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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| B+H Ocean Carriers Ltd. Common Stock | AMEX:BHO | AMEX | Ordinary Share |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
From May 2019 to May 2024
B+H Ocean Carriers Ltd. (NYSE AMEX: BHO) Today reported that for the three months ended September 30, 2009, it incurred charges against earnings totaling $35.0 million from the sale of five non-core vessels either sold in that period or held out for sale or sold in October 2009. The Company added that it was considering the sale of one additional non-strategic vessel and that it estimated that at present fair market value levels such sale, if concluded, would generate a charge against earnings of approximately $19 million.
The Company today reported net loss of $36.9 million or $6.65 per share basic and diluted, for the three months ended September 30, 2009 as compared to a net income of $8.8 million, or $1.28 per share basic and diluted, for the three months ended September 30, 2008. EBITDA for the three months ended September 30, 2009 was $5.8 million as compared to $10.6 million for the comparable period of 2008. Basic earnings per share calculations are based on weighted average shares outstanding of 5,555,426 and 6,853,826 respectively, for the three months ended September 30, 2009 and 2008. There were no dilutive securities at September 30, 2009.
The net loss of $36.9 million for the three months ended September 2009 as compared with the net income of $8.8 million in the comparable period of 2008 is predominantly due to a $9.8 million loss on sale of three MR product tankers and total impairment charges of $25.2 million on one of the Company’s bulk carriers and the last remaining MR tanker in the third quarter of 2009 versus an unrealized gain of $13.2 million on the fair value of put options purchased to hedge charter rates and reduced by an impairment charge of $5.9 million in the comparable 2008 period.
The Company reported net loss of $41.5 million or $7.47 per share basic and diluted, for the nine months ended September 30, 2009 as compared to net income of $14.7 million or $2.15 per share basic and diluted, for the nine months ended September 30, 2008. EBITDA for the nine months ended September 30, 2009 was $16.9 million as compared to $53.2 million for the comparable period of 2008. Basic earnings per share calculations are based on weighted average shares outstanding of 5,555,426 and 6,856,871, respectively, at September 30, 2009 and December 31, 2008. There were no dilutive securities at September 30, 2009.
The net loss of $41.5 million for the nine months ended September 2009 as compared with net income of $14.7 million in the comparable 2008 period is primarily due to a $9.8 million loss on sale of three product tankers and total impairment charges of $25.2 million on one of the Company’s bulk carriers and the last remaining MR tanker in third quarter of 2009 versus a gain on sale of vessels of $13.3 million, an impairment charge of $5.9 million and an unrealized gain of $8.5 million in the fair value of put options purchased to hedge charter rates in the same 2008 period. In addition, Time Charter Equivalent revenue decreased by $10.9 million in the nine months ended September 30, 2009 as compared with the comparable period of 2008.
Summary Operating Data (unaudited)
Nine Months ended September 30, Three Months ended September 30, 2009 2008 2009 2008 Revenues: TCE revenue $ 49,377,321 $ 60,250,175 $ 15,488,074 $ 21,812,876 Other revenue 28,777 529,672 25,532 303,164 Total revenues 49,406,098 60,779,847 15,513,606 22,116,040 Operating expenses: Vessel operating expenses, drydocking and survey costs 28,607,980 30,766,706 8,339,972 10,463,046 Total ship days 3,174 3,649 1,105.32 1,196.00 Total on hire days 2,912 3,107 922.47 1,051.51 Total off hire days 263 541 182.85 144.49 Time charter equivalent 16,959 19,390 16,790 20,744 Vessel operating expenses ( daily) $ 9,012 $ 8,432 $ 7,545 $ 8,748Nine months ended September 30, 2009 (unaudited) versus September 30, 2008 (unaudited)
Net Voyage Revenues
Net voyage revenues (voyage revenues minus voyage expenses) decreased by $10.9 million to $49.4 million for the nine-month period ended September 30, 2009, as compared to $60.3 million for the nine-month period ended September 30, 2008. The decrease is mainly attributable to the substantially lower freight market rates for the product tankers and bulk carriers during the first nine months of 2009 as compared to the first nine months of 2008. The Company’s OBO fleet and M/T Sagamore are fully fixed for the remainder of 2009 through various dates in 2011 and 2012 at profitable levels.
Vessel operating expenses
Vessel operating expenses decreased $2.2 million or 7% for the nine month period ended September 30, 2009 compare to the same period of 2008. The decrease is mainly due to ownership of fewer vessels during the period.
Loss on sale of vessels and impairment charge
The Company reported loss on sale of vessels of $9.8 million for the nine-month period ended September 30, 2009 compared to an aggregate gain on sale of vessels of $13.3 million reduced by an impairment charge of $5.9 million for the same period ended September 30, 2008. During the third quarter of 2009, the Company sold three MR tankers.
