Jinhui strikes agreement with lenders on debt rescheduling

Hong Kong-listed Jinhui said the agreement on the key and critical terms of rescheduling of indebtedness with majority of its lenders are currently at the documentation stage.

“We are at the final stages in discussion with a few remaining lenders and a positive and favourable conclusion is expected to be reached in the coming weeks,” the group said revealed in its latest first half financial statement.

In May, Jinhui announced it had initiated restructuring arrangement talks with its creditors

Jinhui, which operates its worldwide shipping activities through Jinhui Shipping and Transportation Limited, pointed out that it had been able to service its debt obligations including principal and interest payments up until 30 June 2016.

But in order to preserve the group’s liquidty and financial resources to weather the “unprecedented storm in dry bulk shipping market”, the group decided to manage liquidity risk ahead by initiating the rescheduling of indebtedness arrangement discussion with lenders.

In the first six months of 2016, Jinhui’s loss widened to HKD175.03m ($22.56m) compared to the loss of HKD46.42m in the same period of last year. The loss was blamed on its exposure to declining freight rates in a weak shipping market and the HKD97.91m impairment loss on assets held for sale involving three 2000-built supramaxes.

First half revenue plunged by 41%year-on-year to HKD195.18m.

As at 30 August 2016, the group had 33 owned vessels comprising of 28 supramax/handmax vessels, two post-panamaxes, two panamaxes and one handysize.

“The start of this year has been the worst for dry bulk shipping markey as asset prices have gone in a downward spiral given the lack of confidence but have since rebounded significantly from its trough,” Jinhui recalled.

“We believe the current trough market cannot be sustainable in the long term, but the journey to recovery and equilibrium will be tough and the road forward will not be without challenges.”

The group observed that more shipyards are expected to run into financial distress as a result of the dejected dry bulk market, and owners are doing their utmost to delay and cancel newbuilding orders, and financiers are avoiding new exposure against such backdrop.

“Some participants will cease to operate in this industry, leaving those shipowners with the experience, expertise, long term commitment together with support from trusted partners operating in the market,” it said.