RMT pleads with creditors to take a hit

Singapore boxship trust continues survival fight as losses mount.

Endangered Singapore boxship owner Rickmers Maritime Trust (RMT) has issued a plea to creditors to write off debts in order for the company to survive.

It said it continued to face difficulties in meeting principal repayments, including $197.7m owed to an HSH Nordbank syndicate on 31 March, as well as its SGD 100m ($70.51m) 8.45% medium-term notes due on 15 May 2017.

The syndicate has deferred principal and interest payments, in the absence of which RMT would have been required to pay $20.5m in principal and interest repayments.

This would have reduced cash and cash equivalents to $1.9m at the end of 2016.

RMT is also in default of an interest payment of $2.9m in relation to its notes, which would have further reduced cash levels.

Bondholders rejected a restructuring deal in December that would have given the owner access to new loans of $260.2m.

It remains in active talks with secured lenders and noteholders, some of whom have proposed alternative plans.

CFO Tomas Norton de Matos said: "We urge creditors, particularly those who are unsecured or partially unsecured, to work with us to right-size Rickmers Maritime’s debts and thus enable the trust to be in a position to capture potential upside to the benefit of all.

"While it is understandably painful for creditors to write off material portions of debts owed to them, not doing so would limit recoveries as proceeds from distressed sales and liquidation are likely to be unsatisfactory. It would also remove the possibility of realising any upside in the future.

"Furthermore, if Rickmers Maritime is unable to continue as a going concern, we would have to recognise impairments on the trust’s assets to match realisable values, which based on recent transactions, are materially below value-in-use valuations.”

CEO Soeren Andersen said the company's financial woes had made it harder to fix its five spot ships on term deals.

“Our efforts to secure customers for the vessels in the spot market have been hampered by the public attention on the need for the trust’s debts to be restructured," he added.

“We have reduced all cost items except restructuring costs, and the trust continues to earn positive EBITDA," Andersen said.

"However, if we are unable to come to a consensual agreement with the senior lenders and noteholders, the trust may face permanent insolvency issues and be wound up. This outcome would be the most value-destroying of all.

"On the other hand, a future-proof debt restructuring can preserve value for all unsecured lenders and enable us to pursue longer term value-enhancing opportunities for the trust in the future. We hope for understanding and support from all stakeholders in this endeavour.”

Loss chopped

The company posted a net loss of $48.4m in the fourth quarter, against $129.58m in 2015.

Charter revenue fell to $14.28m against $24.08m the year before.

EBITDA was $4.4m for the fourth quarter and $26.7m for the full year.

Impairments totalled $48.1m in the final three months, including $31.6m for a vessel it sold.

Utilisation was down at 86.7%, compared to 98.2% in 2015.

For the full year, the deficit was $180.1m, up from $129.2m, due mainly to the lower revenue and vessel impairments of $168.7m.

Five ships continue to operate on long-term contracts generating $26,850 a day each.

For 2017, Rickmers Maritime has covered employment for 58.4% of its fleet and secured future revenue of $84.9m up to the expiry of the last charter contract in 2019.