Rickmers – BT
Rickmers opts to conserve cash, keeps Q3 DPU at 0.6 US cent
RICKMERS Maritime, the last shipping trust to report its third-quarter results, decided to stay conservative in income distribution despite posting steady results for the three months ended Sept 30.
The group decided to maintain its Q3 distribution per unit (DPU) at Q2’s level of 0.6 US cent. This is 73 per cent lower than the DPU of 2.25 US cents for Q3 2008.
‘While the trust has turned in a strong performance for the third quarter, we do have unresolved financing issues, and until a solution is found, it would be in the interest of the trust and our unitholders to continue our cash conservation efforts,’ said Thomas Preben Hansen, CEO of trustee-manager Rickmers Trust Management.
Rickmers continued to do well operationally in the third quarter, with a 43 per cent year-on-year increase in charter revenue to US$38.1 million from US$26.5 million – resulting in a 46 per cent rise in cash flow from operating activities to US$28.6 million as it maintained a high fleet utilisation rate of 99.9 per cent. Income available for distribution accordingly rose 36 per cent year-on-year to US$19.2 million.
Among the challenges that Rickmers is facing is that Maersk, the charterer of Maersk Djibouti, has given notice of early termination of its charter and will re-deliver the vessel to the trust on Feb 1, 2010. Rickmers is in the process of marketing the vessel for future employment but, given the global economic and trade slowdown and the oversupply of tonnage in the container industry, ‘this will not be an easy task and Maersk Djibouti will definitely be at a charter level lower than she was at’, said Mr Hansen. There is a risk the vessel may not find immediate employment or will secure employment only at a significantly reduced charter rate.
Financing issues are also impacting on the deliveries of Rickmers’ series of 4,250-TEU newbuildings. One of them, Hanjin Milano, has been completed and delivered to Polaris Shipmanagement, a Rickmers Group unit, from which the vessel was purchased. Hanjin Milano has begun its charter with Hanjin Shipping and is currently warehoused by Polaris until discussions with the banks have been finalised.
The future delivery of two 4,250 TEU vessels chartered to Hanjin, which are expected in December and early 2010, may likewise be affected, pending finalisation of discussions with the banks.
Rickmers has previously highlighted its value-to- loan covenants, the refinancing of its US$130 million top-up loan facility maturing in April and the financing of its existing order book as key issues to address. No agreement has been reached yet.