An independent auditor expressed “significant” doubt over whether Rickmers Maritime Trust can continue as a going concern.
The Singapore-based charter containership owner's share price plunged over 25 percent March 23 on word of the announcement.
PricewaterhouseCoopers cited liabilities and commitments of more than $1 billion as it issued a disclaimer to Rickmers' latest audited financial statement for the year to Dec. 31.
Rickmers, an offshoot of Hamburg-based ship-owner Rickmers Group, owns 16 containerships which are on long term charter to ocean carriers CMA CGM, Mitsui OSK, Hanjin Shipping and Italia Maritima, a subsidiary of Taiwanese line Evergreen.
PwC said Rickmers had bank borrowings of $128.7 million, unfulfilled capital commitments of $138 million for not taking delivery of certain vessels and an existing capital commitment of $780.7 million, all of which are due within the next twelve months.
The ability of Rickmers to continue as a going concern depends on the successful refinancing of the $128.7 million loan which falls due on April 30, and an agreement on $711.7 million of liabilities over four contracted container ships of 13,100 20-foot equivalent units capacity and $207 million for three 4,250 TEUs vessels.
PwC said Rickmers must also comply with all its existing loan covenants.
"However, the continuing economic downturn has resulted in a perceived drop in the value of container vessels. This may cause the Group to breach minimum asset to loan covenants," the auditor said.
"The appropriateness of the going concern assumption on which [Rickmers] financial statements are prepared is dependent on the continued support from the Group's banks, related parties and the Group's ability to generate sufficient cash from its operations to meet its obligations as and when they fall due."
"These conditions indicate the existence of a material uncertainty that may cast significant doubt on the ability of the Group and the Trust to continue as going concerns," PwC said.
Rickmers reported 2009 charter income rose 43 percent from the previous year to $146.3 million and net profit grew 18 percent to $40.7 million.
In its annual report published in early February Rickmers said it had exchanged various proposals with its creditors but "due to the complexity of the matter and differing views between the Trust and its various stakeholders, none of these proposals have thus far been accepted."
Contact Bruce Barnard at firstname.lastname@example.org.