On October 29, 2009, the Company completed the sale of one of its two bulk carriers for $10.2 million. As a result of this sale, the vessel is classified as held for sale at September 30, 2009 and an impairment charge of $23.0 million is reflected in the Consolidated Statements of Income for the third 2009 quarter. The fourth MR is held for sale at September 30, 2009 and an estimated impairment charge of $ 2.2 million is also reflected in Consolidated Statements of Income in the third quarter 2009.
Equity in income of Nordan OBO II
The Company received a dividend amounting to $3.5 million from Nordan OBO 2 Inc during the second quarter of 2009. BHO owns 50% of Nordan OBO 2 Inc.
Three months ended September 30, 2009 (unaudited) versus September 30, 2008 (unaudited)
Net Voyage Revenues
Net voyage revenues (voyage revenues minus voyage expenses) decreased by $6.3 million to $15.5 million for the three-month period ended September 30, 2009, as compared to $21.8 million for the three-month period ended September 30, 2008. The decrease is mainly attributable to the substantially lower freight market for the product tankers and bulk carriers during the third quarter of 2009 as compared to the third quarter of 2008.
Vessel operating expenses
Vessel operating expenses decreased $2.1 million or 20% from the three month period ended September 30, 2009 compare to the same period of 2008. The decrease is mainly due to ownership of fewer vessels during the period.
Recent Developments
During the third quarter of 2009, the Company decided strategically that all its wet and dry vessels not covered by profitable period time charters should be sold, due to the their negative effect on the Company’s cash flow. The Company believes it is taking the necessary steps to eliminate loss making operational assets of the Company.
Three of Company’s four 25-year old product tankers were sold in August and September 2009 and a $9.8 million loss on the sale was reflected in the third quarter of 2009. The fourth of the product tankers, M/T Aquidneck is expected to be sold during the fourth quarter 2009. The Company prepared an undiscounted cash flow analysis for the M/T Aquidneck and determined that the carrying value of the vessel will not be recoverable and an estimated $2.2 million impairment charge was recorded in the third quarter 2009.
One of the Company’s two bulk carriers was sold in October 2009 for $10.2 million and an impairment charge of $23.0 million is reflected in the third quarter of 2009. The second bulk carrier is under consideration for sale, which could result in a further impairment charge of approximately $19 million. Earnings relating to operations of the bulk carriers were adversely affected by the bankruptcy of charterers during 2008.
After the sale of these vessels, the Company looks forward to a return to satisfactory levels of EBITDA in 2010 from its remaining six vessels and from its new Accommodation Field Development Vessel, which is due for delivery in the second quarter of 2010.
Following the sale of the bulk carrier in October 2009, the $26.7 million term loan facility of Cliaship Holdings Ltd, a wholly-owned subsidiary, which was the subject of a breach of the EBITDA/Fixed Charges ratio covenant at June 30, 2009, was repaid in full.
With respect to the Company’s $34 million term loan facility, Boss Tankers Ltd, a wholly-owned subsidiary, was in breach of the EBITDA/Fixed Charges ratio and the Minimum Value Ratio covenants at June 30, 2009. With the consent of the lender, it sold three of its four product tankers held as collateral during the third quarter, which resulted in a loss of $9.8 million in the third quarter ended September 30, 2009, and expects to sell the fourth vessel during the fourth quarter of 2009. Following the sale of the four vessels, it is expected there will be a remaining loan balance of approximately $5 million. The Company is in negotiations with the lender to revise the terms of this loan.
With respect to the Company’s $202 million reducing revolving credit facility, OBO Holdings Ltd, a wholly-owned subsidiary, was in breach of the EBITDA/Fixed Charges ratio covenant at June 30, 2009. The Company, on behalf of OBO Holdings Ltd, is in negotiations with its lenders to revise the terms of this loan.
With respect to the Company’s $8,000,000 term loan facility, Seapowet Trading Ltd., a wholly-owned subsidiary, was in breach of the EBITDA/Fixed Charges ratio covenant at June 30, 2009. The Company, on behalf of Seapowet Trading Ltd, is in negotiations with the lender to revise the covenants of this loan.
With respect to the $27,300,000 term loan, Sakonnet Shipping Ltd., a wholly-owned subsidiary, was in breach of the EBITDA/Fixed Charges ratio covenant at June 30, 2009. The lender has conditionally agreed to waive this breach.
