B+H Ocean Carriers Ltd. (NYSE AMEX: BHO) Today
reported that for the three months ended September 30, 2009, it
incurred charges against earnings totaling $35.0 million from the
sale of five non-core vessels either sold in that period or held
out for sale or sold in October 2009. The Company added that it was
considering the sale of one additional non-strategic vessel and
that it estimated that at present fair market value levels such
sale, if concluded, would generate a charge against earnings of
approximately $19 million.
The Company today reported net loss of $36.9 million or $6.65
per share basic and diluted, for the three months ended September
30, 2009 as compared to a net income of $8.8 million, or $1.28 per
share basic and diluted, for the three months ended September 30,
2008. EBITDA for the three months ended September 30, 2009 was $5.8
million as compared to $10.6 million for the comparable period of
2008. Basic earnings per share calculations are based on weighted
average shares outstanding of 5,555,426 and 6,853,826 respectively,
for the three months ended September 30, 2009 and 2008. There were
no dilutive securities at September 30, 2009.
The net loss of $36.9 million for the three months ended
September 2009 as compared with the net income of $8.8 million in
the comparable period of 2008 is predominantly due to a $9.8
million loss on sale of three MR product tankers and total
impairment charges of $25.2 million on one of the Company’s bulk
carriers and the last remaining MR tanker in the third quarter of
2009 versus an unrealized gain of $13.2 million on the fair value
of put options purchased to hedge charter rates and reduced by an
impairment charge of $5.9 million in the comparable 2008
period.
The Company reported net loss of $41.5 million or $7.47 per
share basic and diluted, for the nine months ended September 30,
2009 as compared to net income of $14.7 million or $2.15 per share
basic and diluted, for the nine months ended September 30, 2008.
EBITDA for the nine months ended September 30, 2009 was $16.9
million as compared to $53.2 million for the comparable period of
2008. Basic earnings per share calculations are based on weighted
average shares outstanding of 5,555,426 and 6,856,871,
respectively, at September 30, 2009 and December 31, 2008. There
were no dilutive securities at September 30, 2009.
The net loss of $41.5 million for the nine months ended
September 2009 as compared with net income of $14.7 million in the
comparable 2008 period is primarily due to a $9.8 million loss on
sale of three product tankers and total impairment charges of $25.2
million on one of the Company’s bulk carriers and the last
remaining MR tanker in third quarter of 2009 versus a gain on sale
of vessels of $13.3 million, an impairment charge of $5.9 million
and an unrealized gain of $8.5 million in the fair value of put
options purchased to hedge charter rates in the same 2008 period.
In addition, Time Charter Equivalent revenue decreased by $10.9
million in the nine months ended September 30, 2009 as compared
with the comparable period of 2008.
Summary Operating Data
(unaudited)
Nine Months ended September 30,
Three Months ended September 30,
2009
2008 2009 2008 Revenues:
TCE revenue
$ 49,377,321 $ 60,250,175 $ 15,488,074
$ 21,812,876 Other revenue 28,777
529,672 25,532 303,164 Total revenues
49,406,098 60,779,847
15,513,606 22,116,040
Operating expenses:
Vessel operating
expenses, drydocking and survey costs 28,607,980
30,766,706 8,339,972
10,463,046
Total ship days 3,174 3,649
1,105.32 1,196.00 Total on hire days
2,912 3,107 922.47
1,051.51 Total off hire days 263
541 182.85 144.49
Time charter equivalent
16,959 19,390 16,790
20,744 Vessel operating expenses ( daily) $
9,012 $ 8,432 $ 7,545 $ 8,748
Nine months ended September 30, 2009 (unaudited) versus
September 30, 2008 (unaudited)
Net Voyage Revenues
Net voyage revenues (voyage revenues minus voyage expenses)
decreased by $10.9 million to $49.4 million for the nine-month
period ended September 30, 2009, as compared to $60.3 million for
the nine-month period ended September 30, 2008. The decrease is
mainly attributable to the substantially lower freight market rates
for the product tankers and bulk carriers during the first nine
months of 2009 as compared to the first nine months of 2008. The
Company’s OBO fleet and M/T Sagamore are fully fixed for the
remainder of 2009 through various dates in 2011 and 2012 at
profitable levels.
