Signet Maritime Corporation of Houston, Texas has sold its U.S. flag, twin screw harbor tug “Signet Reliance” (ex-Dotsie) to Rockingham Carriage Service of Portsmouth, New Hampshire. The tug, with dimensions of 52.8
Seattle, Wash., based Harley Marine Services (now known as Centerline Logistics) is expanding its service to the Gulf Coast by acquiring the former MGI of Houston, Texas. This business will be operated
The Erie, Pa., shipyard of Donjon Shipbuilding and Repair has floated the 135-foot-long, 10,500-horsepower tugboat Ken Boothe Sr. into Presque Isle Bay. The vessel was moved from Donjon Shipbuilding’s 1,250-foot graving dock
Wärtsilä is cooperating with Ship Architects, Inc., Daphne, Ala., to bring natural gas fueled propulsion to America’s waterways. The companies have together developed a new concept of towboat design that employs Wärtsilä
The body of the 46-year-old captain of the tug Fairplay-22, which capsized in Rotterdam on November 11th, was found today on the beach close to Hoek van Holland, the Netherlands. Owner of
The tug Fairplay-22, which capsized on November 11 while it was assisting the superferry Stena Brittanica to its terminal at Hoek van Holland, Netherlands, has been refloated by Smit Salvage using the
Calovebora, the first in a series of thirteen Z-Tech tugboats built for ACP (the Panama Canal Authority) by Cheoy Lee Shipyards of Hong Kong is now in Panama. The 26-engine order for
Called the “M-factor,” the vessel is powered by Volvo Penta marine diesel engines both for propulsion and for the bow thruster.
The ship is 85 meters long, 9.6 meter wide and has a load capacity of 1,500 tons, and is a relatively small ship with a very large cargo hold.
The size of the ship and its limited height enables it to sail in almost all European inland waterways. As it is mainly designed for the smaller channels and rivers it will use a 750 hp Volvo Penta D16-750 hp as propulsion engine. Usually this size of ship would be equipped with an engine producing at least 1,000 hp.
Mercurius has been searching for the most fuel efficient engine at part load. In this application, the engine will be operating at part load for at least 80-90 percent of running time.
On part load, the Volvo Penta D16 outperforms the competition in this power range and was thus selected as main propulsion engine.
To reduce emissions, the engine will be equipped with the STT Emtec SCR and POC filter system as a standard even though this is still not required by legislation. The SCR system cuts NOx by 70 to 90 percent and the POC filter reduces the PM by 40 percent.
The prototype will be built at Mercurius Shipping’s own shipyard in Begej and will be ready in May 2011. The plans are to build at least 4-6 ships yearly, depending on the success of this unit. A contract for the second ship has already been given to the Volvo Penta Center Terlouw in Rotterdam. It will deliver the main propulsion engine D16-750, Twin Disk gearbox TD-5170 and SCR system as a complete package to the Mercurius Shipping Group.
A Volvo Penta D12-400 will be installed as a thruster engine. The thruster will be delivered as a complete package including engine from the local manufacturer, Verhaar thruster systems.
Last week, K-Sea had postponed its fourth quarter fiscal 2010 earnings conference call, which had been scheduled for August 31. It staged the call today. It is being archived for seven days and can be accessed HERE
KA First Reserve will appoint three directors to the board of K-Sea’s general partner and will be granted the right to acquire a 35 percent interest in the entity that owns the company’s Incentive Distribution Rights, or IDRs.
The board will be expanded from six members to nine members; KA First Reserve’s designees to join the board are Gary Reaves of First Reserve and Kevin McCarthy and Jim Baker of Kayne Anderson.
President and CEO Timothy J. Casey said, “We are very pleased with our new association with First Reserve and Kayne Anderson. These organizations have a wealth of experience and expertise in the MLP and energy businesses. Their decision to invest in us is a testimony to K-Sea’s leading industry position and the strength of our company. With our balance sheet recapitalization behind us, we will be able to focus on operations, results and new opportunities. We remain convinced the domestic market for marine transportation of refined petroleum products will rebound significantly when demand recovers and single hull vessels leave the market permanently.”
Mr. Casey said the company continues to concentrate on cost control and eliminating low-return assets. “On the latter point,” he said, “we have a definitive agreement to sell two tugboats and our two oldest double-hulled barges to an international buyer, and we have a definitive agreement to sell our environment services property in Norfolk, Virginia. Both transactions should close in the September 2010 quarter.”
The proceeds from the sale of the preferred units will be used to reduce outstanding indebtedness and pay fees and expenses related to the transaction. The investment is expected to close in two steps — $85 million in early September and the remaining $15 million within the thirty days following clearance of Hart-Scott-Rodino review.
K-Sea has also executed amendments to its revolving credit facility and term loans that will become effective on closing of the initial $85 million investment. The amendment to the revolving credit facility reduces the lenders’ commitments from $175 million to $115 million; amends the financial covenants; maintains a July 1, 2012 maturity date; and allows the company to pay distributions subject to certain minimum financial ratios. After applying the expected net proceeds of the $100 million Preferred Unit investment, the company’s total funded debt as of September 1, 2010 was $279.2 million on a pro forma basis, which represents a ratio of Funded Debt to EBITDA (as defined in the revolving credit agreement) of 4.3 times fiscal year 2010 EBITDA.
