• Adjusted Net Loss of $11.3 million, which excludes non-cash losses of $26.4 million incurred on the impairment of vessels and $4.4 million of non-cash losses on goodwill impairment. (*)
Nine Months 2012
• Net Revenues of $47.1 million.
• Adjusted EBITDA of $6.7 million, which excludes non-cash losses of $15.6 million incurred on the sale of vessels, non-cash losses of $38.2 million incurred on the impairment of vessels and $4.4 million of non-cash losses on goodwill impairment. (*)
• Adjusted Net Loss of $18.6 million, which excludes non-cash losses of $15.6 million incurred on the sale of vessels, non-cash losses of $38.2 million incurred on the impairment of vessels and $4.4 million of non-cash losses on goodwill impairment. (*)
(*) These are non-GAAP measures. For a reconciliation of these measures please refer to the EBITDA and Adjusted EBITDA reconciliation section contained in this press release
Stamatis Tsantanis, the Company’s Chief Executive Officer, stated:
“Seanergy’s financial performance over the first nine months of the year was adversely affected by the extremely low prevailing market rates. Regarding the third quarter of 2012, the global economic conditions were once again unfavorable for shipping. The continued financial slowdown has prolonged the decrease in dry cargo movements and the continued newbuilding deliveries worsened further the already oversupplied market.
“However, prospects for dry bulk shipping appear to be improving. On the demand side we expect China to restock its inventories and additional infrastructure investments recently approved by its government are likely to have a positive effect. On the supply side, after years of record newbuilding deliveries, the outstanding orderbook has shrunk considerably and the market is now in the process of absorbing excess vessel capacity. In addition 2012 to date was a record year for removal of older tonnage, as more than 31 million DWT were scrapped, increased by 33% over the full year 2011 – another record year for scrapping. Finally, the absence of traditional ship financing is also expected to cap further newbuilding activity. During the past months, Seanergy sold five of its vessels with proceeds going towards the reduction of debt by $39.3 million. In addition, the Company has entered into an agreement to sell a subsidiary, which will result in further debt reduction of $46.7 million.
“In order to improve the Company’s financial position, we are continuing our discussions with our lenders to restructure the outstanding indebtedness. The Company aims to reach a mutually acceptable agreement that will enhance its balance sheet with a solid capital structure that will create long term value as the dry-bulk market recovers. In light of the prolonged difficult market conditions, the Company’s management is putting forth its best efforts to further reduce operating and financial expenses.
“Dry bulk shipping is a vital link to the world economy and long term fundamentals remain favorable. We are optimistic about emerging from this crisis as a stronger company.”
Christina Anagnostara, the Company’s Chief Financial Officer, stated:
“During the third quarter of 2012, the Company operated an average of 17.2 wholly-owned vessels earning a daily Time Charter Equivalent (“TCE”) of $4,662 compared to $13,324 in the same period of 2011. The abrupt fall in the TCE is due to the particularly weak market conditions witnessed over the third quarter of the current year, during which the daily average of the Baltic Dry Index (BDI) was 45% lower than the already low levels seen in the same period last year.
“For the nine months ended September 30, 2012, Net Revenue was 38% lower compared to the same period in the previous year. This was a result of a 45% fall in daily TCE and a 14% drop in the number of operating days due to the vessel sales that took place within the period.
“So far in 2012, our cost containment efforts have translated to a reduction of 13% in average daily vessel operating expenses for the third quarter of 2012, as compared to the same period in 2011. In the nine month period the corresponding reduction was equal to 8%. Average daily management fees per vessel were reduced by 21% in the third quarter and 22% in the nine month period, as compared to the corresponding 2011 figures. Last, daily general and administrative expenses per vessel in the first nine months of 2012 were decreased by 34% as compared to the corresponding period in 2011. We anticipate that improvements in operational efficiency have further room to take place.”
Third Quarter 2012 Financial Results:
Net revenues for the third quarter of 2012 decreased to $11.6 million from $23.5 million in the same quarter in 2011. The decrease of 51% in net revenues reflects lower freight rates earned in the dry bulk market as compared to the same quarter last year, as well as a 30% reduction in operating days that resulted from vessel sales during the period.
