'Once in a generation prices'

I was mildly amused to have read that FreeSeas Inc's chief executive Ion Varouxakis was reported to have described his company's US$11m acquisition of the 1996-built, 30,800 dwt 'Yucatan' from Eastwind Maritime as being a 'once-in-a-generation price'.

The Yucatan is no spring chicken at 13 years old. Ten year Handysizes have been cheaper than US$11m in 1998 and 2001. So the 'once-in-a-generation' comment would seem to be a bit of a throw away line. What's more, I predict that by next year, the Yucatan will be worth less than what Freeseas paid for her as the dry bulk market enters a tail spin.

On the face of it, it does seem a low price for today's market. However, rumour has it that the Yucatan is due for its survey and that it will be an expensive one given that Eastwind Maritime has been cash constrained. I think the sensible course of action would have been for Freeseas to have utilised the US$16.7m from its July equity issue to pay down debt rather than pull the trigger at the start of a dry bulk down turn.