Rickmers Maritime Trust, the Singapore-based container affiliate of Rickmers Group, moved to pull itself out of its financial troubles with three initiatives it announced Friday.
The company secured approval from some of its lenders to extend repayment of $130 million in loans; secured a three-year waiver of the asset-to-loan requirements in these loans; and canceled the agreement to buy new ships.
Rickmers Maritime Trust, which trades on the Singapore Stock Exchange, is 33.1 percent owned by the Rickmers Group, parent of Rickmers-Linie.
During the container industry boom that ended at the end of 2008, Rickmers Maritime had taken out loans to buy new vessels for charter hire to container lines, but when the boom ended, it was left with too many orders bought on credit and too few charter hires. In March, independent auditor PricewaterhouseCoopers expressed “significant doubt” as to whether the trust could continue operations. It 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.
As part of the agreement to restructure its loans announced Friday, Rickmers Maritime signed a term sheet with its lending banks to extend the maturity of its $130 million “Top Up Loan Facility” by five years and to waive compliance with its asset-to-loan coverage ratios for up to three years.
Under the term sheet, Rickmers will make a prepayment of $59 million towards its loan facilities and will repay any remaining outstanding amount over five years.
Quah Ban Huat, CFO of Rickmers Maritime, said the agreements with lenders would allow the trust to prepay its loans while ship values remain depressed and reduce its leverage. He said the agreements should allay investor concerns about the trust’s ability to continue to operate.
Rickmers Trust also signed a second term sheet with Polaris Shipmanagement, a wholly-owned subsidiary within the Rickmers Group, setting out the terms to cancel its obligation to spend $918.7 million to buy seven new ships from it.
The canceled obligations include orders for three 4,250-TEU vessels and four 13,100-TEU vessels. In exchange for the cancellation, Rickmers Maritime will pay Polaris compensation of $64 million (approximately 7 percent of acquisition cost) of which $15 million will be paid in cash and the remaining amount of $49 million will be converted into an interest bearing convertible loan to the trust.
“With this agreement in hand, we have a unique opportunity to bring the Trust closer to sheltered waters,” said Thomas Preben Hansen, CEO of Rickmers Maritime.
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