Precious Shipping sank to a $37.3m second-quarter loss, dragged down by its settlement with China’s Sainty Marine and weaker markets.
The loss included a charge of $27.4m related to the settlement of its long-running dispute with the former Jiangsu province-based shipbuilder over 11 ultramax bulkers.
Precious described the settlement as a “win-win” for both sides, with the bulker owner already receiving $40.5m as part of the settlement.
The company said it agreed to the settlement to “get much needed cash” into Precious “as soon as possible” and to save additional legal costs of about $3m per year, as well as management time.
“The removal of uncertainty will strengthen our perception with investors and financiers,” the Bangkok-listed shipowner added.
Precious also suffered from the weaker dry cargo market during the quarter, Its ships earned $6,099 per day, substantially lower than the year-ago figure of $9,002 per day.
Challenging quarter
Despite this, the company was able to outperform the Baltic Handy Size Index by 15.6% and the Baltic Supramax Index by 34.2%.
Precious described the second quarter as “far more challenging” than the first, which was affected by the lockdown in China, which accounts for roughly 40% of all dry cargo movement.
In contrast, the second quarter was hurt by lockdown in the rest of the world, which accounts for the other 60% of dry cargo movement.
Precious said capital markets remained frozen in the first half and it does not expect a “rapid reopening of debt/equity capital markets for the time being”.
Despite this, the company disclosed that it had successfully amended the terms of two outstanding bonds during the quarter, which will see their maturity dates extended by 18 months, and an increase in each bond’s coupon of 150 basis points during the extended maturity.
“These amendments have allowed us to extend our cash runway, a step which makes us more resilient and better equipped to weather the impact of Covid-19,” Precious said.
