Ultrapetrol suffers impairment loss from failed ship sales

Ultrapetrol suffers impairment loss from failed ship sales

London: Ultrapetrol’s former owners have turned down an offer to purchase four vessels from the company, which has incurred an impairment loss for the NASDAQ-quoted group.

In September, the Menendez family sold their controlling stake in the Argentinian company to Sparrow Capital Investments, part of private equity Southern Cross Latin America.

The deal included an option for Hazels (Bahamas) Investments, one of the Menendez family’s investment vehicles, to purchase Ultrapetrol’s ocean business, which comprises two products tankers and two feedermax containerships. The deadline expired in March without the transaction taking place.

As a result, the NASDAQ-listed company has posted a non-cash impairment loss of $10.5m through the failed sale of the product tankers Alejandrina (9,200 dwt, built 2006) and Miranda I (6,600 dwt, built 1995). There was an additional one-off charge of $5.7m related to the deal.

Alejandrina (pictured) has been laid up in Argentina since September, which Ultrapetrol said has significantly impacted its ocean segment’s financial results.

“We expect her to be back in operation by May 2015, as lower than expected market demand has delayed her redeployment,” the company said today.

Miranda I is now up for sale.

Revenues from the ocean business decreased by $1.9m (11%) to $16m in the fourth quarter of 2014, compared to $17.9m the same period of 2013.

Ultrapetrol also operates two feedermax containerships, Argentino (932 teu, built 2002) and Asturiano (1,150 teu, built 2003).

One of these vessels, believed to be Argentino, was off-hire for an “extensive” period of time during the fourth quarter of 2014, which also negatively affected Ultrapetrol’s earnings for the quarter. The mechanical issue has since been resolved, the company said.

In contrast, Ultrapetrol’s offshore segment saw sustained growth during the financial year 2014. Adjusted EBITDA increased 21% to $48.6m, compared to $40.0m in 2013.

“In the offshore supply business, we have continued to focus on securing our revenue stream with attractive, multi-year contracts that provide us with stability and earnings visibility. By signing four-year contracts for the UP Safira and UP Opal and extending the contract of the UP Turquoise for an additional four years on consistent terms, we have made significant progress towards this goal,” Damian Scokin, Ultrapetrol’s president and CEO said today.

“Additionally, the UP Coral, which will be employed on a six-year contract with Petrobras, is completing its conversion to an ROV support vessel and is expected to sail for Brazil next week where it will commence its complex, high-margin employment.”

Overall, the group posted a net loss of $52.27m for 2014, way down on profits of $7.92m in 2013. Revenues decreased from $411.2m to $363.7m over the same period.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.

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