MPC Container Ships (MPCC) is betting on a recovery in feeder boxship markets.
The Oslo-listed company saw losses rise in the second-quarter of the year as it was "severely affected" by the impact of Covid-19.
But it believes container markets are picking up and has successfully raised another $3.5m from its latest share capital increase.
Chief executive Constantin Baack said the company "is well-positioned to benefit from a much-anticipated market rehabilitation".
"The world is navigating unchartered waters of extreme uncertainty and hence the market remains fragile," he said.
He added there are "encouraging signs of improvement in several important industry indicators".
These include an improving charter market and a smaller idle fleet.
"Total idle container fleet, which increased dramatically during the onset of the pandemic, has seen an equally substantial retraction over the summer as liners are re-instating services," Baack said.
"Charter rates are yet again improving, and the supply side remains insufficient due to an historically low orderbook and the re-opening of recycling yards in the Indian subcontinent."
Worst year on record
MPCC reported net losses of $17.6m in the second quarter, up from $6.4m in the previous year.
Revenues were $39.1m for the period, against $46m in the year before.
But the company has successfully completed a recapitalisation to give it more liquidity, debt covenant waivers and a bond maturity extension.
In July, the company undertook a private placement of 260m new shares to raise NOK 260m ($27.5m).
Another 35m new shares issued at NOK 1 each at the end of August is expected to have raised a further $3.5m.
The capital increase was deemed necessary in order to weather losses due to the coronavirus.
MPCC said that "2020 will likely turn out to be one of the worst years for container trade on record".
But it is betting on a gradual recovery, with macroeconomic indicators expected to normalise in 2021.
That should enable the extensive excess supply in the boxship market to be unwound in 2020.
MPCC owns 68 container vessels from 1,000 teu to 2,500 teu, of which eight operate in a joint-venture.
The company expects the feeder fleet growth to contract by 0.2% in 2020 and decrease by a further 1.5% in 2021.
It said the number of idle feeders has fallen to 94 vessels and expects a recovery in charter rates that began in August to continue.
Average time-charter rates received by MPCC in the second quarter fell to $7,938 per day, down from $8,969 in the first quarter.
That contributed to a loss of $28.3m in the first half of the year, doubling the company's $14m loss in the corresponding period of 2019.
However, MPCC notched up Ebitda of $1.4m in the second quarter, which is largely in line with expectations, according to Fearnley Securities.
“Feeder rates troughed in June/July and has since then improved by as much as 30%,” it said. “This will create some sought-needed tailwind into the fourth quarter.
“This improving backdrop hopefully sets the stage for a better 2021 as well.”
