SINGAPORE - Atlantic Navigation's management said it is reasonably confident the group can pay its debts on time, in response to a Singapore Exchange query on cashflow in relation to its net current liability of U$25.9 million as at end-2018.
The marine services company said it expects to improve on FY2018's U$15 million operating cashflows, in a bourse filing on Thursday (April 11).
For one, it expects no capital expenditure in FY2019 after the delivery of seven fully-deployed new vessels in FY2018 to fulfil long-term contracts with a Middle East national oil company.
The company also expects its net current liability position to be reduced from U$25.9 million to U$22.9 million after the settlement of a U$2.5 million loan deferment and sale of a vessel for U$0.5 million in March 2019.
It added that an additional U$1.5 million financing was obtained in March 2019 from a controlling shareholder in the form of a short-term shareholder advance.The group noted other available financing avenues such as bank financing and monetising the group's two unencumbered vessels (with an aggregate net book value of U$15.7 million at end-2018) to ease any liquidity issues.
Its marine vessels are "long-lived assets in nature and classified as non-current assets", but portions of the long-term loans to be repaid in the next 12 months are classified as current liabilities, skewing the net current position calculation higher, the group said.
It also said it has the support of bankers and other stakeholders such as Michael Kum Soh Har, the non-executive and non-independent chairman who spent U$26 million (through Saeed Investment) to take a 50.2 per cent stake in the company.
The company also cited non-excessive use of leverage and a gearing ratio that has stayed fairly constant (57 per cent at end-Dec 2018 and at end-2017) despite the higher value of marine vessels on its balance sheet.
Atlantic Navigation shares were suspended after its free float level fell to 8.43 per cent on Dec 21, 2018, following the Saeed Investment deal.
The shares last traded at $0.10 before trading was suspended.