Vessel operating expenses
Vessel operating expenses decreased $2.2 million or 7% for the
nine month period ended September 30, 2009 compare to the same
period of 2008. The decrease is mainly due to ownership of fewer
vessels during the period.
Loss on sale of vessels and impairment charge
The Company reported loss on sale of vessels of $9.8 million for
the nine-month period ended September 30, 2009 compared to an
aggregate gain on sale of vessels of $13.3 million reduced by an
impairment charge of $5.9 million for the same period ended
September 30, 2008. During the third quarter of 2009, the Company
sold three MR tankers.
On October 29, 2009, the Company completed the sale of one of
its two bulk carriers for $10.2 million. As a result of this sale,
the vessel is classified as held for sale at September 30, 2009 and
an impairment charge of $23.0 million is reflected in the
Consolidated Statements of Income for the third 2009 quarter. The
fourth MR is held for sale at September 30, 2009 and an estimated
impairment charge of $ 2.2 million is also reflected in
Consolidated Statements of Income in the third quarter 2009.
Equity in income of Nordan OBO II
The Company received a dividend amounting to $3.5 million from
Nordan OBO 2 Inc during the second quarter of 2009. BHO owns 50% of
Nordan OBO 2 Inc.
Three months ended September 30, 2009 (unaudited) versus
September 30, 2008 (unaudited)
Net Voyage Revenues
Net voyage revenues (voyage revenues minus voyage expenses)
decreased by $6.3 million to $15.5 million for the three-month
period ended September 30, 2009, as compared to $21.8 million for
the three-month period ended September 30, 2008. The decrease is
mainly attributable to the substantially lower freight market for
the product tankers and bulk carriers during the third quarter of
2009 as compared to the third quarter of 2008.
Vessel operating expenses
Vessel operating expenses decreased $2.1 million or 20% from the
three month period ended September 30, 2009 compare to the same
period of 2008. The decrease is mainly due to ownership of fewer
vessels during the period.
Recent Developments
During the third quarter of 2009, the Company decided
strategically that all its wet and dry vessels not covered by
profitable period time charters should be sold, due to the their
negative effect on the Company’s cash flow. The Company believes it
is taking the necessary steps to eliminate loss making operational
assets of the Company.
Three of Company’s four 25-year old product tankers were sold in
August and September 2009 and a $9.8 million loss on the sale was
reflected in the third quarter of 2009. The fourth of the product
tankers, M/T Aquidneck is expected to be sold during the fourth
quarter 2009. The Company prepared an undiscounted cash flow
analysis for the M/T Aquidneck and determined that the carrying
value of the vessel will not be recoverable and an estimated $2.2
million impairment charge was recorded in the third quarter
2009.
One of the Company’s two bulk carriers was sold in October 2009
for $10.2 million and an impairment charge of $23.0 million is
reflected in the third quarter of 2009. The second bulk carrier is
under consideration for sale, which could result in a further
impairment charge of approximately $19 million. Earnings relating
to operations of the bulk carriers were adversely affected by the
bankruptcy of charterers during 2008.
After the sale of these vessels, the Company looks forward to a
return to satisfactory levels of EBITDA in 2010 from its remaining
six vessels and from its new Accommodation Field Development
Vessel, which is due for delivery in the second quarter of
2010.
Following the sale of the bulk carrier in October 2009, the
$26.7 million term loan facility of Cliaship Holdings Ltd, a
wholly-owned subsidiary, which was the subject of a breach of the
EBITDA/Fixed Charges ratio covenant at June 30, 2009, was repaid in
full.