Financial Statements
Consolidated Balance Sheets
Unaudited Audited ASSETSSeptember 30, 2009
December 31, 2008 CURRENT ASSETS: Cash and cash equivalents 5,717,689 30,483,501 Marketable securities 233,779 233,779 Trade accounts receivable, less allowance for doubtful accounts of $253,000 at September 30, 2009 and December 31, 2008 3,480,021 2,534,775 Vessel held for sale 10,185,000 17,735,000 Inventories 1,048,350 2,828,070 Prepaid expenses and other current assets 949,015 3,486,587 Total current assets 21,613,854 57,301,712 Vessels, at cost: Vessels 280,898,014 358,800,247 Less - Accumulated depreciation (66,684,196) (76,596,657) 214,213,818 282,203,590 Investment in Nordan OBO II Ltd 9,706,282 12,425,182 Other assets 2,070,135 2,858,860 Total assets $ 247,604,089 $ 354,789,344 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable 10,560,976 19,800,732 Accrued liabilities 2,464,757 5,611,280 Accrued interest 641,217 510,754 Current portion of mortgage payable and unsecured debt 110,928,454 160,291,230 Floating rate bonds payables 13,500,000 15,500,000 Deferred income 3,708,904 6,818,299 Other liabilities 66,896 109,523 Unsecured loan 1,250,000 - Total current liabilities 143,121,204 208,641,818 Fair value of derivative liability 3,772,626 4,982,914 SHAREHOLDERS' EQUITY: Preferred stock, $0.01 par value; 20,000,000 shares authorized; - - no shares issued and outstanding Common stock, $0.01 par value; 30,000,000 shares authorized; 7,557,268 shares issued, 5,555,426 shares outstanding as of September 30, 2009 and December 31, 2008 75,572 75,572 Paid-in capital 93,863,095 93,863,095 Retained earnings 25,066,591 66,564,545 Other Comprehensive income (2,183,198) (3,226,799) Treasury stock (16,111,801) (16,111,801) Total shareholders' equity 100,710,259 141,164,612 Total liabilities and shareholders' equity $ 247,604,089 $ 354,789,344Unaudited Consolidated Income Statements
For the nine For the nine For the three For the three months ended months ended months ended months ended September 30, 2009 September 30, 2008 September 30, 2009 September 30, 2008 Revenues: Voyage, time and bareboat charter revenues $ 62,103,239 85,333,408 19,498,019 32,632,364 Other revenue 28,777 529,672 25,532 303,164 Total revenues 62,132,016 85,863,080 19,523,551 32,935,528 Operating expenses: Voyage expenses 12,725,918 25,083,233 4,009,945 10,819,488 Vessel operating expenses, drydocking and survey costs 28,607,980 30,766,706 8,339,972 10,463,046 Vessel depreciation 13,148,749 15,476,061 4,210,948 5,929,624 Loss (gain) on sale of vessel 9,779,568 (13,262,590 ) 9,779,568 - Charge for vessel impairment 25,245,440 5,853,447 25,245,440 5,673,447 Amortization of deferred charges 6,904,446 3,591,079 1,887,487 1,085,504 General and administrative: Management fees to related party 849,716 905,104 274,248 304,977 Consulting and professional fees, and other expenses 3,069,934 3,454,757 1,063,352 1,008,797 Total operating expenses 100,331,751 71,867,797 54,810,960 35,284,883 (Loss) income from vessel operations (38,199,735 ) 13,995,283 (35,287,409 ) (2,349,355 ) Other income (expense): Equity in income of Nordan OBO II 781,101 1,017,864 470,527 379,961 Interest expense (5,688,927 ) (8,993,862 ) (2,057,011 ) (2,569,487 ) Interest income 18,032 1,052,255 1,435 233,835 (Loss) gain on trading marketable securities 63,205 (306,216 ) (57,145 ) (24,270 ) Loss on value of put option contracts - 8,519,699 - 13,182,314 Gain on foreign currency hedging transactions - (336,427 ) - (162,931 ) Settlement of foreign currency hedging transactions - 253,276 - 379 (Loss) gain on fair value of interest rate swap 109,870 (566,763 ) - (24,168 ) Gain on debt extinguishment 1,418,500 Other income - 93,058 - 93,058 Total other expenses, net (3,298,219 ) 732,884 (1,642,194 ) 11,108,691 Net income (loss) $ (41,497,954 ) $ 14,728,167 $ (36,929,603 ) $ 8,759,336 Basic earnings (loss) per common share $ (7.47 ) $ 2.15 $ (6.65 ) $ 1.28 $ (7.47 ) $ 2.15 $ (6.65 ) $ 1.28 Diluted earnings (loss) per common share Weighted average number of common shares outstanding: 5,555,426 6,856,871 5,555,426 6,853,826 Diluted 5,555,426 6,856,871 5,555,426 6,853,826 EBITDA $ 16,896,500 $ 53,230,715 $ 5,837,469 $ 10,573,055Unaudited Consolidated Statement of Cash Flows
