Rickmers – BT

Rickmers cuts Q1 DPU by 73% to conserve cash

It expects funding issue to be resolved with recent signing of 2 term sheets

RICKMERS Maritime kept its income distribution conservative in continued efforts to conserve cash with a distribution per unit (DPU) of 0.57 US cents – 73 per cent lower compared to Q1’09 – for the first quarter ended March 31.

However, its management stressed that the trust has recently signed two important term sheets that are finally expected to resolve its funding issues.

Last week, Rickmers announced that a term sheet has been signed with its lending banks for a five-year extension of its US$130 million top-up loan facility – which matures April 30 – and a waiver of its value-to-loan covenants for up to three years.

Another term sheet has also been signed with Polaris Shipmanagement Company, which is a wholly owned subsidiary of the Rickmers Group, to discharge the trust from its obligations to purchase three 4,250 TEU and four 13,100 TEU container ships worth US$918.7 million.

As such, it will pay Polaris compensation of US$64 million, of which US$15 million will be paid in cash and the balance converted into an interest bearing convertible loan to the trust, maturing in 2014.

During the quarter, income available for distribution slipped 8 per cent to US$17.93 million while net profit took a 51 per cent tumble to US$5.43 million, mostly due to US$5.3 million of unrealised losses from two of its interest rate swaps. Earnings per unit were 1.28 US cents, down from 2.61 US cents.

Charter revenue was 14 per cent higher at US$37.16 million compared to the previous corresponding quarter, thanks to maiden contribution from its 4,250 TEU containership Hanjin Newport, as well as full-quarter contributions from two 4,250 TEU vessels.

The Kaethe C Rickmers, a 5,060 TEU containership (formerly Maersk Djibouti), has also been fixed on a 12-month charter, although at a lower rate.

The trust continued to maintain a high level of efficiency on the operations front with no off-hire days in Q1’10, Rickmers said.

Cash flow from operating activities increased by two per cent to US$27.64 million thanks to higher charter revenue, though this was offset by increased expenses.

‘With the return of consumer demand we have good reason to remain cautiously optimistic about the prospects of the container shipping industry. Our focus in the coming months is to finalise documentation and seek the necessary approvals to conclude the various agreements with our creditors,’ highlighted Thomas Preben Hansen, CEO of trustee-manager Rickmers Trust Management.

Rickmers Maritime’s portfolio currently comprises 16 containerships, of which 15 are chartered out for periods of between seven and 10 years.