Marine Link
Thursday, December 8, 2016

Low Commodity Prices Drive 2016 Defaults, Oilfields to Shut

Commodity prices at multi-year lows drove a rise in defaults early this year, and the oil sector could see still more unprofitable fields shut, industry analysts said on Wednesday. Debt defaults in the commodity sectors rose in the first two months of 2016 from the same period a year ago, credit ratings agency Moody's said. "Of the 18 defaults since the start of the year, half have been in commodity sectors," said Sharon Ou, a Moody's vice president and senior credit officer, in an e-mailed statement late on Tuesday. Five of the defaults were in the oil and gas sector while four were in metals and mining, she said. For the same period last year, there were 11 defaults in total and only one in commodities, Ou said.

Trico Marine Services Receives Notice of Default and Guarantee Demand

Trico Marine Services, Inc. announced the issuance of a notice of default and guarantee demand by Bear Stearns Corporate Lending Inc. ("Bear Stearns"). Bear Stearns is an administrative agent under the $55 million term loan (the "Term Loan") issued by a group of bank lenders to Trico's two primary domestic subsidiaries in February 2004. The Company is a guarantor of its subsidiaries' obligations under certain provisions of the Term Loan. Bear Stearns' notice of default and guarantee demand was issued on the basis of an earlier default arising from the Company's non-payment of interest due on its $250 million 8.875% Senior Notes due 2012 in June 2004.

Sainty Marine in Troubles Waters

 Image: Sainty Marine

Financially troubled Chinese shipbuilder Sainty Marine has announced Bank of China and China Exim Bank have frozen its bank accounts. Shenzhen-listed Sainty Marine has also announced that it has reached an agreement with Dutch ship investment firm, Universal Marine, for the cancellation of four 2,350teu containerships. Universal Marine ordered the vessels at Sainty Marine in March 2014, however, it has been unable to secure the financing to start the newbuilding project, which has led to the cancellation of the vessels. No compensation is involved in the agreement.

S&P: More Shipping Companies Likely To Default

Depressed shipping market conditions are likely to cause more shipping companies to default on junk bond issues, according to Standard & Poors (S&P).

Greek Shipping Company Gets Hit With Defaulted Junk Bonds

A Greek-owned shipping company said on Thursday it would seek damages from holders of its defaulted junk bonds who last week "arrested" one of the company's ships as security for a $175 million repayment claim. The 25,900 gt Ocelotmax has been held in the port of Pusan, Korea since August 4, and is unable to trade until released. Enterprises Shipholding defaulted on the bond's $7.76 million semi-annual interest coupon in July. "Due to this wrongful attachment (arrest), the company has immediately experienced a loss of hire of thousands of dollars per day and exposed itself to... massive claims by cargo interests," said an Enterprises statement on Wednesday. "The company intends to seek compensation for all damages arising out of the attachment," it added.

New Containership Arrested

Bondholders who financed the shipping company Enterprises Shipholding have "arrested" one of the company's newest containerships to force repayment of a $175 million junk bond on which it defaulted in June. The 25,900 gross ton Ocelotmax has been held in the port of Pusan, Korea since August 4, and is unable to trade until released. "The Ocelotmax was arrested to secure the bondholders' unquestionable right to judgement and payment of their claims against Enterprises," said a statement from the bondholders. The bondholders are largely U.S.-based investment funds, while Enterprises Shipholding is controlled by Greek shipping entrepreneur Victor Restis and is incorporated in Liberia.

New Containership Arrested

Bondholders who financed the shipping company Enterprises Shipholding have "arrested" one of the company's newest containerships to force repayment of a $175 million junk bond on which it defaulted in June. The 25,900 gross ton Ocelotmax has been held in the port of Pusan, Korea since August 4, and is unable to trade until released. "The Ocelotmax was arrested to secure the bondholders' unquestionable right to judgement and payment of their claims against Enterprises," said a statement from the bondholders. The bondholders are largely U.S.-based investment funds, while Enterprises Shipholding is controlled by Greek shipping entrepreneur Victor Restis and is incorporated in Liberia.

