ATHENS, Greece, Nov. 16 /PRNewswire-FirstCall/ -- Aries Maritime Transport Limited RAMS ("Aries" or "the Company") today announced that it has engaged in a range of transactions focused on repositioning and recapitalizing Aries, as well as, reported its financial results for the third quarter and nine months ended September 30, 2009.
"We acquired Aries because we believe that we can use it as a platform for growth. Today, we announce the dropdown of Newlead Shipmanagement, a technical and commercial management company, and six vessels, of which four are dry bulk vessels and two are product tankers. All of these assets are owned by Grandunion Inc., and Aries will be exchanging shares of common stock in Aries for these assets. We believe that Newlead Shipmanagement will improve Aries' operating efficiency, which has been poor to date, by bringing in house the necessary technical and commercial expertise to manage a broad range of vessels. The six vessels to be added to our fleet are subject to quality time charters and will expand our fleet, increase operating efficiency and add to cash flow. We are also pleased to announce the exit of the container market through the proposed sale of the last two container vessels," said Michail S. Zolotas, President and Chief Executive Officer.
Mr. Zolotas continued, "My commitment to the success of Aries is evidenced by Focus Maritime Corp.'s conversion of $20.0 million in principal amount of notes into approximately 26.67 million shares of common stock as well as Grandunion's willingness to accept equity in exchange for the assets being dropped down."
RECENT DEVELOPMENTS
- Completed $400.0 million recapitalization
- Entered into a new $221.4 million credit facility agreement
- Issued $145.0 million senior unsecured convertible 7% notes
- Acquired three dry bulk carriers with a net asset value of $36.0 million
- New management team and Board of Directors
- Signed non-binding Letter of Intent for Dropdown of six vessels and shipmanagement company
- Preliminary agreement to sell two container vessels for $11.4 million
DROPDOWN DETAILS
Six Vessels
Grandunion Inc. ("Grandunion") has entered into a non-binding letter of intent to drop down Newlead Ship Management Ltd. and six vessels, consisting of four dry bulk vessels and two product tankers (identified below) in a transaction valued at approximately $180.0 million, of which approximately $20.0 million will be paid through the issuance of Aries common shares at a price of not less than $2.25 per share, a premium of almost 125% from the recent closing price of Aries' common shares. The balance of the purchase price will be paid through the assumption of existing liabilities. The transaction is subject to board approval and consents from existing creditors. No assurance can be provided that this transaction will be closed and if it is closed in the form contemplated.
Newlead Shipmanagement Ltd.
Newlead Shipmanagement Ltd. ("Newlead") is an integrated technical and commercial management company, appropriately licensed and staffed, providing a broad spectrum of technical and commercial management to all segments within the maritime industry. Newlead has the following accreditations:
- ISO 9001 from American Bureau of Shipping for a quality management system, by consistently providing a service that meets customer and applicable statutory and regulatory requirements, and enhancing customer satisfaction through, among other things, processes for continual improvement
- ISO 14001 from American Bureau of Shipping for environmental management, including policy and objectives targeting legal and other requirements
- Safety, Quality and Environmental from American Bureau of Shipping
Newlead's management has broad expertise, including specialized knowledge required for managing oil tankers, gas carriers, chemical carriers and bulkers. Senior personnel have a record of successfully performing and have a dedicated pool of senior engineers and top-class masters.
Six Vessels: Commercial and Other Details
EXIT FROM CONTAINER MARKET
Aries has preliminarily agreed to sell the MSC Seine and Saronikos Bridge for an aggregate purchase price of $11.4 million, payable in cash at closing. If the sales proceed, they are expected to close during the fourth quarter of 2009.
Each of the MSC Seine and Saronikos Bridge is a 2,917 TEU container vessel built in 1990. Upon the closing of these transactions, Aries will have exited the container market.
CONVERSION OF NOTES
Pursuant to the recapitalization of Aries on October 13, 2009, Aries issued $145.0 million in aggregate principal amount of 7% senior unsecured convertible notes due 2015 (the "Notes"). The principal amount of the Notes is convertible into common shares at a conversion price of $0.75 per share. Focus Maritime Corp ("Focus"), 100% owned by Mr. Zolotas, purchased substantially all of the Notes and recently commenced a conversion of $20.0 million in principal amount. As a result of this conversion, approximately 26.67 million new common shares will be issued in the name of Focus. After this conversion, the remaining new principal balance of the Note will be $125.0 million and will be convertible into approximately 166.67 million common shares.
