Rickmers Maritime Trust will be wound up after failing to secure a satisfactory deal with its primary creditors, HSH Nordbank and DBS Bank, announces the company in a press release Wednesday.
The squeezed company has struggled to obtain a restructuring solution and thus failed to repay its USD 196.7 million debt due at the end of last month.
"The Trustee-Manager is disappointed to have to announce that, after much effort placed on achieving a consensual restructuring among creditors, potential investors have not supported an injection of new equity into the Trust due to the challenges in obtaining, through a consensual process between parties, noteholders' and other creditors' consent for significant debt write-offs," it says in the release.
HSH had granted the Trustee-Manager until April 15 2017 to present a new restructuring proposal which would ensure a higher level of recoveries than under a winding up of the trust. In connection with formulating the new proposal, the Trustee-Manager had entered into discussions with potential industry, private, and distressed investors to raise new equity, on the basis that HSH would be willing to grant material debt forgiveness of the existing loans that it has extended to the Trust and if the Trust was able to secure similar substantial debt forgiveness from the noteholders and its other unsecured creditors.
"Impracticable to continue"
"In light of the aggravated illiquidity and lack of new investors, the Trustee-Manager opines that it is impracticable to continue the Trust and that it shall therefore be wound up," it states and continues:
"The winding up decision is made in light of no other possible alternatives to restructure the liabilities of the Trust with the objective of delivering value on an accelerated basis to all creditors to avoid uncertainties and risks involved in a protracted winding up process. The Trustee-Manager is in advanced discussions with a potential buyer for the Trust's assets which may allow the Trust to distribute cash recoveries upfront to unsecured creditors. While the parties are in advanced discussions, no deal has been finalized at this stage."
The acute crisis became even more evident when the 2016 annual report was published. The bottom line landed at yet another huge deficit of USD 180 million, which is attributed to write-downs on the fleet for USD 168 million.
In 2015, the deficit booked was USD 120 million, and over the past three years the company has lost a total of USD 325 million chartering container vessels to global carriers such as CMA CGM, Mitsui OSK Line, and MSC.
Sorry bondholders said no
Revenue also dropped by 36 percent to USD 69.2 million. This is despite the fact that the fleet of container vessels had a relatively high utilization rate of 89.2 percent.
That was less than a week ago when the management was still struggling for survival.
"Our immediate focus is to seek a sustainable restructuring of our debts. It is crucial that we secure a restructuring plan at the earliest as our efforts to secure employment for the Trust's vessels in the spot market are hampered by the public attention on the need for the Trust's debts to be restructured," says CEO Søren Andersen and Chairman Bertram C. Rickmers.
When ShippingWatch interviewed Søren Andersen before Christmas last year after the bondholders had rejected the restructuring proposal, he said:
"I am terribly sorry that our bondholders chose to say no today. The proposal for a restructuring was not only designed to help Rickmers Maritime Trust along a little, but to propel it far forward."