With respect to the Company’s $34 million term loan facility,
Boss Tankers Ltd, a wholly-owned subsidiary, was in breach of the
EBITDA/Fixed Charges ratio and the Minimum Value Ratio covenants at
June 30, 2009. With the consent of the lender, it sold three of its
four product tankers held as collateral during the third quarter,
which resulted in a loss of $9.8 million in the third quarter ended
September 30, 2009, and expects to sell the fourth vessel during
the fourth quarter of 2009. Following the sale of the four vessels,
it is expected there will be a remaining loan balance of
approximately $5 million. The Company is in negotiations with the
lender to revise the terms of this loan.
With respect to the Company’s $202 million reducing revolving
credit facility, OBO Holdings Ltd, a wholly-owned subsidiary, was
in breach of the EBITDA/Fixed Charges ratio covenant at June 30,
2009. The Company, on behalf of OBO Holdings Ltd, is in
negotiations with its lenders to revise the terms of this loan.
With respect to the Company’s $8,000,000 term loan facility,
Seapowet Trading Ltd., a wholly-owned subsidiary, was in breach of
the EBITDA/Fixed Charges ratio covenant at June 30, 2009. The
Company, on behalf of Seapowet Trading Ltd, is in negotiations with
the lender to revise the covenants of this loan.
With respect to the $27,300,000 term loan, Sakonnet Shipping
Ltd., a wholly-owned subsidiary, was in breach of the EBITDA/Fixed
Charges ratio covenant at June 30, 2009. The lender has
conditionally agreed to waive this breach.
Financial Statements
Consolidated Balance Sheets
Unaudited Audited ASSETS
September 30, 2009
December 31, 2008 CURRENT ASSETS:
Cash and cash equivalents 5,717,689
30,483,501 Marketable securities 233,779 233,779
Trade accounts receivable, less allowance for doubtful accounts of
$253,000 at September 30, 2009 and December 31, 2008
3,480,021 2,534,775 Vessel held for sale 10,185,000
17,735,000 Inventories 1,048,350 2,828,070
Prepaid expenses and other current assets 949,015
3,486,587
Total current assets 21,613,854
57,301,712 Vessels, at cost:
Vessels 280,898,014
358,800,247 Less - Accumulated depreciation (66,684,196)
(76,596,657) 214,213,818 282,203,590
Investment in Nordan OBO II Ltd
9,706,282 12,425,182 Other assets 2,070,135
2,858,860
Total
assets $ 247,604,089 $ 354,789,344
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 10,560,976 19,800,732 Accrued
liabilities 2,464,757 5,611,280 Accrued interest
641,217 510,754 Current portion of mortgage payable
and unsecured debt 110,928,454 160,291,230 Floating
rate bonds payables 13,500,000 15,500,000 Deferred
income 3,708,904 6,818,299 Other liabilities
66,896 109,523 Unsecured loan 1,250,000 -
Total current liabilities 143,121,204
208,641,818 Fair value of
derivative liability 3,772,626 4,982,914
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 20,000,000 shares
authorized; - - no shares issued and outstanding
Common stock, $0.01 par value;
30,000,000 shares authorized; 7,557,268
shares issued, 5,555,426 shares outstanding as of
September 30, 2009 and December 31, 2008
75,572 75,572 Paid-in capital 93,863,095
93,863,095 Retained earnings 25,066,591 66,564,545
Other Comprehensive income (2,183,198) (3,226,799)
Treasury stock (16,111,801) (16,111,801)
Total
shareholders' equity 100,710,259 141,164,612
Total liabilities and shareholders' equity $
247,604,089 $ 354,789,344
Unaudited Consolidated Income
Statements
For the nine For the nine
For the three For the three
months ended months ended
months ended months ended
September 30, 2009 September 30, 2008
September 30, 2009 September 30, 2008
Revenues:
Voyage, time and bareboat charter revenues $ 62,103,239
85,333,408 19,498,019
32,632,364 Other revenue
28,777 529,672 25,532
303,164 Total revenues
62,132,016 85,863,080
19,523,551 32,935,528
Operating
expenses:
Voyage expenses 12,725,918
25,083,233 4,009,945
10,819,488 Vessel operating expenses, drydocking and survey
costs 28,607,980 30,766,706
8,339,972 10,463,046
Vessel depreciation 13,148,749
15,476,061 4,210,948
5,929,624 Loss (gain) on sale of vessel
9,779,568 (13,262,590 )
9,779,568 - Charge for vessel
impairment 25,245,440 5,853,447
25,245,440 5,673,447
Amortization of deferred charges 6,904,446
3,591,079 1,887,487
1,085,504 General and administrative:
Management
fees to related party 849,716
905,104 274,248 304,977
Consulting and professional fees, and other expenses
3,069,934 3,454,757
1,063,352 1,008,797 Total
operating expenses 100,331,751
71,867,797 54,810,960
35,284,883
(Loss) income from vessel operations
(38,199,735 ) 13,995,283
(35,287,409 ) (2,349,355 )
Other income (expense):
Equity in
income of Nordan OBO II 781,101
1,017,864 470,527 379,961
Interest expense (5,688,927 )
(8,993,862 ) (2,057,011 ) (2,569,487 )
Interest income 18,032 1,052,255
1,435 233,835
(Loss) gain on trading marketable securities 63,205
(306,216 ) (57,145 )
(24,270 ) Loss on value of put option contracts
- 8,519,699 -
13,182,314 Gain on foreign currency
hedging transactions - (336,427
) - (162,931 ) Settlement of
foreign currency hedging transactions -
253,276 - 379
(Loss) gain on fair value of interest rate swap
109,870 (566,763 ) -
(24,168 ) Gain on debt extinguishment
1,418,500
Other income - 93,058
- 93,058 Total other
expenses, net (3,298,219 ) 732,884
(1,642,194 ) 11,108,691
Net
income (loss) $ (41,497,954 ) $ 14,728,167
$ (36,929,603 ) $ 8,759,336
Basic earnings
(loss) per common share $ (7.47 ) $ 2.15
$ (6.65 ) $ 1.28 $ (7.47 )
$ 2.15 $ (6.65 ) $ 1.28 Diluted
earnings (loss) per common share
Weighted average number of common shares
outstanding: 5,555,426 6,856,871
5,555,426 6,853,826
Diluted 5,555,426
6,856,871 5,555,426
6,853,826
EBITDA $ 16,896,500 $
53,230,715 $ 5,837,469 $ 10,573,055
Unaudited Consolidated
Statement of Cash Flows
For the nine For the nine
months ended months ended
September 30, 2009 September 30, 2008
CASH FLOWS FROM OPERATING
ACTIVITIES: Net (Loss) income $
(41,497,954 ) $ 14,728,167 Adjustments to reconcile
net income to net cash provided by operating activities:
Vessel depreciation 13,148,749
15,476,061 Gain (loss) on sale of
vessel 9,779,568 (13,262,590 )
Charge for vessel impairment 25,245,440
5,853,447 Amortization of deferred charges
6,904,446 3,591,079 (Gain) loss
on fair value of marketable securities (63,205 )
190,948 (Gain) on fair value of put option
contracts - (8,519,699 ) Loss on
fair value of foreign currency exchange contracts -
336,427 (Gain) loss on fair value of
interest rate swaps (109,870 ) 566,763
Gain on debt extinguishment (1,418,500 )
- Changes
in assets and liabilities: (Increase)
decrease in trade accounts receivable (945,246 )
2,501,155 Decrease (increase) in inventories
1,779,720 (867,989 ) Decrease in
prepaid expenses and other assets 2,537,572
175,674 (Decrease) in accounts payable
(9,239,756 ) (31,538,791 ) (Decreased)
Increase in accrued liabilities (3,146,523 )
4,694,916 Increase (decrease) in accrued interest
130,463 (416,385 ) (Decrease) in
deferred income (3,109,395 ) (592,012 )
(Decrease) in other liabilities (42,627 )
(90,748 ) Payments for special surveys
(3,423,905 ) (6,620,492 ) Total adjustments
38,026,931 (28,522,236 ) Net cash used
by operating activities (3,471,023 )
(13,794,069 ) CASH FLOWS FROM
INVESTING ACTIVITIES: Proceeds from
sale of vessel 29,693,993
38,116,601 Purchase and investment in vessels
(4,656,899 ) (6,163,982 ) Investment in vessel
conversions (335,158 ) (16,849,315 )
Investment in Nordan OBO II (781,101 )
(1,017,864 ) Dividend received from Nordan OBO II
3,500,000 1,500,000 Redemption of
marketable equity securities, net -
641,764 Net cash provided in investing activities
27,420,835 16,227,204
CASH FLOWS FROM FINANCING
