Year

Market conditions

Thoughts before action

Decision

Remarks

1979-end

Bulk carriers are profitable; they get high ship prices

Sell 2 SD 14 at $15 m each (=$30 m)

No forecasting. Ships could be kept 18 more months; company was tempted to sell due to their high prices

1980

(it is remarkable how fast market fell)

Ship prices reflect now steel’s cost and machinery’s; expected not to fall further; ships are now cheap

To order 2 tankers… to strengthen balance sheet; to get 2 years nearer the “expected” end of depression… i.e. in 1982

To order 2 all-purposes tankers 60 k; $35 m each; 60% credit; 8.5% interest; i.e. a debt of $70 m

Wrong action!

No forecasting!

A periodic cycle 2 + 2 years assumed

1982-end

Freight rates fall

Use of past reserves (out of necessity)

Cash flow inadequate

1982

The market price of a product carrier was less than half its new price

low prices offered in Japan; 2 years closer to the “new’ expected end of depression… i.e. 1984

To order 1 60 k product carrier at $25 m; 60% credit; debt $25 m; total debt $95 m

No forecasting.

Periodic cycle of 2 + 2 years assumed again.

1983

Depression peaks

To sell 4 bulk carriers at $20 m; and scrap the VLCC at $4 m (get $84 m)

Funds left $13 m, but proved inadequate.

1984

Low ship prices

Bankruptcy threat

$9 m increase³⁷ in share capital; sell 3 tankers (at rather low prices)

Company left with: $15 m loans & a market worth of $22 m!