The conversion by Focus will save Aries $1.4 million annually in interest cost.
THIRD QUARTER RESULTS
For the three months ended September 30, 2009, total revenues from continuing operations were $12.2 million compared to total revenues of $21.5 million recorded for the three months ended September 30, 2008. For the three months ended September 30, 2009 and September 30, 2008, the Company's TCE rates were $9,675 per day and $13,861 per day, respectively.
TCE rates are defined as voyage, time charter and bareboat charter revenues, less voyage expenses during a period, divided by the number of available days during the period. The TCE rate is a standard shipping industry performance measure used primarily to compare daily earnings generated by vessels on time charters with daily earnings generated by vessels on voyage charters, because charter hire rates for vessels on voyage charters are generally not expressed in per day amounts, while charter hire rates for vessels on time charters generally are expressed in such amounts.
The decrease in revenues and TCE rates were primarily attributable to (a) low vessel utilization, (b) the general economic environment and market conditions for tankers that resulted in lower charter/ spot rates, (c) out-of-service days related to the MSC Seine, which did not generate revenue during two months of the third quarter, and (d) the Nordanvind's failure to generate revenue during the three months ended September 30, 2009. In general, the increase in scheduled dry-dockings and repairs during the period, adversely impacted revenue during the three months. Also, eight out of 11 vessels operated in the spot market during the three months ended September 30, 2009.
Fleet utilization for the three months ended September 30, 2009 was 77.3% compared to 86.2% for the three months ended September 30, 2008. Given the significant number of dry-docking days in the third quarter, fleet utilization for the three months ended September 30, 2009 and 2008 would be 61.4% and 86.2%, respectively, after giving effect to dry-docking.
Net loss from continuing operations was $110.9 million or $3.86 basic and diluted loss per share, for the three months ended September 30, 2009, compared to net loss of $4.9 million, or $0.17 basic and diluted loss per share, recorded for the three months ended September 30, 2008. The results for the third quarter of 2009 include a $91.6 million vessel impairment charge, $3.6 million provision for charter claims, as well as a $0.2 million non-cash gain from the change in the fair value of derivatives. The results for the same period of 2008 included a $0.8 million non-cash loss from the change in the fair value of derivatives.
Net loss from continuing and discontinued operations for the three months ended September 30, 2009, was $111.3 million, or $3.87 basic and diluted loss per share, compared to net loss of $4.3 million, or $0.15 basic and diluted loss per share, recorded for the three months ended September 30, 2008.
Adjusted EBITDA for the three months ended September 30, 2009, was $(7.1) million, compared to $2.0 million for the three months ended September 30, 2008. This decrease is mainly attributable to the fleets lower utilization as well as higher voyage expenses due to the fact that much of the fleet operated on the spot market. Furthermore there were approximately $2.6 million of expenses related to the Company's recapitalization during the quarter.
Allan L. Shaw, Chief Financial Officer, commented, "In a few weeks, we have strengthened Aries balance sheet and have taken significant steps to restructure and reposition with the purpose of creating value for all stakeholders."
NINE MONTH RESULTS
Total revenues of $42.9 million from continuing operations were recorded for the nine months ended September 30, 2009, compared to total revenues of $58.1 million recorded for the nine months ended September 30, 2008. For the nine months ended September 30, 2009 and September 30, 2008, the Company's TCE rates were $13,064 per day and $16,149 per day, respectively, TCE rates are defined as voyage and time charter revenues, less voyage expenses during a period, divided by the number of available days during the period.
The decrease in revenues and TCE rates were primarily attributable to (a) low vessel utilization, (b) the general economic environment and market conditions for tankers that resulted in lower charter/ spot rates, (c) out-of-service days related to the MSC Seine, which did not generate revenue during two months of the third quarter, and (d) the Nordanvind's failure to generate revenue during the nine months ended September 30, 2009. In general, the increase in scheduled dry-docking and repairs adversely impacted revenue during the course of the nine months. Also, eight out of 11 vessels operated in the spot market during the nine months ended September 30, 2009.
Fleet utilization for the nine months ended September 30, 2009 was 83.5%, compared to 90.7% for the nine months ended September 30, 2008. Given the significant number of dry-docking days during the year, fleet utilization for the nine months ended September 30, 2009 and 2008 would be 75.9% and 89.3%, respectively, after giving effect to dry-docking.
