Friday, 25 April 2014 | 05:32
SPONSORS
View by:

Seanergy Maritime Holdings Corp. Reports Financial Results for the Third Quarter And Nine Months Ended September 30,2011

Thursday, 12 January 2012 | 00:00
Seanergy Maritime Holdings Corp. announced yesterday its operating results for the third quarter 2011 and nine months ended September 30, 2011.Dale Ploughman, the Company's Chairman and Chief Executive Officer, stated:"During the first nine months of 2011 we increased our revenues as the result of the larger average size of our fleet compared to the same period of last year, which expanded from 15.4 to 20 vessels. This also enabled us to minimize the effect of the sharp fall in freight rates that prevailed in the shipping markets since the beginning of 2011.
"We believe that the high quality of our fleet and our expertise in commercial management have enabled us to continue to keep our vessels employed with charterers who we believe are reputable and creditworthy while we utilize the spot market to position our vessels into areas where we believe that the chances are higher in achieving favorable period employment whenever possible. Overall, we focused on achieving a balanced exposure to spot market fluctuations arranging for a diversified portfolio of charter contracts that provide both long term cash flow stability and upside potential.
"In this context, three of the four Capesize vessels in our fleet which operate under charter arrangements with market linked rates benefited from the renewed strength in the Capesize spot rates that we have experienced during the fourth quarter of 2011. Furthermore, our increased exposure to the less volatile Handysize segment, with 11 out of 20 vessels in our fleet, counterbalanced the downward pressure on the daily charter rates earned over the first nine months of 2011. At the same time, we implemented certain cost cutting measures during the year such as the reduction of general and administrative expenses and fleet management fees in an effort to support profitability and minimize losses during a difficult market environment. We also believe that our decision to adjust the book value of our six vessels acquired in 2008 will positively affect our balance sheet and profitability going forward. We believe that the recent agreement with our lenders and major shareholders for an equity injection demonstrates their confidence and commitment to the Company.
"Over 2012, we expect that the fast expansion in the supply of tonnage will continue to suppress any sustained upward pressure on spot rates. Nevertheless, demolition of older vessels is continuing to be strong as scrap metal prices remain high and freight rates are low.
"The dire predictions concerning the world economy that we saw earlier in 2011 have yet to materialize in the economic data. Industrial production seems to be resilient in the U.S. and Japan, while the moderate slowdown in Chinese and Korean manufacturing suggests that economic fundamentals do not seem to confirm fears of a pronounced lack of demand. It therefore seems that the situation in Europe is the main factor posing a threat to the otherwise strong demand for dry bulk shipping. This suggests that as soon as we start to see the over-supply of vessels moderating, the dry bulk market is likely to stabilize at higher levels.
"We believe that Seanergy is well positioned to cope with today's challenging market conditions. With a high quality fleet, strong management, efficient technical and commercial operations, a balanced and diversified charter portfolio, we feel confident that we can continue to work towards our goal of making Seanergy a leading dry bulk ship owner, able to capitalize on the robust long term demand for the transportation of essential commodities."
Christina Anagnostara, the Company's Chief Financial Officer, stated:
"During the third quarter of 2011 the Company operated 20 wholly-owned vessels earning a daily Time Charter Equivalent ("TCE") of $13,324 compared to $16,153 in 3Q 2010, a decrease of 18%. It is worth noting that our chartering strategy and exposure to the Handysize market have resulted in a relatively modest drop in charter rates earned by our vessels, compared to the first nine months of 2010, during which market rates stood at considerably higher levels.
"Total adjusted operating costs, excluding impairment charges, for the third quarter 2011 were approximately 6% higher than in the same period last year. Total adjusted operating costs were negatively impacted by an increase in the amortization of drydocking expenses, owing to the timing of surveys. On a positive note, we saw a 29% reduction in general and administrative expenses as a result of our recent cost-cutting measures coming into effect. Going forward we expect operating costs to follow a downward trend, which should prove particularly important amidst a weak market environment.
"For the nine month period ending September 30, 2011 our operating costs were impacted by increased one-time expenses relating to the reorganization of the Far East office, the timing of dry docking surveys and higher vessel operating expenses. As far as revenue is concerned, we have achieved higher revenue in the first nine months of 2011 as we have operated a larger fleet.
"Moreover, unfavorable market conditions in the shipping industry have prompted Seanergy to undertake an impairment test on our vessels' book values and goodwill. Seanergy concluded that it was prudent to impair the book values and related goodwill of the six initial vessels acquired in 2008. As a result, Seanergy wrote down the associated book values by a total of $201.9 million during the third quarter of 2011. It should be noted that this does not represent a cash expense and it does not affect the Company's cash flow.
"In addition, Seanergy agreed in principle with our major shareholders and lending institutions for an equity injection and amendments of the Company's borrowings, which are described in detail under the financial developments section of this press release. We believe that the amendments will lead to a sustainable capital structure for the long term. Furthermore, they serve as an important indicator of confidence in the company's future prospects."
Third Quarter 2011 Financial Results:

Net Revenues
Net revenues for the third quarter of 2011 decreased to $23.5 million from $29.0 million in the same quarter in 2010. The decrease in net revenues reflects lower levels of freight rates earned in the dry bulk market as compared to the same quarter last year.
EBITDA and Adjusted EBITDA, Operating Income and Adjusted Operating Income
The operating results for the third quarter 2011 include the non-cash losses incurred due to the impairment of goodwill and vessel values, which amounted to $201.9 million. Excluding the impairment charges, adjusted operating income was equal to $1.4 million. Excluding the non-cash impairment charges, Adjusted EBITDA was equal to $11.8 million as compared to $15.7 million in the same quarter in 2010.
Including the impairment charges, EBITDA was negative $190.1 million for the third quarter of 2011.
Operating loss amounted to $200.5 million for the three months ended September 30, 2011, as compared to an operating income of $8.2 million for the same quarter in 2010.
For more information please refer to the EBITDA and Adjusted EBITDA reconciliation section contained in this press release.
Net Loss and Adjusted Net Loss
For the third quarter of 2011, Adjusted Net Loss excluding the effect of the impairment charges was $1.6 million. Including the impairment charge of $201.9 million, net loss amounted to $203.5 million or $27.82 loss per basic and diluted share. In the same quarter of 2010, net profit was equal to $2.9 million, or $0.40 profit per basic and diluted share, based on weighted average common shares outstanding of 7,314,363 basic and diluted for 2011; 7,314,932 basic and diluted for 2010, on a reverse-split adjusted basis.
The Adjusted Net Loss excluding the impairment charges is mainly due to lower TCE rates earned, which led to lower operating income for the period.
Nine Months Ended September 30, 2011 Financial Results:
Net Revenues
Net revenues for the first nine months of 2011 increased to $76.5 million from $69.9 million during the same period in 2010 or by 9.5%. The increase in revenues is due to the increased size of our fleet, which resulted in additional operating days and offset the effect of a decrease in TCE rates.
EBITDA and Adjusted EBITDA, Operating Income and Adjusted Operating Income
Excluding non-cash losses resulting from impairment charges, adjusted EBITDA was $38.2 million for the first nine months of 2011 as compared to $36.5 million in the same period in 2010. Including impairment charges, EBITDA was negative $163.7 million for the first nine months of 2011.
Adjusted operating income excluding the impairment charges amounted to $8.5 million for the nine months ended September 30, 2011, as compared to an operating income of $17.3 million for the same period in 2010. Operating loss including the impairment charges was equal to $193.4 million.
The increased size of Seanergy's fleet resulted in slightly higher adjusted EBITDA over the first nine months of the year compared to the first nine months of 2010, as it mitigated the effects of lower TCE rates.
For more information please refer to the EBITDA and Adjusted EBITDA reconciliation section contained in this press release.
Net Loss and Adjusted Net Loss
For the first nine months of 2011, Adjusted Net Loss excluding non-cash impairment charges was $2.5 million, as compared to Net Profit of $2.8 million, or $0.51 per basic and diluted share, in the same period of 2010, based on weighted average common shares outstanding of 5,371,204 basic and diluted for 2010 on a reverse-split adjusted basis. Including impairment charges, net loss was equal to $204.4 million, or $27.94 loss per share based on weighted average common shares outstanding of 7,314,739 basic and diluted for 2011.
Operating Cash Flow
In the first nine months of 2011, the Company generated $14.2 million of cash from operations, as opposed to $26.3 million in the first nine months of 2010. The decrease was mainly attributable to lower Net Income earned in 2011 as well as to expenses incurred relating to vessels' dry docking inspections.
Debt Repayment for 2011
The Company ended the third quarter of 2011 with $363.6 million of outstanding debt. This reflects a reduction of $9.8 million and of $36.0 million during the third quarter and nine months ended September 30, 2011, respectively.
As of today, total debt outstanding is approximately $346 million.
Third Quarter 2011 Developments:
Impairment of Vessels and Goodwill Book Values
Due to the unfavorable market conditions witnessed in 2011 and as market expectations for future rates are low, management and the Board of Directors of the Company carefully considered and further determined to record an impairment charge to the book value of our six initial vessels in the amount of $189 million and an impairment charge to the book value of goodwill in the amount of $12.9 million. In total, non-cash impairment charges amounted to $201.9 million.