FSL Trust Making the Best of It in Q3 2013

FSL Singapore: Photo courtesy of FSL Trust

Despite a caveat by auditors as to whether FSL Trust may continue as a going concern, due to the conditions of a loan covenant, the ship-owning trust has continued to ensure that its vessels have generated a return in the third quarter of 2013. The Trust suffered a 3QFY13 loss of US$8.9 million. This was partly due to recognition of an impairment loss of US$3.6 million caused by the lease defaults for two dry bulk carriers. Bareboat charter revenue fell 23.6% YoY to US$13.9 million from US$18.3 million due to the payment default of US$3.0 million for two crude oil tankers…

Are You Inadvertently Operating on Different AIS Channel?

Image courtesy USCG

Between July 27 and August, 2010, while conducting development testing of its Nationwide Automatic Identification System (NAIS), the Coast Guard inadvertently tele-commanded most AIS users transiting the Eastern United States between lower Connecticut and North Carolina to switch to AIS frequencies other than the AIS default frequencies (161.975 MHz - Channel 87B - 2087 and 162.025 MHz - Channel 88B - 2088). As a result, those users within uniquely defined channel management regions…

Stolt-Nielsen S.A. Resolves Dispute with Noteholders

Stolt-Nielsen S.A announced that the company had resolved its dispute with its senior noteholders regarding defaults asserted by the noteholders. "We are pleased that the noteholders have agreed to waive their claims of default and to modify some loan covenants to permit the Company to make certain investments in joint ventures," said Niels G. Stolt-Nielsen, Chief Executive Officer of SNSA. "In return, the Company has agreed to provide the noteholders with certain security, which can be released if the Company obtains an investment grade rating on its senior notes and under certain other circumstances. SNSA can now focus on its businesses and capitalize on the improving parcel tanker market worldwide." The Company expects to file its Annual Report on Form 20-F on June 16, 2004.

Enterprise Containership Detained; Repayment of $175 Million Bond Forced

Bondholders who financed the shipping company Enterprises Shipholding, said on Tuesday they had arrested one of the company's newest containerships, the Ocelotmax, to force repayment of a $175 million bond on which it defaulted in June. "The Ocelotmax was arrested to secure the bondholders' unquestionable right to judgment and payment of their claims against Enterprises," said a statement from the bondholders. "While the bondholders have initiated multiple efforts to address the default with the company's management and directors, the company has utterly failed to respond to such efforts," it added. Enterprise's Director and CFO Kostas Koutsoubelis denied the company had failed to respond. "It is us who tried to initiate discussions with the bondholders," he said.

Pegasus Shipping Mulls Bond Restructuring

Panamax tanker specialist Pegasus Shipping is reportedly discussing restructuring its $150 million 1997 junk bond issue with noteholders. Officials said the company is using a 30-day grace period in relation to a coupon payment that was due on Nov. 15. Discussions also included proposals to capitalize on current market sector weakness and the introduction of new capital, officials said. Last week ratings agency Moody's downgraded Pegasus' senior secured debt rating on the company's 11.875 percent first preferred ship mortgage notes due 2004 to Ca from B3 on fears of a payment default. Company officials said that competitive conditions in the Panamax tanker markets exerted pressure on rates…

S&P's Cuts Pacific & Atlantic Ratings

Standard & Poor's lowered its corporate credit ratings on Pacific & Atlantic Holdings Inc. to 'SD' (selective default) from double-'C'. At the same time, the ratings on the company's 11.5% $128 million first preferred mortgage notes, due 2008, were lowered to 'D' (default) from double-'C'. All ratings are removed from CreditWatch, where they were placed on March 2, 1999, with negative implications. The rating actions took place at the end of an extended grace period for the payment of the half-yearly interest installment on Pacific & Atlantic's first preferred mortgage notes. The company did not make the coupon payment due on Nov. 30, 1999.

Horizon Offshore Completes $77M Refinancing

Horizon Offshore, Inc. Inc. (the CIT Group). bears interest at LIBOR plus 4.5% per annum. unpaid interest due at maturity in March 2011. term loan facility agented by Manchester Securities Corp. March 2007 and related closing costs and fees. financings of this type.

Horizon Offshore Completes Refinancing

Horizon Offshore, Inc. has entered into a $77.4 million secured term facility agented by The CIT Group/Equipment Financing, Inc. The credit facility has a five year term and bears interest at LIBOR plus 4.5% per annum. The credit facility is payable in monthly installments of $0.9 million, plus interest, for the first 24 months beginning March 31, 2006 and $0.6 million, plus interest, for the next 35 months, with the remaining principal and unpaid interest due at maturity in March 2011. The proceeds from the facility were used to repay the outstanding amount under the Company's previous CIT Group facility maturing in March 2006 and outstanding amount under the $70 million senior secured term loan facility agented by Manchester Securities Corp.