For the nine For the nine months ended months ended September 30, 2009 September 30, 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Net (Loss) income $ (41,497,954 ) $ 14,728,167 Adjustments to reconcile net income to net cash provided by operating activities: Vessel depreciation 13,148,749 15,476,061 Gain (loss) on sale of vessel 9,779,568 (13,262,590 ) Charge for vessel impairment 25,245,440 5,853,447 Amortization of deferred charges 6,904,446 3,591,079 (Gain) loss on fair value of marketable securities (63,205 ) 190,948 (Gain) on fair value of put option contracts - (8,519,699 ) Loss on fair value of foreign currency exchange contracts - 336,427 (Gain) loss on fair value of interest rate swaps (109,870 ) 566,763 Gain on debt extinguishment (1,418,500 ) - Changes in assets and liabilities: (Increase) decrease in trade accounts receivable (945,246 ) 2,501,155 Decrease (increase) in inventories 1,779,720 (867,989 ) Decrease in prepaid expenses and other assets 2,537,572 175,674 (Decrease) in accounts payable (9,239,756 ) (31,538,791 ) (Decreased) Increase in accrued liabilities (3,146,523 ) 4,694,916 Increase (decrease) in accrued interest 130,463 (416,385 ) (Decrease) in deferred income (3,109,395 ) (592,012 ) (Decrease) in other liabilities (42,627 ) (90,748 ) Payments for special surveys (3,423,905 ) (6,620,492 ) Total adjustments 38,026,931 (28,522,236 ) Net cash used by operating activities (3,471,023 ) (13,794,069 ) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of vessel 29,693,993 38,116,601 Purchase and investment in vessels (4,656,899 ) (6,163,982 ) Investment in vessel conversions (335,158 ) (16,849,315 ) Investment in Nordan OBO II (781,101 ) (1,017,864 ) Dividend received from Nordan OBO II 3,500,000 1,500,000 Redemption of marketable equity securities, net - 641,764 Net cash provided in investing activities 27,420,835 16,227,204 CASH FLOWS FROM FINANCING ACTIVITIES: Payments for debt issuance costs (21,348 ) (594,999 ) Mortgage proceeds - 30,000,000 Proceed from unsecured loan 1,250,000 - Purchase of debt securities (581,500 ) - Issuance of treasury shares - (284,349 ) Payments of long-term debt (49,362,776 ) (45,831,456 ) Net cash used in financing activities (48,715,624 ) (16,710,804 ) Net decrease in cash and cash equivalents (24,765,812 ) (14,277,669 ) Cash and cash equivalents, beginning of period 30,483,501 61,672,953 Cash and cash equivalents, end of period $ 5,717,689 $ 47,395,284About B+H Ocean Carriers Ltd.
The Company was organized as a corporation under Liberian law on April 28, 1988 to engage in the business of acquiring, investing in, owning, operating and selling vessels for dry bulk and liquid cargo transportation. As of November 1, 2009, the Company owned and operated one dry bulkcarrier, one medium-range product/chemical tanker, one Panamax product tanker and five ore/bulk/oil combination carriers (“OBOs”). The Company also owns a 50% interest in a company which is the disponent owner of a 1992-built 75,000 DWT Combination Carrier, effected through a lease structure. Each vessel accounts for a significant portion of the Company’s revenues. On July 29, 2008, the Company, through a wholly-owned subsidiary, agreed to acquire an Accommodation Field Development Vessel (“AFDV”) under construction, for delivery in the second quarter of 2010.
We provide EBITDA (earnings before interest expense, taxes, depreciation and amortization) information as a guide to the operating performance of the Company. EBITDA, which is not a term recognized under generally accepted accounting principles, is calculated as net income plus interest expense, income taxes (benefit), depreciation and amortization, and an adjustment for book value gains and losses. Included in the depreciation and amortization for the purpose of calculating EBITDA is depreciation of vessels, including capital improvements and amortization of mortgage fees. EBITDA, as calculated by the Company, may not be comparable to calculations of similarly titled items reported by other companies. The Company believes that this measurement is meaningful because it is widely applied by research analysts for shipping company valuations. TCE revenue represents gross revenue less voyage related expenses. This measure is used to compare time-charter and voyage revenues. Changes in the composition of the Company’s fleet and type of revenue make it necessary to use the TCE measure for period to period analysis.
Safe Harbor Statement
Certain statements contained in this press release, including, without limitation, statements containing the words “believes,” “anticipates,” “expects,” “intends,” and words of similar import, constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases, regarding the Company’s financial and business prospects. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, those set forth in the Company’s Annual Report and other filings with the Securities and Exchange Commission. Given these uncertainties, undue reliance should not be placed on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained or incorporation by reference herein to reflect future events or developments.
For further information, including the Company’s Annual Report on Form 20F, as amended and previous announcements, access the Company’s website: www.bhocean.com
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