Mercator to terminate charters to lower debts

Mercator is also negotiating change of terms for its third long term chartered-in vessel.

The proactive approach to enhance its cash flow position follows a $72.8m net loss reported in the third quarter ended 31 December 2012, as against a profit of $1.18m in the same period of 2011.

The planned sale of its vessel Sri Prem Putli will generate net proceeds of $44.4m which will be partly used to pay down Mercator's debts and partly for payment of compensation and expenses relating to termination and change of terms of long term chartered-in vessels.

Basis the current market, the company would save around $25m over the next two years, according to Mercator.

“Proceeds from sale of Sri Prem Putli would help us reduce long term debt and liabilities. The termination and rearrangement of terms of chartered in vessels are beneficial for the company as it would help reduce company's liabilities and significantly improve its cash flows,” said Shalabh Mittal, managing director and ceo of Mercator.

Revenue during the third quarter dipped to $18m from $36.05m a year ago.