Net loss from continuing operations was $117.9 million or $4.10 basic and diluted loss per share, for the nine months ended September 30, 2009, compared to a net loss of $8.2 million, or $0.29 basic and diluted loss per share, recorded for the nine months ended September 30, 2008. The results for the third quarter of 2009 included a $91.6 million vessel impairment charge, $3.6 million provision for charter claims, as well as a $1.4 million non-cash gain from the change in the fair value of derivatives. The results for the same period of 2008 include a $0.8 million non-cash loss from the change in the fair value of derivatives.
Net loss from continuing and discontinued operations for the nine months ended September 30, 2009, was $123.8 million, or $4.30 basic and diluted loss per share, compared to net income of $2.0 million, or $0.07 basic and diluted income per share, recorded for the nine months ended September 30, 2008.
Adjusted EBITDA for the nine months ended September 30, 2009, was $1.6 million compared to $16.8 million for the nine months ended September 30, 2008. This decrease is mainly attributable to the deterioration in revenue, increased voyage expenses due to the fleet's spot exposure, as well as transaction costs associated with the Company's recapitalization.
BALANCE SHEET
The Company had a negative working capital position of approximately $244.4 million, reflecting $0 cash and cash equivalents as of September 30, 2009 compared with $4.0 million as of December 31, 2008. The Long Term Debt decreased to $221.4 million for the period ending September 30, 2009, compared to $223.7 million as of September 30, 2008. Giving effect to the Company's recapitalization, working capital improved to approximately $90.0 million.
RECAPITALIZATION
As previously announced, on October 13, 2009, in connection with Aries' recapitalization, Grandunion, a company controlled by Michail Zolotas and Nicholas Fistes, undertook certain transactions with Aries.
Aries' existing syndicate of lenders entered into a new $221.4 million Facility Agreement to refinance its existing revolving credit facility, and Aries issued $145.0 million aggregate principal amount of the Notes. Aries also assumed a $37.4 million credit facility in relation to the three vessels transferred to the Company as part of the recapitalization.
Grandunion transferred to Aries three dry bulk carriers with an approximate net asset value of $36.0 million in exchange for 18,977,778 newly issued shares of the Company, of which 2,666,667 shares were transferred to Rocket Marine, Inc. in exchange for Rocket and its affiliates entering into a voting agreement with Grandunion. Under this voting agreement, Grandunion controls the voting rights relating to the shares owned by Rocket and its affiliates. Currently, Grandunion owns approximately 34.2% of the Company and, as a result of the voting agreement, controls the vote of approximately 71.0% of the Company's outstanding shares.
FLEET UPDATE
Not including the six dropdown vessels described above, following the closing of the transactions completed on October 13, 2009 in connection with the recapitalization, Aries operates a fleet of nine double-hull product tankers, two container ships and three dry bulk vessels. Currently, six of the Company's 14 vessels are secured on period charters with established international charterers. The charters for the product tankers and container vessels have remaining periods ranging from seven to 13 months. Charters for two of Aries' product tanker vessels and one of its dry bulk vessels, currently have profit-sharing components. It is anticipated that Aries will have 18 vessels, giving effect to the dropdown of six vessels and sale of two vessels.
The charters for the dry bulk vessels have approximately remaining periods ranging as follows:
- China - Minimum six years - Maximum six years, 11 months, plus an option to extend further by approximately 159 days due to dry-docking duration.
- Australia - one month.
- Brazil - Minimum four years, 11 months - Maximum five years, three months.
The Company received redelivery for the MSC Seine in accordance with the terms of its charter in September 2009.
On November 5, 2009, the Company announced a two-year time charter for the 1993-built, 172,972 dwt dry bulk vessel Australia at a net daily charter hire rate of $20,391 per day. This charter has an expiration date ranging from a minimum of one year, 11 months and a maximum two years, one month.
(1) Aries considers Adjusted EBITDA to represent the aggregate of net loss from continuing operations, net of interest expense, depreciation, amortization (excluding the effect of the amortization of the deferred revenue due to the assumption of charters associated with certain vessels acquisitions), change in the fair value of derivatives, stock-based compensation expense, claim provisions, doubtful receivables and impairment loss. The Company's management uses Adjusted EBITDA as a performance measure. The Company believes that Adjusted EBITDA is useful to investors, because the shipping industry is capital intensive and may involve significant financing costs. Adjusted EBITDA is not an item recognized by GAAP and should not be considered as an alternative to net income/ loss, operating income/ loss or any other indicator of a company's operating performance required by GAAP. The Company's definition of Adjusted EBITDA may not be the same as that used by other companies in the shipping or other industries.
