Singapore-listed containership owner and operator Rickmers Maritime Trust (RMT) has become the latest casualty in a growing list of boxship owners with toxic vessel assets that are unable to generate sufficient funds to pay their outstanding debt obligations, according to Alphaliner.
While numerous privately-owned shipowners and KG vessel funds have already filed for bankruptcy in the last three years due to the collapse in containership charter rates and asset values, RMT is the first publicly listed owner to admit that it is technically insolvent and that its assets are currently only worth their scrap values.
According to RMT, its fleet of 16 panamax containerships of 3,400-5,000 TEU, with an average age of only nine years, would be worth a maximum of only USD 140 million in a distressed sale, against a book value of USD 640 million.
Secured lenders will likely only recover 50 – 65% of the debt owed, while bondholders and shareholders will suffer a total loss on their investments if the assets are liquidated.
In an attempt to buy time, RMT has proposed that its bondholders exchange USD 100 million of notes due in May 2017 to USD 28 million perpetual notes with no maturity date that are convertible to 20% of the shares of the company.
If the bondholders do not accept the proposal, the Singapore-listed company said it will not be able to obtain the secured lenders’ agreement to refinance the rest of its outstanding senior debt of USD 281 million, of which USD 180 million is due in March next year.
Alphaliner said that the proposal will likely be resisted by the bondholders as it favours the equity owners, who will still retain 80% of the company shares, while buying additional time in the hope that the panamax containership market will enjoy an improbable recovery.