Seanergy Reports First Profitable Quarter Since 2011
Seanergy Maritime Holdings Corp. announced its financial results for the first quarter ended March 31, 2013.
Financial Highlights:
First Quarter 2013
-Net Revenues of $5.6 million.
-EBITDA of $3.8 million.
-Net Income of $1.1 million.
-Debt reduction of $31.8 million, or approximately 15% of the company’s outstanding indebtedness.
Management Discussion:
Stamatis Tsantanis, the company’s Chief Executive Officer, stated:
“I am pleased to announce our first profitable financial quarter since 2011, despite the challenging dry bulk market conditions. Our net income was $1.1 million compared to a net loss of $6.4 million for the same period last year. During the first quarter of 2013 charter rates continued to deteriorate and our average daily Time Charter Equivalent (“TCE”) rate decreased to $6,004 per vessel as compared to $9,546 in the first quarter of 2012.
“Regarding our financial restructuring, since the beginning of 2012 and as of the date of this press release, we managed to reduce our indebtedness to $176.9 million, from $346.4 million, through finalized agreements with three out of our five lenders. In addition, we have entered into an agreement with our fourth lender for the sale of three MCS’s vessel owning subsidiaries in exchange for a nominal cash consideration and full satisfaction of the underlying loan of approximately $38 million. After giving effect to this transact ion, we will have reduce d our indebtedness by approximately 61% to $135 million. We continue discussions with our remaining lender, aiming to reach a solution that will enable Seanergy to complete the restructuring of its outstanding debt.”
Christina Anagnostara, the company’s Chief Financial Officer, stated:
“During the first quarter of 2013, net revenues were $5.6 million, 68% lower than in the same period in 2012 reflecting the smaller size of our fleet and a 37% reduction of the daily TCE.
“For the first quarter of 2013, net income amounted to $1.1 million compared to a net loss for the first quarter of 2012 of $6.4 million. After adjusting for $5.5 million gain on the sales of four vessel owning subsidiaries and $0.9 million loss on vessel impairment, Seanergy’s net loss was $3.6 million compared to a net loss of $4 million in the first quarter of 2012 after adjusting for $2.3 million loss on sale of vessels. The reduction reflects the significant decrease in interest and finance costs to $2.2 million from $3.4 million in 2012.
We continue our efforts to achieve a viable financial structure that will facilitate Seanergy’s ability to benefit from the eventual rebound in shipping markets. We believe that the recent sale of our four Handysize owning subsidiaries and the forthcoming sale of three additional Handysize owning subsidiaries, in full satisfaction of the associated loan facilities, are positive for Seanergy as they are expected to bring our total indebtedness down to approximately $135 million.”
First Quarter 2013 Financial Results:
Net Revenues
Net revenues for the first quarter of 2013 decreased to $5.6 million from $17.4 million in the same quarter of 2012. The decrease of 68% in net revenues reflects lower freight rates earned in the dry bulk market as compared to the same quarter last year, as well as a 57% reduction in operating days that resulted from the sale of vessel owning subsidiaries.
EBITDA and Adjusted EBITDA
Adjusted EBITDA was negative $0.8 million for the first quarter of 2013, excluding $5.5 million of gains resulting from the sales of subsidiaries and $0.9 million of non-cash impairment losses associated with the African Oryx sale. Including the aforementioned items, EBITDA stands positive at $3.8 million. For the first quarter of 2012, Seanergy recorded Adjusted EBITDA of $4.9 million, while EBITDA was $2.5 million.
Net Income/Loss
For the first quarter of 2013, net income amounted to $1.1 million or $0.09 per basic and diluted share, as compared to a net loss for the first quarter of 2012 of $6.4 million, or $0.54 per basic and diluted share, based on weighted average common shares outstanding of 11,958,063 basic and 11,959,282 diluted for the first quarter of 2013, and 11,803,933 basic and diluted for the first quarter of 2012.
For the first quarter of 2013, adjusted net loss excluding gains from the sales of subsidiaries and non-cash impairment losses was $3.6 million, as compared to an adjusted net loss of $4.0 million in 2012.
Debt Reduction
Seanergy ended the first quarter of 2013 with $176.9 million of outstanding debt. This reflects the reduction of our outstanding indebtedness by $31.8 million, during the three month period ended March 31, 2013.
First Quarter 2013 Developments:
Sale of Subsidiaries in Satisfaction of DVB Loan
On January 29, 2013, Seanergy’s subsidiary, Maritime Capital Shipping Limited (“MCS”), sold its 100% ownership interest in the four companies that owned the Handysize dry bulk vessels Fiesta, Pacific Fantasy, Pacific Fighter and Clipper Freeway for a nominal consideration.
