Thor and Christian Stadil's Thornico group will no longer provide guarantees for losses stemming from vessel ownership and from costly, long-term contracts with shipowners made by carrier Thorco.

Vessel ownership is today separated from the carrier's operations, placed instead in a series of companies under Thornico. In 2016 alone, these companies, of which the most important is Sofia Shipping AS, triggered a loss of more than DKK 600 million (USD 94.8 million) due to massive impairments on vessels that, according to Thor Stadil, were purchased at far too high prices.

The Stadil family has, until now, through the Thornico group supported the loss-inducing vessels, but Thor Stadil now says in an unusually frank comment to ShippingWatch that neither banks nor owners of vessels which Thorco has leased can expect that this will continue.

In addition to owning some 20 vessels in the virtually collapsed sector for specialized and project cargo vessels, multipurpose, Thorco has commitments related to a series of chartered vessels on long-term contracts, many of which are for 10 years. These charter contracts are almost equal to ownership due to the length of hire.

Banks must contribute

"In rough terms, I can't continue to finance banks and the like. They need to contribute, and the same goes for the shipowners from whom we've leased the vessels. So we've had to renegotiate a reduction of charter contracts. This is briefly put a matter of either returning a vessel (to owners) or, alternatively, reducing the rate," Thor Stadil tells ShippingWatch, noting of the role played by banks:

"Until early 2016 we've paid everything, and we were mainly sending money to to German banks and Japanese financing units and such. So I had to tell myself that this can't go on. I can't keep the financial sector alive, and what we've done is not different than what others have done. They just did it before us. No carriers in this sector would have survived if they hadn't renegotiated their financial terms," he says, stressing that the family will support operating unit Thorco Projects, which according to Thor Stadil is running reasonably and delivered a profit of close to USD 1 million last year.

Danish media InsideBusiness, in its Friday edition, reviews the results of subsidiary Sofia Shipping AS, under which a series of loss-inducing vessels have been placed since Stadil spun off ownership of the costly and deficit-making vessels from operations.

In the report, PWC's accountants decline to vouch for key conditions related to the company:

"The company has significant negative equity, and the company will not be able to meet debt commitments. There has at this time not been reached agreements with creditors and equity owners to forgive debt or add additional capital. The report has been filed on the assumption of going concerns, which we on this basis do not deem appropriate," write the accountants.

The company has lost more than DKK 400 million and has a negative equity of DKK 286 million, according to the financial report.

Thorco Shipping has not impaired fleet in two years 

Thor Stadil adds to ShippingWatch:

"We have not previously had accountant reservations for the ship companies, which are dreadful. The accountants are now asking whether I can guarantee going concern the next two years with capital from Thornico, But I won't and I can't keep providing blank guarantees for the next two years. So we've told the accountant that we'll review it on a case to case basis. Anything else would be impossible to justify, plus there are some shipowners with whom you just can't negotiate," he says.

Forget Thornico

"So I've said: Forget Thornico and look at the asset you've financed, and that's a ship. And we've found solutions every time. All creditors and suppliers are paid. The only ones who aren't paid are the financial creditors, who'll have to accept that they're getting paid less for some years, and then we hope for better times. I've stopped feeding the financial creditors," he says.

Negotiations with banks have led to Thornico selling a series of vessels in 2016 and this year, as per the banks' request. The sale resulted in a considerable loss due to the extremely low asset values in the distressed market for project vessels. This is also a main factor behind the massive loss booked in 2016.

Several years of big deficits in Thorco, and a need for a capital of DKK 250 million from Thornico back in 2015, made the Stadil family split the carrier into two in 2016 to isolate the financially draining ownership of vessels in independent companies.

Rickmers in firesale of MPP vessels to Zeaborn 

German banks in particular have billions on the line in the collapsed multipurpose sector, and these banks are also driving the consolidation currently taking place, especially in Germany.

English Edit: Daniel Logan Berg-Munch

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