EBITDA and Adjusted EBITDA
Adjusted EBITDA was negative $3.6 million for the third quarter of 2012, excluding $26.4 million of non-cash losses resulting from the impairments of vessels and $4.4 million of non-cash losses on goodwill impairment. Including the aforementioned non-cash items, EBITDA was negative $34.4 million. For the third quarter of 2011, Adjusted EBITDA was equal to $11.8 million, which excluded non-cash impairment losses of $201.9 million, whereas EBITDA was negative $190.1 million. For more information please refer to the EBITDA and Adjusted EBITDA reconciliation section contained in this press release.
For the third quarter of 2012, Net Loss amounted to $42.0 million or $3.51 loss per basic and diluted share, as compared to a Net Loss of $203.5 million or $27.82 loss per basic and diluted share in the same period in 2011, based on weighted average common shares outstanding of 11,957,064 basic and diluted for third quarter of 2012; 7,314,363 basic and diluted for third quarter of 2011.
For the third quarter of 2012, Adjusted Net Loss excluding non-cash losses was $11.3 million, as compared to $1.6 million for the same period in 2011.
Seanergy ended the third quarter of 2012 with $278.5 million of outstanding debt. This reflects the reduction of $17.7 million, from the repayment of debt principal during the three month period ended September 30, 2012.
Nine Months Ended September 30, 2012 Financial Results:
Net revenues for the first nine months of 2012 decreased to $47.1 million from $76.5 million during the same period in 2011. The decrease in net revenue of 38% is due to the reduced size of our fleet, which resulted in 14% fewer operating days and the market-induced weakness in the daily rates earned by our vessels.
EBITDA and Adjusted EBITDA
Adjusted EBITDA was $6.7 million for the first nine months of 2012, excluding non-cash losses resulting from impairment charges and vessel sales, as compared to $38.2 million in the same period in 2011. Including the aforementioned non-cash charges, EBITDA was negative $51.4 million in the nine months ended September 30, 2012, while EBITDA was negative $163.7 million for the corresponding period of 2011.
Fewer operating days for the fleet and lower daily TCE resulted in lower adjusted EBITDA for the first nine months of 2012.
For more information please refer to the EBITDA and Adjusted EBITDA reconciliation section contained in this press release.
For the first nine months of 2012, Net Loss amounted to $76.7 million, or $6.70 loss per share, based on weighted average common shares outstanding of 11,448,821 basic and diluted. In the corresponding period of 2011, Net Loss was $204.4 million or $27.94 loss per share, based on weighted average common shares outstanding of 7,314,739 basic and diluted.
For the first nine months of 2012, Adjusted Net Loss excluding non-cash losses was $18.6 million, as compared to $2.5 million for the same period in 2011.
Seanergy ended the third quarter of 2012 with $278.5 million of outstanding debt. This reflects the reduction of $67.9 million, from the repayment of debt principal during the nine month period ended September 30, 2012.
Third Quarter 2012 Developments:
As a result of prolonged negative market conditions, the Company is no longer in compliance with some financial and non financial covenants and other terms of its loan agreements.
The Company has entered into a constructive dialogue with its lenders aimed at developing and implementing a realistic plan for improving the Company's liquidity and operating flexibility. This plan is focused on developing a solid capital structure that will allow the Company to manage the current difficult market conditions and place Seanergy in a competitive position to re-grow its fleet and balance sheet in the long term. The Company has appointed Houlihan Lockey and Axia Ventures Group to advise on the development of the restructuring plan.
The Company is in discussions to obtain waivers from its lenders related to various restrictive covenants and defaults, as well as amendment of debt profile and maturities and an agreement that lenders will forbear from exercising remedies under their respective debt arrangements.
Although the Company is optimistic that it will reach an agreement with its lenders on the shortterm waivers of defaults and on the terms of the restructuring of the Company's indebtedness, the Company cannot assure that these agreements will be concluded, in which case the lenders could exercise their remedies, which in turn would affect values and the classification of assets/liabilities in our financial statements.
Sale and Purchase Transactions
On July 16, 2012, Seanergy sold the BET Fighter, a 173,149 DWT Capesize vessel built in 1992. Gross proceeds amounted to $9.1 million and were used to repay debt. No gain or loss resulted from the sale.