In exchange for the sale, approximately $30.3 million of outstanding debt was discharged.
The buyer was a third-party nominee of the lenders under the senior secured credit facility with DVB Merchant Bank (Asia) Ltd., as agent.
In connection to the sale, the company’s board of directors obtained a fairness opinion from an independent third party. Impairment of African Oryx the company assessed the recoverability of the carrying value, including unamortized deferred dry docking costs, of the vessel African Oryx due to its sale in the second quarter of 2013 and, as a result, recognized an impairment loss of $0.9 million.
Subsequent Events:
Sale of African Oryx
On April 10, 2013, Seanergy sold the African Oryx, a 24,112 DWT Handysize vessel built in 1997. Gross proceeds amounted to $4.1 million and were used to repay debt.
Receipt of NASDAQ Notice
The company received a written no tification from the Nasdaq Capital Market, dated May 1, 2013, indicating that the company is not in compliance with the requirement to maintain a minimum of $2.5 million in stockholders’ equity for continued listing on the Capital Market, pursuant to Nasdaq Listing Rule 5550(b)(1). The company reported negative stockholders’ equity of $101.6 million for the fiscal year ended December 31, 2012. In addition, as of April 30, 2013, the company did not meet the alternative standards for continued listing, including a market value of listed securities of at least $35 million, pursuant to Nasdaq Listing Rule 5550(b)(2), or net income from continuing operations of at least $500,000, pursuant to Nasdaq Listing Rule 5550(b)(3).
In order to cure this deficiency, the company must submit a plan to Nasdaq to regain compliance by June 17, 2013. If the plan is accepted by Nasdaq, the company may be granted a grace period to regain compliance of up to 180 days, expiring on or before October 28, 2013.
The company is currently preparing a comprehensive plan that will be submitted to Nasdaq in order to regain compliance with the continued listing standards of the Capital Market.
Agreement for the Sale of Subsidiaries in Satisfaction of UOB Loan
On May 6, 2013, Seanergy’s subsidiary, MCS, entered into an agreement with its fourth lender (United Overseas Bank) for the sale of three vessel owning subsidiaries that own the Handysize vessels African Joy, African Glory and Asian Grace, in exchange for a nominal cash consideration and full satisfaction of the underlying loan. The sale is subject to final documentation and is expected to close within the second quarter of 2013 or any other date as may be agreed between the company and the lender. Upon the closing of the transaction approximately $38 million of the company’s outstanding debt will be discharged and the guarantee provided by MCS will be fully released.
Prior to the sale of the shares, the company’s board of directors will obtain a fairness opinion from an independent third party.
Ability to Continue as a Going Concern
Over the past year and as of the date of this press release, the company has experienced significant losses and reduction in cash which has affected its ability to satisfy its obligations due to shipping sector volatility and economic difficulties. The company experienced significant reduction in cash flow, as it had to re-charter its vessels at low prevailing rates.
As a result of the above, the company defaulted under its loan agreements in respect of certain covenants (including, in some cases, the failure to make principal and interest payments, the failure to satisfy financial covenants and the triggering of cross default provisions). To date, the company has not obtained waivers of all these defaults from its lenders. Since January 1, 2012, the company has sold or otherwise disposed a total of 13 vessels (or the owners hip of certain of its vessel owning subsidiaries) and it has entered into an agreement to sell three additional vessel owning subsidiaries in connection with its debt restructuring. Proceeds from the sale of remaining vessels are expected to be insufficient to fully repay the related debt and, therefore, it is likely that the company will continue to have significant debt unless it enters into satisfactory arrangements with its lenders for the discharge of all such obligation s. During the restructuring process, the lenders have continued to reserve their rights in respect of events of default under the loan agreements. The lenders have not exercised their remedies at this time, including demand for immediate payment. The lenders, however, could change their position at any time. As such, there can be no assurance that a satisfactory final agreement will be reached with the lenders in the restructuring, or at all.
While the company continues to use its best efforts to restructure the debt of its remaining lender, there can be no assurance that the negotiations will be successful or that it will obtain waivers or amendments from its lender. Failure to obtain such waivers or amendments could materially and adversely affect the company’s business and operations. Furthermore, the impact of the final terms of any restructuring is uncertain. Due to the above, the company’s $176.9 million outstanding debt as of March 31, 2013 is classified as current.
The full report can be viewed online here: seanergymaritime.com/press/pr12062013.pdf.
