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Rickmers Maritime suspends distribution to ‘conserve cash’

Rickmers Maritime suspends distribution to ‘conserve cash’
Singapore-listed shipping trust Rickmers Maritime has decided to suspend its cash distribution to conserve cash flow amid the slowdown in the shipping charter market.

Soeren Andersen, ceo of Rickmers Trust Management (RTM), the trustee-manager of Rickmers Maritime, said: “It is a difficult decision to suspend distributions. In fact, we have been paying out distribution per unit of 0.6 US cents every quarter since 4Q2010.

“However, given the downturn in the charter market heading into 2016 and the uncertainty over how long this could persist, we have made the difficult decision to suspend distributions,” he said.

The company will review its decision on distributions every quarter, and it expects to be better positioned for growth when the shipping market improves.

“Our growth plan remains intact. We still want to expand our fleet, and as a trust, we actively evaluate acquisition opportunities,” Andersen continued.

The trust has a fleet of 16 containerships achieving close to full utilisation rate during the third quarter. While the fleet is currently fully chartered for 2015, 11 of the ships will trade in the spot market in 2016.

Through its existing charter contracts, Rickmers Maritime has secured revenue of $163.3m between 30 September 2015 and the expiry of the last charter party contract in 2019.

The distribution cut was revealed when Rickmers Maritime announced a third quarter net profit of $8.99m, emerging from the loss of $53.02m in the previous corresponding period due to the absence of a $44.45m provision for vessel impairment in the year-ago period.

Revenue, however, decreased by 17% year-on-year to $27.36m due mainly to lower market charter rates of seven vessels which commenced new charters over the course of the year.

The trustee-manager is also in discussion with its lenders to extend the trust’s value-to-loan covenant waiver, which is expiring on 31 December 2015.