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Gulf Navigation settles $10.1m with NAT; 'significant doubt' over future

Gulf Navigation settles $10.1m with NAT; 'significant doubt' over future
Gulf Navigation has issued creditor Nordic American Tankers (NAT) with a settlement of AED37.34m ($10.1m) in Mandatory Convertible Bonds (MCBs).

Subject to approval from the Dubai Department of Economic Development and Securities and Commodities Authority, the MCBs will be issued prior to August 20. The debt arose after a London arbitration panel found Gulf Navigation liable for repair costs to a NAT vessel it chartered between 2004 and 2010.

The announcement comes on the back of a 61.8% Q2 profit increase to AED5.11m, pushing H1 profits up 172%, from AED3.7m in 2014 to AED10m in 2015.

“We appreciate the full support given by our shareholders, investors and government regulators in our efforts to resolve pending creditor concerns,” said Gulf Navigation founder and chairman, Hazza Baker Al Qahtani. “They were all instrumental to our successful negotiations with NAT and will definitely be crucial to similar ongoing talks with other creditors. Our exceptional profit for the first half of this year validates our improving financial position and we expect to direct our focus more on future growth in the coming months.”

However, the company is still mired in debt, with AED707m of liabilities at end June. Author of the PriceWaterhouseCooper’s report Douglas O’Mahony concluded: “These conditions, along with other matters... indicate the existence of a material uncertainty which may cast significant doubt about the ability of the group to continue as a going concern.”