Genco Shipping shares fall as it cancels 6 orders

MINNEAPOLIS - Shares of drybulk hauler Genco Shipping fell in turbulent trading Wednesday after it said it was canceling plans to take delivery of six new ships.

Its shares fell 82 cents, or 3.7 percent, to close at $21.64 after trading as high as $25.39 earlier in the session.

New York-based Genco said it had been on track to pay $530 million for the ships, and that it will forfeit $53 million in deposits. It had agreed to buy them in June. The cancellation will result in a fourth-quarter charge of about $54 million.

Genco said it had sold time for 93 percent of its fleet's available days for the rest of this year and 67 percent for next year.

Genco announced the news after the markets closed on Tuesday. On Wednesday morning, Jefferies & Co. analyst Douglas Mavrinac wrote that canceling the ship orders significantly reduces Genco's charter hire risk for next year, since none of the new ships had a time charter yet.

He cut his 2009 earnings estimate for Genco to $6.90 per share from $6.96, because of its lower ship count. The average forecast by analysts polled by Thomson Reuters is for earnings of $6.35 per share.

Genco said it still has four new Capesize ships scheduled for delivery next year, and will pay for them with a mix of borrowing and cash from operations.

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