US-listed EuroDry is in talks with lenders to push back loan payments due this year.
The move emerged as the Greek company reported the worst financial results since its inception as a pure-play dry bulk company two years ago.
“As part of our efforts to ensure sufficient liquidity, we have agreed or are in the process of discussing with some of our lenders to defer a number of loan repayments due in 2020 to later periods or to the end of the respective facilities,” chief financial officer Tasos Aslidis said on Thursday.
Chief executive Aristides Pittas is expecting remaining talks with lenders to conclude successfully. "We're confident things will move along quite nicely," he told analysts in a conference call after results were published.
EuroDry, which owns seven bulkers, announced a bottom-line net loss of $3.83m for the three months through June, compared with a loss of $1.81m in the same period a year ago.
This was the second consecutive quarter of losses for the company, causing first-half losses to widen more than five-fold to $6.12m.
The Covid-19 global downturn hit EuroDry as hard as its other listed peers. On top of that, the company had two vessels in dry-docking, increasing costs and reducing revenue. EuroDry has no more dry-dockings due this year, Pittas said.
As a further measure to boost liquidity, the company agreed with preferred shareholders to introduce the option, until January, to pay dividends in kind rather than in cash, by issuing new preferred shares.
Inducement
As an inducement, the new preferred shares will yeld almost 10.3%, one percentage point higher than if the dividend is paid in cash.
EuroDry is taking these measures amid a shrinking cash balance. Its earnings report showed cash and cash equivalents dropped to about $902,000 as of the end of June, down from $5.4m at the end of 2019.
The liquidity buffer increases to about $6.8m when other current assets are included, Aslidis told analysts.
“Our strategy is to ensure that we mitigate and address the risks of Covid-19 and have sufficient liquidity to deal with the possibility of renewed market weakness,” Pittas explained.
Downside risks notwithstanding, Pittas said the freight market recovery noted since June might prove sustainable.
“We expect a reversal of fortunes in the third quarter if such trends continue,” Pittas said, adding: "2021 seems to be shaping up as a promising year".
The Greek shipping player said he remained optimistic about the post-pandemic, medium-term prospects of dry bulk shipping, as the fleet orderbook stands at its lowest level in more than 20 years.
EuroDry was set up in 2018 as dry bulk spin off of boxship player EuroSeas, which is also listed on the Nasdaq.
The company has been presenting itself since as a consolidation vehicle for combination with other fleets.
“As always, we continue to seek and evaluate opportunities and options to renew or expand our fleet exploring also merger possibilities with other fleets in accretive transactions,” Pittas said.