The unfavorable market conditions in the shipping industry prompted the Company to review the recoverability of our assets. It was concluded that the values of the vessels acquired under the BET and MCS acquisitions were not impaired. However, the book values of our six initial vessels and the goodwill recorded as part of their acquisition, warranted impairment. In 2008, when these six vessels were acquired, the market was dominated by historically high daily rates and vessel values.
African Glory Dry Docking
The survey for the M/V African Glory commenced on August 19, 2011 and was completed on September 4, 2011 at a cost of approximately $0.4 million.
BET Commander Dry Docking
The survey for the M/V BET Commander commenced on August 24, 2011 and was completed on October 6, 2011 at a cost of approximately $1.25 million.
Vessel Employment
In July 2011, the M/V Davakis G., a 54,051 dwt Supramax dry bulk carrier built in 2008, commenced a time charter for a period of about twelve to about eighteen months at a gross charter rate of $14,500 per day with a first class charterer.
In September 2011, the M/V BET Intruder, a 69,235 dwt Panamax dry bulk carrier built in 1993, commenced a time charter for a period of about eleven to about thirteen months at a gross charter rate of $12,250 per day.
Subsequent Events:
Vessel Employment
In November 2011, the M/V BET Prince, a 163,554 dwt dry bulk carrier built in 1995, commenced a time charter for a period of about eleven to about thirteen months at a gross charter rate linked to the adjusted Time Charter Average of the Baltic Exchange Capesize Index.
As of the date of this press release, the Company has secured under employment 72% of its ownership days for 2012 and 24% for 2013.
Financial Developments
Two of the Company's lenders, Marfin Egnatia Bank SA ("Marfin") and Citibank International plc ("Citi") as agent of the lenders, have agreed in principle to waive certain financial and other covenants of three loan facilities and amend certain terms of two loan facilities. As part of the lenders' agreement, the Company entered into a share purchase agreement with four entities affiliated with members of the Restis family, the Company's major shareholders, for an equity injection of $10 million.
Marfin has agreed in principle to an extension of the revolving and term facilities' maturity date from 2015 to 2018, the deferral of principal debt payments for 2012 and amendment of the facilities' installment profiles, an extension of the waiver on the Company's security margin covenant for the period from January 3, 2012 through January 1, 2014, as well as to waive all other financial covenants until January 1, 2014 including margin re-pricing. Additionally, Marfin has agreed to grant waivers on all previous covenants' breaches.
On the loan facility of Bulk Energy Transport (Holdings) Limited ("BET"), the Company's subsidiary, with Citi, as agent of the lenders, Citi has agreed in principle to waive all covenants for the period up to and including January 1, 2013, with the exclusion of the security requirement to security value covenant to be amended from 125% to 100% and be tested quarterly, including margin re-pricing. Additionally, Citi has agreed to grant waivers on all previous covenants' breaches.
All relevant amendments of the loan agreements with Marfin and Citi are expected to be signed and finalized shortly.
As part of the equity injection plan, four entities affiliated with members of the Restis family, agreed to purchase an aggregate of 4,641,620 common shares of the Company in exchange of $10 million. The common shares will be issued at a price equal to the average closing price of five trading days preceding the execution of the agreement. The shares are expected to be issued by January 31, 2012.
The Company expects that the waivers will be granted by the lenders, thus the presentation of the long term debt in the attached consolidated financial statements assumes that the waivers will be granted and accordingly all of the Company's long term debt continues to be classified as non-current as of September 30, 2011. In case the waivers are not granted, then the facilities will be required to be classified as current, reflecting the lenders' ability to call the debt at any time at their option.
Source: Seanergy Maritime Holdings Corp.
Comments
    There are no comments available.
    Name:  
    Email:  
    Comment:  
     
    In order to send the form you have to type the displayed code.

     
SPONSORS