Back in April, the world was captivated by the Somali pirates who took over the Maersk Alabama and were holding its Captain, Richard Phillips, hostage. While we all know how the story ended — Phillips was rescued by Navy Seals, three of the pirates were killed and a fourth is likely to stand trial in the US — it’s interesting to see how piracy, which isn’t exactly new on the high seas, is starting to pop up in the filings.

Over the past two months, shipping companies seem to be rediscovering piracy, or at least noting it as one of the many risks they face in their filings. Take Tidewater (TDW) for example, which first mentioned piracy in an 8-K it filed on May 8. Since then, it’s mentioned piracy in 9 subsequent filings. But Tidewater is hardly the only one. Freeseas (FREE) mentioned it in a 6-K it filed 2 days ago.

While Freeseas has included piracy in its filings in the past, it significantly expanded its disclosure in the recent filing. Here’s a snip:

Acts of piracy have historically affected ocean-going vessels trading in regions of the world such as the South China Sea and in the Gulf of Aden off the coast of Somalia. Throughout 2008 the frequency of piracy incidents has increased significantly, particularly in the Gulf of Aden off the coast of Somalia, with dry bulk vessels and tankers particularly vulnerable to such attacks. If these piracy attacks result in regions in which our vessels are deployed being characterized as “war risk” zones by insurers, as the Gulf of Aden temporarily was in May 2008, or as “war and strikes” listed areas by the Joint War Committee, premiums payable for such coverage could increase significantly and such insurance coverage may be more difficult to obtain. In addition, crew costs, including due to employing onboard security guards, could increase in such circumstances. We may not be adequately insured to cover losses from these incidents, which could have a material adverse effect on us. In addition, detention of any of our vessels, hijacking as a result of an act of piracy against our vessels, or an increase in cost, or unavailability, of insurance for our vessels, could have a material adverse impact on our business, financial condition, results of operations and ability to pay dividends in the future.

Now reading into risk factors in the filings can be particularly tedious. Much of the writing isn’t just bad, it’s written in such a way that it’s often hard to figure out what’s a real concern for the company and what’s CYA. But they can often provide interesting clues to a company’s thinking on issues in the news — like piracy — and all sorts of other things too.

Posted in Buried treasure, Legal woes Tags: new disclosures, risk factors

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