In light of the prevailing extreme shipping market conditions, Hong Kong-based Jinhui Shipping and Transportation Limited has initiated restructuring discussions with its lenders in an effort to manage liquidity risk and preserve its financial resources.
The company said that, although it was able to service its debt obligations, including principal and interest payments, as at March 31, Jinhui Shipping’s liquidity would “become tight” if the current shipping market conditions continue.
The discussions are ongoing and are at an advanced stage, the company said, adding that it expects to finalize the potential restructuring before the end of the second quarter of 2016.
As the dry bulk shipping market experienced an unprecedented depressed period and freight rates kept declining to unexpectedly low levels, Jinhui Shipping saw its revenue for the first quarter of 2016 plunge by 55 percent to USD 9.9 million from USD 22.2 million reported in the same period a year earlier.
The company’s consolidated net loss was at USD 18.5 million for the quarter, compared to the consolidated net profit of USD 4.7 million in the first quarter of 2015.
The average daily time charter equivalent rates earned by the company’s fleet dropped by 57 percent to USD 2,934 in the quarter, compared to USD 6,749 a year earlier.
Furthermore, Jinhui Shipping entered into a memorandum of agreement to dispose of a 2000-built Supramax at a consideration of USD 2.9 million in late March 2016. The loss on disposal of the vessel was USD 4.5 million, which will be accounted for in the second quarter of 2016, according to the shipping firm.
As at May 30, 2016, the company’s fleet consisted of 35 owned vessels.
Looking ahead, Jinhui Shipping said that it would continue to focus on maintaining a strong financial position and an optimal fleet size “in accordance to our future expectations of the operating environment.”