Trailer Bridge may seek bankruptcy protection if it can’t refinance

Jones Act carrier Trailer Bridge, Inc. (NASDAQ Global Market: TRBR) today announced unaudited financial results for its second quarter and six months ended June 30, 2011 that included net losses of $3.6 million for the quarter and $14 million for the six months. The company also said that if it is unable to refinance $82.5 million in public notes due in November 2011, its “finances and ability to operate would be severely impaired and the company could be required to seek protection under federal bankruptcy laws.”

The company’s deployed vessel capacity utilization during the second quarter was 91.2% southbound and 24.1% northbound, compared to 100.1% and 29.5%, respectively, during the second quarter of 2010, and 88.8% and 22.6%, respectively, sequentially from the first quarter of 2011

Second quarter revenue was $29.0 million, compared to $31.7 million in the prior year period. Charter revenues declined to $0.6 million from $0.9 million in the prior year period, but rose by $0.5 million from the first quarter of 2011.

The company reported an operating loss of $1.1 million in the second quarter of 2011 compared to operating income of $3.4 million in the prior year period and an operating loss of $8.0 million in the first quarter of 2011.

Net loss for the second quarter of 2011 was $3.6 million, or $0.30 per basic and diluted share, compared to net income of $0.9 million, or $0.07 per basic and diluted share, in the prior-year period.

Increased fuel prices drove the net fuel expense to $2.2 million, up $1.1 million over the prior-year period. Adjusted EBITDA was $1.2 million in the second quarter of 2011.

Trailer Bridge had revenue of $53.8 million during the first six months of 2011, compared to $60.5 million in the prior year period. Charter revenues during the period declined to $0.6 million from $2.2 million in the prior year period.

Operating loss for the first six months of 2011 was of $9.1 million, compared to operating income of $5.6 million in the prior year period.

Net loss for the first six months of 2011 was $14.0 million, or $1.17 per basic and diluted share, compared to net income of $0.6 million, or $0.05 per basic and diluted share, in the prior-year period. Adjusted EBITDA,was $1.6 million in the six months ended June 30, 2011.

Each of the company’s two roll-on, roll-off vessels was sequentially out of service as work related to five-year regulatory requirements was being performed. The company resumed its regular deployment in late April. One of the company’s Triplestack Box Carrier vessels was dry-docked in the second quarter of 2011. Trailer Bridge incurred a total of $6.9 million in expense related to the dry-docking of these vessels, of this amount $6.6 million was incurred in the first quarter of 2011 and the remaining $0.3 million in the second quarter of 2011.

There were no dry-docking expenses in the prior year periods.

Refinancing Status

Trailer Bridge says refinancing efforts are ongoing. It says it continues actively working with interested lenders and its advisors to refinance the $82.5 million in public notes due in November 2011 and other indebtedness of the Company. The company says it is “exploring a number of options, that might involve the private or public lending market and may include an equity component, and that might result in a change of control. The interest rate the company pays on its overall debt will likely be higher under such refinancing than previously anticipated. In the event the company is not able to refinance the notes, the company’s finances and ability to operate would be severely impaired and the company could be required to seek protection under federal bankruptcy laws.”

Financial Position

At June 30, 2011, the company had cash balances of $0.2 million and working capital deficit of $88.6 million due to the $82.5 million in notes due in November 2011 as well as the company’s term loan debt being classified as current liabilities. As of June 30, 2011, the company had drawn approximately $5.0 million on its $10.0 million revolving credit facility, and, based upon eligible receivables, had $1.8 million of unused availability left under this facility. During the six months ended June 30, 2011, net cash used in operating activities was $13.2 million.

August 12, 2011