Rickmers Maritime says vessel sale not confirmed
Its trustee-manager acknowledges the sale of India Rickmers is an option tabled for senior debt settlement
Singapore
THE trustee-manager of Rickmers Maritime on Friday acknowledged the sale of its vessel, India Rickmers, is an option on the table for its senior debt settlement but denied any transaction has taken place.
The trustee-manager was responding to trade media reports on the purported vessel sale. Citing Vesselsvalue (VV), these reports said India Rickmers has been scrapped before it reached its end of life.
The trustee-manager said negotiations are still ongoing with one of the trust's senior lenders on the terms of the debt settlement agreement. This involves among other options tabled, the sale of India Rickmers. No sale of the vessel has been concluded, it said.
VV valued India Rickmers at US$5.87 million, just above scrap value. In 2016, the value of India Rickmers tumbled by 62 per cent as vessels in its class are no longer in demand for carrying cargoes through the widened Panama Canal, VV said.
With the expanded Panama Canal in operation since June, vessels sailing through the key waterway along the transpacific trade route are no longer restricted to Panamax size and below.
Even so, unitholder Mano Sabnani said the management behind Rickmers Maritime has previously indicated the Panamax vessels on its fleet can be used in feeder vessels in intra-region trade. He questioned the logic of selling ships in a depressed market when the management has "repeatedly said it is actually an opportunity to buy or invest in ships in anticipation of an eventual recovery in freight rates".
Pareto Securities Pte Ltd's chief executive, David Palmer, concurred on the challenges in securing a resale of containerships under this downturn. "In an environment of no immediate buyers for vessels on resale, containership owners in general, may have to turn to realising cash by scrapping vessels before their end of life," Mr Palmer opined.
India Rickmers is a 2009-built, 4,250-TEU (20-foot equivalent) containership. Resale opportunities for vessels with similar capacity to India have reportedly dried up as freight rates on the spot market are said to have fallen to negative cash flow region. Whether Rickmers Maritime will consequentially expand the impairment of vessels for FY16 from US$120.58 million provisioned for nine months to Sept 30, 2016, remains to be seen.
Only five vessels of the shipping trust's fleet are serving term charters, all with Mitsui OSK Lines. These are pledged to a loan from a BNP-led syndicate. Of the remaining vessels, 10 are pledged to a loan from a HSH Nordbank-led syndicate and one lone vessel to a Commerzbank facility, according to a Rickmers Maritime noteholders presentation on Sept 15.
Noteholders have spurned Rickmers Maritime's bid to restructure S$100 million of medium term notes through a swap of the outstanding notes for substantial equity in the trust. Completing the notes restructuring is a pre-condition for the trust's senior lenders to deliver a proposed US$260.2 million senior debt restructuring package.
The trust has defaulted on the repayment of a coupon due on Nov 15 for the S$100 million notes. Its trustee-manager had warned the default could challenge the trust's ability to continue as a going concern.