The preferred units will have a coupon of 13.5%, with payment-in-kind distributions through the quarter ended June 30, 2012 or, if earlier, when the company resumes cash distributions on its common units. The preferred units convert on a unit-for-unit basis into common units at KA First Reserve’s option. The preferred units were priced at $5.43 per unit, which represents a 10% premium to the 5-day volume weighted average price of K-Sea’s common units as of August 26, 2010.
The company will have an option to force conversion after three years if the price of K-Sea’s common units is 150% of the conversion price on average for 20 consecutive days on a volume-weighted basis.
K-Sea describes First Reserve as “one of the world’s leading private equity firms in the energy industry, making both private equity and infrastructure investments throughout the energy value chain, with approximately $19 billion under management” and Kayne Anderson as “a leading investment firm focused on the energy industry with approximately $10 billion under management and […] the largest institutional investor in MLPs.”
The pricing grid for the amended credit facility changes only when the total funded debt to EBITDA ratio rises above 5.0 times. It is expected that the company’s interest cost under the revolving credit facility will rise by 50 basis points at the effective date.
OPERATING RESULTS
K-Sea also today reported operating results for its fourth fiscal quarter ended June 30, 2010. The company reported an operating loss of $0.5 million, excluding a $54.3 million write-off of goodwill and an impairment charge of $5.1 million on excess tugboats. This represents a decrease of $8.8 million, compared to $8.3 million of operating income for the fourth fiscal quarter ended June 30, 2009. Including the write-off of goodwill and the impairment loss, our operating loss for the quarter was $59.9 million. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the fourth quarter of fiscal 2010 was $12.4 million, a decrease of $9.1 million, or 42%, compared to $21.5 million in the same quarter last year; and an increase of $3.3 million, or 36%, compared to $9.1 million for the March 2010 quarter. There were two special items in the fiscal 2010 fourth quarter that impacted EBITDA: a $1.0 million charge for an additional insurance call previously mentioned in our financial statements; and a $0.8 million gain from the sale of assets. Excluding these items, EBITDA was $12.6 million. EBITDA is a non-GAAP financial measure that is reconciled to net income, the most directly comparable GAAP measure, in the table below.
Three Months Ended June 30, 2010
For the three months ended June 30, 2010, the Company reported an operating loss of $0.5 million, excluding the previously mentioned write-off of goodwill and impairment charge. This represents a decrease of $8.8 million, compared to $8.3 million of operating income for the three months ended June 30, 2009. EBITDA decreased by $9.1 million, or 42%, to $12.4 million for the three months ended June 30, 2010, compared to $21.5 million for the three months ended June 30, 2009. EBITDA was negatively impacted by a non-recurring $1.0 million insurance charge relating to an additional insurance call by the Company’s insurance carrier. The carrier had previously announced the possibility of the call in November 2008; however, the insurance carrier did not decide to make the call until May 2010. The decrease in EBITDA resulted mainly from a $7.3 million decline in revenue, net of voyage expenses, which is attributable to fewer working days owing to the retirement of a majority of our single-hull vessels and an overall reduction in net utilization mainly relating to expiring contracts and the need to employ vessels in the spot market. Additionally, vessel operating expenses increased by $2.0 million as a result of the $1.0 million insurance call and $1.3 million of increased operating lease expenses mainly relating to sale leaseback transactions entered into in June 2009.
Net loss for the three months ended June 30, 2010 was $7.1 million, or $0.37 per fully diluted limited partner unit, excluding the write-off of goodwill and impairment charge. This represents a decrease of $9.7 million compared to net income of $2.6 million, or $0.09 per fully diluted limited partner unit, for the three months ended June 30, 2009. The decrease was primarily a result of the $8.8 million decrease in operating income. Interest expense also increased by $1.6 million resulting from increased interest margins due to the December amendment of our revolving credit facility and a term loan. Including the write-off of goodwill and the impairment charge, net loss for the three months ended June 30, 2010 was $66.5 million, or $3.43 per fully diluted limited partner unit.
Fiscal Year Ended June 30, 2010
For the fiscal year ended June 30, 2010, the Company reported operating income of $1.8 million, excluding a $54.3 million write-off of goodwill and a $12.6 million asset impairment charge on single-hull vessels and excess tugboats. This compares with $36.5 million of operating income for the fiscal year ended June 30, 2009. Including the write-off of goodwill and the asset impairment charge, the Company reported an operating loss of $65.1 million for the fiscal year ended June 30, 2010. EBITDA decreased by $34.1 million, or 38%, to $55.5 million for the fiscal year ended June 30, 2010, compared to $89.6 million for the fiscal year ended June 30, 2009. The decrease in EBITDA resulted from a $43.9 million decrease in revenue, net of voyage expenses, which as mentioned above, is attributable to fewer working days due to the retirement of a majority of our single-hull vessels and an overall reduction in net utilization directly relating to expiring contracts and having to employ vessels in the spot market. This decrease was partially offset by a $6.2 million reduction in vessel operating expenses and a $2.6 million reduction in general and administrative expenses.
Net loss for the fiscal year ended June 30, 2010 was $20.5 million, or $1.08 per fully diluted limited partner unit, excluding the write-off of goodwill and impairment charges. This represents a decrease of $34.4 million compared to net income of $13.9 million, or $0.61 per fully diluted limited partner unit, for the fiscal year ended June 30, 2009. Including the write-off of goodwill and the impairment charges, net loss for fiscal year 2010 was $87.4 million, or $4.60 per fully diluted limited partner unit.