Senate Conducts Hearing on Title XI Loan Guarantee Program

The Senate Commerce Committee conducted a hearing on the Title XI Loan Guarantee Program

Statutory Change Through Codification

The U.S. Court of Appeals for the First Circuit ruled that Congress changed the default wage statute when it codified portions of Title 46, U.S. Code in 1983, despite any indication in the legislative history that a change was intended. In the instant case, various fishermen sued the owner of the fishing vessel for failure to make a written fishing agreement with each fisherman employed prior to the voyage. The fishermen claimed damages under the default wage statute. Until the 1983 codification, this provision had various exemptions, including one for seamen entitled to earn lay shares. During the codification (which included repeal of the old statute), the other exemptions were relocated, but the exemption for seamen entitled to earn lay shares was not.

Ship Financing Under Posidonia Spotlight

A few days after Aggelikousis Group’s US$1.25 billion credit facility with six banks for the financing of nine LNG carriers was made public, delegates of a shipbuilding conference held during the fourth day of this year’s Posidonia Exhibition heard that increasing defaults on existing financing agreements between shipowners and lenders will ultimately lead to an era of no new lending. Speaking at the ‘Building for the Future 2012’ shipbuilding conference, on the penultimate day of Posidonia 2012, Jean Richards, CEO of Second Wind Shipping Limited, said that while finance is still available through traditional banks, Chinese banks, bond and equity markets, financiers tend to specialize in specific asset types while setting demanding preconditions.

Eagle Bulk Gets Another Few Days

Photo: Eagle Bulk Shipping Inc.

Lenders to Eagle Bulk Shipping Inc gave it a few more days to negotiate a deal to boost its liquidity and avoid default. The supramax specialist Eagle Bulk has extended its forbearance and standstill agreement with its creditors by a further three days to give it more time to find a solution to the money it owes in loans. This is the fifth time Eagle Bulk has extended the period with its creditors. According to Zacks Investment Research, “Eagle Bulk Shipping is the largest U.S. based owner of Handymax dry bulk vessels.

Otto Marine Launches Second Arbitration Proceedings

Photo: Otto Marine

Singapore-based offshore marine group Otto Marine, which is in the midst of a takeover offer by its chairman, has taken a second legal action against payment default, reports Strait Times. Otto Marine said it has commenced arbitration proceedings against Vettal Mega Services for failing to pay around US$6 million (S$8.05 million) in charter fees for tugboats Swordfish 5 and Go Enif. Just last week, Otto also said it has started arbitration proceedings against Robert Knutzen Shipholdings Ltd (RKSL) for alleged default on charter parties.

Flirting with Default, Argentina Enjoys Oil Drilling Boom

Holders of Argentina's  defaulted debt and their supporters have warned the country risks being frozen out from international capital markets unless it finds a way to solve its legal problems by the July 30 deadline. But away from the bad-tempered litigation in U.S. courts, which has dominated the news about Argentina for months, the country is experiencing an oil drilling boom as international companies seek to cash on its huge shale resources. In June, there was an average of 107 rigs drilling for oil or gas in the country, the highest number operating since records began in 1982, and more than double the number at the start of 2012, according to oil field services company Baker Hughes (Chart 1). Most were hunting for oil rather than gas.

Evergreen Holding Group May Miss Bond Payment

Evergreen Holding Group, an unlisted company that specialises in building boats, issued a warning on Friday that it may have trouble making coupon and interest payments on a bond maturing on May 15. The company said in a statement on the website of the China interbank market operator that it was unsure if it would be able to make payment in regard to a 0.4 billion yuan ($61.6 million) short-term commercial debt due on May 15. The announcement follows a series of bond default warnings and cancelled issuances in China as pressure on the bond market rises. Reporting by Shanghai Newsroom

Vinashin Asks Bondholders to Write Off Debt

A report from Bloomberg sited a bondholder who met with Vietnam Shipbuilding Industry Group, saying the state-owned company, with more than $4b in debt, asked holders of a local-currency bond it defaulted on in April to write off as much as 90% of the money owed. Source: Bloomberg


Maritime Reporter Magazine Cover Nov 2016 - Workboat Edition

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