Still in red, Rickmers' unit holders OK issue of new units

Units in container ship operator Rickmers Maritime surged nearly 30 per cent yesterday after unit holders approved a plan to help get the company out of a tight spot.

But more bad news emerged after the market closed, with Rickmers reporting it remained stuck in the red in the third quarter.

The business trust posted a net loss of US$74.7 million (S$103.9 million) in the three months ended Sept 30, compared with a net profit of US$9 million a year earlier, after a non-cash impairment of US$69.1 million was applied to 15 vessels in the fleet. In the second quarter, Rickmers had reported a net loss of US$55.6 million.

Third-quarter revenue fell 43 per cent year on year to US$15.6 million in a depressed charter market.

It decommissioned three idling vessels in August and two in September, to reduce vessel operating expenses and management fees.

  • AT A GLANCE

  • REVENUE:

    US$15.6 million (-43%)

    NET LOSS:

    US$74.7 million (nm, net profit of US$9 million in Q3 of 2015)

But even excluding the decommissioned vessels, fleet utilisation was 85.3 per cent in the quarter, from 99.9 per cent a year earlier.

The trust manager said in a statement: "Although almost twice as much container shipping capacity has been scrapped year-to-date 2016 as during full year 2015, there is still too much capacity...

"The bankruptcy of Hanjin Shipping added to the available shipping capacity as vessels previously employed by Hanjin entered the charter market." It added that time charter rates are expected to stay depressed in the coming months.

The trust also reported total bank debt of US$276.9 million remaining as at Sept 30, of which US$179.7 million is due in March next year - a repayment profile that is not sustainable, it said.

At an extraordinary meeting earlier yesterday, Rickmers unit holders approved the proposed issue of 1.3 billion new units in Rickmers to note holders as partial redemption of $60 million of the $100 million notes due in May 2017. The units shot up 0.8 cent or 29.6 per cent to close at 3.5 cents on the news.

Rickmers will convene a note holders' meeting next Wednesday to seek their approval for the partial redemption and an extension of the maturity of the other $40 million in principal to November 2023, among other requests for waivers and amendments.

The Securities Investors Association (Singapore), in cooperation with the senior management of Rickmers Trust Management, is holding a dialogue session with note holders tomorrow at 7pm at SGX Auditorium.


Correction note: An earlier version of this article mistakenly mentioned in the first paragraph that bond holders approved the share issue. This is incorrect, as it was unit holders who voted at the EGM.

A version of this article appeared in the print edition of The Straits Times on November 01, 2016, with the headline 'Still in red, Rickmers' issue of new units gets OK'. Print Edition | Subscribe