2010 a time of reckoning - OCBC has a shipping trust/REIT analyst (Meenal) who is very competent. I like her reports. She put out one this morning on Rickmers and other ship trusts. Summary: Rickmers Maritime (RMT) is in discussions with key stakeholders including lenders and its sponsor on 1) loan-to-market value covenants; 2) a US$130m facility maturing in April; and 3) the outstanding Hanjin and Maersk acquisitions contracted at US$918.6m. RMT\'s sponsor is currently warehousing all incoming vessel deliveries while these discussions continue. We are increasingly concerned about charterer CMA CGM, which contributed 39% of RMT\'s 9M09 revenue, and is in the midst of a large debt restructuring exercise. The liner could potentially seek rate renegotiations from RMT - if the trust yields, this could stress cash flows. As discussions drag out, deadlines creep closer. The April loan maturity is of particular concern to us as we believe lenders will take a harsher stance on ship owners in 2010. In our opinion, resolution of these issues is tough ? and potentially dilutive to existing investors. Maintain SELL rating with a probability-weighted S$0.15 fair value estimate (down from S$0.16 due to a weaker USD) that considers the likelihood and consequences of a distressed scenario. (Meenal Kumar)
Ship sinking....after auditors issued report on their concerns. Are the issues new? I doubt it. So, can Rickmers survive the financing challenges? Anyone knows this business well? This sharp drop ( 24%!!! ) in share price today ( now 31 c) may be a buying opportunity for the daring and those who understand the issues. I dont.....
Hi all, am new here just signed up today. Anw, all analysts negative on RMT but its the kind of stock which Peter Lynch said dont buy when it gets lower.
- Price dipped in 09 due to DPS slash
- MDC clause results in higher interest costs - $32m funding gap for Hanjin vsls (1 yr) - $700m + of ships not financed(Maersk)(1 yr) - $130m top up fund to pay off by Apr 2010
- IPO term $360m loan amortize only post 2017 - Existing ships are on mortgage - Cash at $110m - adjusted income for distribution ought to be lower since they have been losing money most times on hedges. (look at net income as safest bet, approx 30-40m income)
Typically ships mortgage on a LTV basis, if shipping is poor, ship value dips and owner has to top up the remainder. Most importantly, firm is in container ships which will see a very slow recovery due to surplus of such ships and slow recovering demand. THe firm has LT contracts for chartering but its 140+m not 140b error stated in presentations.
Funding is the key issue and hence the going concern note by auditors. Lastly, the bulk of the notes are in L+, if rates were to move higher (not unlikely), RMT will be squeezed by interest expense. This stock has simply too many variables that may change wildly. Those who are looking may wish to wait out further. Those who are holding, if there's better bets, can rotate.
By Jonathan Burgos March 24 (Bloomberg) -- Yangzijiang Shipbuilding Holdings Ltd., a China-based shipbuilder, said it's not affected by financial difficulties at Rickmers Maritime Singapore as ships ordered by its German parent haven't been canceled. Yangzijiang is not affected by what is happening to Rickmers in Singapore as the orders to Yangzijiang are from Rickmers Holdings GmbH, the company said in an e-mailed statement.
Rickmers Holdings holds 17.5 percent of Rickmers Maritime Singapore, according to Bloomberg data. Rickmers Singapore'¢s liabilities may cast significant doubt on the ability of the trust to continue as a going concern, PricewaterhouseCoopers told the shareholders of the Singapore-listed shipping trust on March 22. It has existing capital commitments of $780.7 million and bank borrowings of $128.7 million that are due in the next 12 months, the auditor said. Yangzijiang said today it is building four container ships for Rickmers Holdings. Payments are up to date and the vessels are scheduled for delivery this year and next year, it said. Yangzijiang slipped 1.7 percent to S$1.16 as of the 12:30 p.m. trading break in Singapore. Rickmers Maritime sank 1.6 percent to 30 Singapore cents, adding to yesterday's 26 percent slump.
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