On September 17, 2012, the Company entered into a memorandum of agreement (“MoA”) to sell the Clipper Grace, a 30,548 DWT Handysize vessel built in 2007. The vessel had an additional twenty-five years of estimated useful life prior to the sale. The change in the intended use of Clipper Grace (sale versus operation until the end of its useful life) resulted in an impairment loss of $16.2 million.
In addition, on September 28, 2012, the Company entered into a MoA to sell the BET Intruder, a 69,235 DWT Panamax vessel built in 1993. The Company assessed the recoverability of the carrying value, including unamortized deferred dry docking costs, of the vessel BET Intruder due to its expected sale and as a result, recognized an impairment loss of $10.2 million.
Impairment of Goodwill
Due to the unfavorable market conditions witnessed in 2012 and as market expectations for future rates are low, the management and the Board of Directors of the Company carefully considered and further determined that the carrying amount of goodwill in the amount of $4.4 million is not recoverable.
2012 Annual General Meeting
The Company announced on September 6, 2012, the results of its annual meeting of its shareholders held on September 5, 2012 at the Company's executive offices in Athens, Greece. At the meeting the following proposals were approved and adopted: (1) the election of Mr. George Tsimpis and Mr. Dimitris Anagnostopoulos, as Class C Directors to serve until the 2015 Annual Meeting of Shareholders and 2) the appointment of Ernst & Young (Hellas) Certified Auditors Accountants S.A. as the Company's Independent Registered Public Accounting Firm for the Fiscal Year ending December 31, 2012.
The scheduled survey of the vessel Asian Grace commenced on August 22, 2012 and was completed on September 14, 2012. The total cost was approximately $0.5 million.
The Appointment of New Chief Executive Officer
Effective as of October 1, 2012, Stamatis Tsantanis has succeeded Dale Ploughman as the Chief Executive Officer of the Company. Mr. Tsantanis has also been appointed to the Board of Directors. Mr. Ploughman will continue to serve as the Chairman of the Board and as a Director of the Company.
Sale and Purchase Transactions
On October 15, 2012, Seanergy delivered the Clipper Grace, a 30,548 DWT Handysize vessel built in 2007, to its new owners. Gross proceeds amounted to $11.25 million and were used to repay debt. On October 29, 2012, Seanergy delivered the BET Intruder, a 69,235 DWT Panamax vessel built in 1993, to its new owners. Gross proceeds amounted to $4.8 million and were used to repay debt. On November 5, 2012, Seanergy entered into a MoA to sell the Clipper Glory, a 30,570 DWT Handysize vessel built in 2007 for gross proceeds of $11.25 million. The vessel is expected to be delivered to its new owners in December 2012. The sale is expected to result in a book loss of approximately $16.6 million. The Company plans to use the proceeds to repay debt and for working capital purposes.
Sale of the Bulk Energy Transport (Holdings) Limited (BET) Subsidiary
As part of its financial restructuring plan, Seanergy has reached an agreement to sell its 100% ownership interest in BET for a nominal consideration. The buyer is a company controlled by entities affiliated with members of the Restis family, our controlling shareholders. The transaction has been approved in principle by the majority of the Company’s lenders and is expected to close in the fourth quarter of 2012, subject to completion of definitive documents. After the sale, our total indebtedness will be reduced by $46.7 million. On the date of the agreement, the fleet of BET consisted of two Capesize dry-bulk carrier vessels with an average age of 19.3 years and a carrying capacity of 313,061 DWT.
Upon the completion of the BET sale transaction, the Company’s fleet will consist of 13 dry-bulk carriers (two Panamax, two Supramax, and nine Handysize vessels) with a total carrying capacity of approximately 499,070 dwt and an average fleet age of 13.3 years.
About Seanergy Maritime Holdings Corp.
Seanergy Maritime Holdings Corp. is a Marshall Islands corporation with its executive offices in Athens, Greece. The Company is engaged in the transportation of dry bulk cargoes through the ownership and operation of dry bulk carriers.
As of today, the Company’s fleet consists of 15 drybulk carriers (two Capesize, two Panamax, two Supramax, and nine Handysize vessels) with a total carrying capacity of approximately 812,131 dwt and an average fleet age of 14.1 years.
The Company's common stock trades on the NASDAQ Global Market under the symbol “SHIP”.
Seanergy Maritime Corp. press release