(2) Available days is the total number of days a vessel is controlled by a company less the aggregate number of days that the vessel is off-hire due to scheduled repairs or repairs under guarantee, vessel upgrades or special surveys.
(3) Operating days is the number of available days in a period less the aggregate number of days that the vessels are off-hire due to any reason, including lack of demand or unforeseen circumstances.
(4) Fleet utilization is the percentage of time that the Company's vessels were available for revenue generating available days, and is determined by dividing the number of operating days during a relevant period by the number of available days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding suitable employment for its vessels.
(5) Equivalent vessels data is the available days of the fleet divided by the number of the calendar days in the respective period.
(6) Adjusted to reflect that the Stena Compass and the Stena Compassion were each employed on a bareboat charter; an assumed TCE of $24,500 per day, reflecting assumed operating costs of $5,800 per day, has been included in respect of:
(a) the 92 calendar days of the vessels during the three month period ended September 30, 2009, and 2008, respectively.
(b) the 273 and 274 calendar days of the vessels during the nine month period ended September 30, 2009 and 2008, respectively.
(7) Total vessel operating expenses are defined as the sum of the vessel operating expenses, amortization of dry-docking and special survey expense and management fees adjusted to exclude the following calendar days with respect to the Stena Compass and the Stena Compassion, which were employed on bareboat charters:
(a) the 92 calendar days of the vessels during the three month period ended September 30, 2009, and 2008, respectively.
(b) the 273 and 274 calendar days of the vessels during the nine month period ended September 30, 2009 and 2008, respectively.
Basis of presentation: The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year.
CONFERENCE CALL INFORMATION
Aries will hold a conference call on Monday, November 16, 2009, at 8:00 a.m. Eastern Time to discuss results for the third quarter of 2009. To access the conference call, dial (888) 694-4702 for domestic callers or (973) 582-2741 for international callers, and use the conference ID 41283423. Following the teleconference, a replay of the call may be accessed by dialing (800) 642-1687 for domestic callers, or (706) 645-9291 for international callers, and the conference ID 41283423. The replay will be available through November 30, 2009. The conference call will also be broadcast live over the Internet. To access the live webcast, please go to the Company's website: www.ariesmaritime.com. The conference call will not include a question and answer session.
In addition, Aries will be publishing a supplemental slide presentation which will also be available on Aries' website on the morning of the call.
About Aries Maritime Transport Limited
Aries Maritime Transport Limited is an international shipping company that owns and operates product tankers, container and dry bulk vessels. The Company's products tanker fleet consists of five MR tankers and four Panamax tankers, all of which are double-hulled. The Company also owns a fleet of two container vessels in capacity of 2,917 TEU each and three dry bulk vessels secured on period charters.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
This press release includes assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as ''forward-looking statements.'' We caution that assumptions, expectations, projections, intentions and beliefs about future events may and often do vary from actual results and the differences can be material. All statements in this document that are not statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, such matters as future operating or financial results; statements about planned, pending or recent acquisitions, business strategy, future dividend payments and expected capital spending or operating expenses, including dry-docking and insurance costs; statements about trends in the container vessel and products tanker shipping markets, including charter rates and factors affecting supply and demand; our ability to obtain additional financing; expectations regarding the availability of vessel acquisitions; and anticipated developments with respect to pending litigation. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in our records and other data available from third parties. Although Aries Maritime Transport Limited believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, Aries Maritime Transport Limited cannot assure you that it will achieve or accomplish these expectations, beliefs or projections described in the forward looking statements contained in this press release. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including changes in charter rates and vessel values, failure of a seller to deliver one or more vessels, failure of a buyer to accept delivery of a vessel, default by one or more charterers of our ships, changes in demand for oil and oil products, the effect of changes in OPEC's petroleum production levels, worldwide oil consumption and storage, changes in demand that may affect attitudes of time charterers, scheduled and unscheduled dry-docking, changes in Aries Maritime Transport Limited's voyage and operating expenses, including bunker prices, dry-docking and insurance costs, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, domestic and international political conditions, potential disruption of shipping routes due to accidents, international hostilities and political events or acts by terrorists and other factors discussed in Aries Maritime Transport Limited's filings with the U.S. Securities and Exchange Commission from time to time. When used in this document, the words ''anticipate,'' ''estimate,'' ''project,'' 'forecast,'' ''plan,'' ''potential,'' ''may,'' ''should,'' and ''expect'' reflect forward-looking statements.
Source: Aries Maritime Transport Limited
SOURCE Aries Maritime Transport Limited
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