Norway’s Green Reefers, one of the largest operators of refrigerated cargo ships, is winding up its operations and selling its fleet to its controlling shareholder after its bankers refused to provide fresh working capital.
The Oslo-listed reefer shipowner said the majority of its ships aren’t covering operating costs due historically low freight rates and the absence of a high season in the first quarter.
Green Reefers expects to receive just $3.5 million from the sale of 31 ships to Norway’s Caiona AS, and its Caiona Ship AS unit, which already owns 66.2 percent of its shares. It will use the proceeds to pay off its debts.
The Bergen-based company plans to delist from the Oslo stock exchange after a shareholders meeting on June 22.
Green Reefers’ demise is the most dramatic demonstration of the deepening crisis in the reefer market amid tumbling rates, poor harvests, soaring fuel prices and aggressive competition from cargo-hungry ocean container carriers.
Green Reefers, which lost $30.7 million in 2011, mulled selling some ships to raise cash to remain in business. But with purchase prices at scrap levels and well below outstanding loans, vessel disposals would not provide the required capital.
The company raised $12 million from the sale and lease back of six vessels to Caiona in the fourth quarter of 2011.
Refrigerated ship operators face further competition from container ships this year as ocean carriers seek more higher-paying reefer cargoes.
The launch of a Maersk Line service between Ecuador and the Mediterranean and the Black Sea in the second half of 2011 removed 600,000 cartons of bananas every week, equivalent to three conventional reefer shiploads. A further threat comes from a partnership between Chile’s CSAV and Geneva-based Mediterranean Shipping Co.
Reefer lines allege ocean carriers are offering below cost rates to boost their market share.
Around 15 percent of the global reefer fleet has been scrapped so far this year and older ships are expected to sail to breakers yards rather than go into lay up through the summer low season.
This is improving the supply/demand balance and improving prospects for owners of modern tonnage.
Contact Bruce Barnard at email@example.com.