SINGAPORE - Rickmers Maritime is finally biting the bullet.
The shipping trust's managers said on Wednesday (April 11) that they have begun a process to wind up the ship owner, after debt restructuring talks failed last December.
"Potential investors have not supported an injection of new equity into the trust due to the challenges in obtaining... noteholders' and other creditors' consent for significant 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."
Last December, Rickmers bond holders rejected the management's appeal to swap the principal on S$100 million of notes of 8.45 per cent, which would have been due this May, for S$40 million due in November 2023 pegged to much lower coupon rates.
Rickmers, which is swimming in an ocean of debt amid a depressed charter market, needed to get bond holders on board before bank lenders would allow it to draw on a US$260.2 million (S$376 million) facility for refinancing.
This has led to events of default, Rickmers said.
Its main lender, HSH Nordbank AG, had granted Rickmers until April 15 to present a new restructuring proposal which would ensure a higher level of total recoveries than under a winding up of the Trust.
Rickmers had approached potential industry, private and distressed investors to raise new equity, but no one would inject fresh equity into the trust.
Rickmers added that it is now in "advanced discussions" with a potential buyer for its assets.
Rickmers Trust Management said it will advise unsecured creditors on the amount of recoveries via their respective agents and trustees in due course.
"Regrettably, unitholders are highly unlikely to recover any of their investments," it added.
Trading in Rickmers Maritime units had been suspended since last November.
Incidentally, one bond holder had filed a police report against Rickmers Trust Management on Monday, alleging that management was still drawing salaries despite bond holders' earlier directive to wind up.
This bond holder said: "If the company freezes assets and starts liquidating, note holders can get back more, because the company is operating at loss, which means the longer it drags, the less is left."
Rickmers joins other Singapore-listed companies that have struggled with debt over the last year. Seven companies have defaulted on S$1.35 billion of bonds in the Singapore market since November 2015, according to data compiled by Bloomberg. In March, oilfield services firm Ezra Holdings filed for US Chapter 11 bankruptcy, following the collapse of Swiber Holdings last year.