ACTIVITIES: Payments for debt issuance
costs (21,348 ) (594,999 ) Mortgage
proceeds - 30,000,000
Proceed from unsecured loan 1,250,000
- Purchase of debt securities (581,500
) - Issuance of treasury shares
- (284,349 ) Payments of long-term debt
(49,362,776 ) (45,831,456 ) Net cash used in
financing activities (48,715,624 )
(16,710,804 ) Net decrease in
cash and cash equivalents (24,765,812 )
(14,277,669 ) Cash and cash equivalents, beginning of period
30,483,501 61,672,953 Cash and
cash equivalents, end of period $ 5,717,689 $
47,395,284
About B+H Ocean Carriers Ltd.
The Company was organized as a corporation under Liberian law on
April 28, 1988 to engage in the business of acquiring, investing
in, owning, operating and selling vessels for dry bulk and liquid
cargo transportation. As of November 1, 2009, the Company owned and
operated one dry bulkcarrier, one medium-range product/chemical
tanker, one Panamax product tanker and five ore/bulk/oil
combination carriers (“OBOs”). The Company also owns a 50% interest
in a company which is the disponent owner of a 1992-built 75,000
DWT Combination Carrier, effected through a lease structure. Each
vessel accounts for a significant portion of the Company’s
revenues. On July 29, 2008, the Company, through a wholly-owned
subsidiary, agreed to acquire an Accommodation Field Development
Vessel (“AFDV”) under construction, for delivery in the second
quarter of 2010.
We provide EBITDA (earnings before interest expense, taxes,
depreciation and amortization) information as a guide to the
operating performance of the Company. EBITDA, which is not a term
recognized under generally accepted accounting principles, is
calculated as net income plus interest expense, income taxes
(benefit), depreciation and amortization, and an adjustment for
book value gains and losses. Included in the depreciation and
amortization for the purpose of calculating EBITDA is depreciation
of vessels, including capital improvements and amortization of
mortgage fees. EBITDA, as calculated by the Company, may not be
comparable to calculations of similarly titled items reported by
other companies. The Company believes that this measurement is
meaningful because it is widely applied by research analysts for
shipping company valuations. TCE revenue represents gross revenue
less voyage related expenses. This measure is used to compare
time-charter and voyage revenues. Changes in the composition of the
Company’s fleet and type of revenue make it necessary to use the
TCE measure for period to period analysis.
Safe Harbor Statement
Certain statements contained in this press release, including,
without limitation, statements containing the words “believes,”
“anticipates,” “expects,” “intends,” and words of similar import,
constitute “forward-looking statements” as defined in the Private
Securities Litigation Reform Act of 1995 or by the Securities and
Exchange Commission in its rules, regulations and releases,
regarding the Company’s financial and business prospects. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of the Company, or industry results, to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, but are not limited to, those set
forth in the Company’s Annual Report and other filings with the
Securities and Exchange Commission. Given these uncertainties,
undue reliance should not be placed on such forward-looking
statements. The Company disclaims any obligation to update any such
factors or to publicly announce the result of any revisions to any
of the forward-looking statements contained or incorporation by
reference herein to reflect future events or developments.
For further information, including the Company’s Annual Report
on Form 20F, as amended and previous announcements, access the
Company’s website: www.bhocean.com
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