OSLO-LISTED German container line
MPC Containers Ships is seeking approval from its bondholders and
lenders for a recapitalisation plan designed to improve liquidity and provide
the company time to optimise its fleet and position for an anticipated market
recovery following the coronavirus outbreak.
The company, which operates 68 feeder container
ships ranging between 1,000 and 3,000 TEU, said that it needs the approval of the plan or that
it might be forced into bankruptcy and the sale of its assets.
MPC Containers Ships said it has
experienced a sharp delcine in cargo volumes due to the ongoing Covid-19
pandemic which is expected to continue to have a signifcant negative impact on
the company.
Idle container ship capacity they
estimated in their filing to the bondholders has increased by approximately 6 per
cent at the end of 2019 to more than 11 per cent in mid-May and feeder charter
rates are down 26 per cent and continue to decline.
The restructuring and
recapitalisation plan is designed to strengthen the company's balance sheet and
bridge the short-term liquidity requirements. The key components include US$15
million in new cash equity plus additional cash equity from any subsequent
repair issue. The company is also seeking amendments for its bonds, including
waivers, extended maturity, and payment-in-kind interests, reports The Maritime Executive, Fort
Lauderdale, Florida.
Without these actions, the
company warns that the market situation is expected to adversely impact its
ability to be in compliance with financial covenants in its bonds and other financial
arrangements. Based on current financial forecasts the company projects it will
breach its minimum liquidity covenant in July and face an operational liquidity
shortfall.
MPC
Container Ships commenced operations
in April 2017 and has since grown into one of the largest owners of container
feeder vessels with an estimated 15 per cent market share. Its feeder services
support the primary shipping services by connecting ports on intercontinental
shipping lanes with one or more smaller ports, which are not serviced by the
main line vessels. MPC Container Ships' vessels are chartered out on time
charter contracts to global liner shipping companies and regional carriers.
In May, the company reported a
net loss of nearly $11 million on operating revenues of $46 million. Commented
at the time, CEO
Constantin Baack said: "The
rapid spread of Covid-19, the preventative measures imposed in various
countries to counter the pandemic and the inevitable impacts on containerised
trade of goods have led economic conditions to deteriorate significantly
compared with our expectations at the end of 2019. The severity and fluidity of
the situation makes it challenging to anticipate the timing and shape of a
recovery."
Source : HKSG.
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