Financially embattled Rickmers Maritime is finally biting the bullet.
The shipping trust's managers said yesterday they have begun a process to wind up the container ship owner and sell assets, after debt restructuring talks failed in December.
"Potential investors have not supported an injection of new equity into the trust due to the challenges in obtaining... note holders' and other creditors' consent for signifi- cant debt write-offs," Rickmers Maritime Trust said in a statement to the Singapore Exchange. "In light of the aggravated illiquidity and lack of new investors, Rickmers Maritime Trust opines that it is impracticable to continue the trust and that it shall therefore be wound up."
Rickmers ran into a cash crunch amid a depressed charter market and struggling global shipping industry, and a lack of new financing was the final nail in the coffin.
Last December, Rickmers' bond holders rejected the management's appeal to swop the principal on $100 million of notes, which would have been due next month, for $40 million due in November 2023 pegged to much lower payout rates.
It needed to get bond holders on board before bank lenders would let it draw on a US$260.2 million (S$365 million) facility for refinancing.
Following the failure to obtain a consensus, Rickmers' main lender, HSH Nordbank, gave it until this Saturday to draw up a new restructuring plan to avoid liquidation.
Rickmers said it had approached private and distressed investors to raise new funds, but no one would inject fresh equity into the trust.
Last year, it warned that bond holders are likely to lose everything in a liquidation as distressed sales proceeds are inadequate to repay senior loans.
But the tone yesterday was a tad more hopeful, with Rickmers stating it is in advanced discussions with an unnamed buyer for its assets, which could generate some cash to pay unsecured creditors. The management declined to comment on the identity of the potential buyer until a deal was certain.
"Regrettably, unit holders are highly unlikely to recover any of their investments," Rickmers said.
Rickmers Maritime had a market value of about $23 million before units were suspended from trading last November.
Mr Mano Sabnani, who is a unit holder, said: "The banks insisted on note holders taking a haircut, and note holders have been the difficult party. I am surprised it has come to this." Mr Joseph Mu, a bond holder, said: "We were expecting them to come up with a new restructuring plan. I will speak to my lawyer to see if there is anything we can do from here."
But another bond holder, who wanted to be known only as Jeffrey, said: " The winding up is not unexpected as far as I am concerned."
Rickmers joins a string of Singapore issuers that are sinking under debt woes. Last month, offshore marine giant Ezra Holdings filed for Chapter 11 bankruptcy protection in the United States. Altogether, seven companies have defaulted on $1.35 billion in Singdollar bonds since November 2015.