Financing Woes Hit Rickmers Trust

Rickmers Maritime Trust, a Singapore-based charter ship owner, was unable to take delivery of a vessel it had ordered for charter to Hanjin Shipping in the third quarter because of financing troubles and said it may not be able to take delivery of two more new ships for charter to Hanjin later this year and next.

The trust is negotiating with 10 lender banks and Germany's Rickmers Group, which owns 40 percent of the trust, regarding ongoing financing and the breach of certain loan covenants regarding the value of the vessels they have financed.

Rickmers Trust said its profit for the third quarter ended Sept. 30 fell by 4 percent to $9.23 million from $9.66 million in the same period last year, even as its charter revenue increased by 43 percent to $38.06 million from $26.54 million last year.

Rickmers attributed the decline in profit to unrealized losses from one of its interest rate swap arrangements.

It said the sharp increase in revenue was due to the delivery of four new vessels of 4,250 20-foot equivalent unit capacity each, one in November last year and three this year.

Rickmers Trust said it had been unable to take delivery of the Hanjin Milano, which was delivered instead to Polaris Shipmanagement Co., a wholly-owned company within the Rickmers Group, from which the vessel was purchased.

It said the Hanjin Milano had begun its charter with Hanjin Shipping, and is currently warehoused by Polaris until negotiations for bank financing have been finalized.

To add to its troubles in the quarter, Maersk Line informed the trust that it will exercise its early termination option for the Maersk Djibouti and will redeliver it in February 2009.

The trust said it has begun marketing the vessel to other carriers, but that “given the global economic and trade slowdown, coupled with the oversupply of tonnage in the container industry, there is a risk that Maersk Djibouti may not find immediate employment or will only secure employment at a significantly reduced charter rate.”

Rickmers Trust said it is negotiating with 10 lender banks and Rickmers Group regarding three financial challenges” facing it. The first is the breach of covenants from the banks on the value of its ships to the loans outstanding. The second is the refinancing of a $130 million top-up loan facility that matures in April of 2010. The third is the financing of its existing order book.

Contact Peter T. Leach at pleach@joc.com.