Analysts have backed a new rescue plan at MPC Container Ships (MPCC) as "bold and decisive".
The Oslo-listed feedership player revealed last week it was plotting share sales of up to $16.5m, plus $7m in other measures including asset disposals.
The company believes this will give it enough cash for 18 months of operations, avoiding a potential bankruptcy and boxship "fire sales".
Fearnley Securities said the moves relieve pressure on covenants.
Analysts Espen Landmark Fjermestad, Peder Nicolai Jarlsby and Ulrik Mannhart added liquidity should be sufficient to see the company into 2021.
"By then, a slowly recovering market should result in rates above MPCC’s cash break-even levels," they said.
MPCC's charter rates are below cash break-even of about $7,500 per day, with levels of $6,000 per day forecast for the second half of 2020.
Fearnley has reduced the target price to NOK 17 ($1.76), against a trading price of NOK 8.26 on Monday morning.
Runway to normalised market
MPCC is also seeking to amend $200m of bonds to ease covenants and extend maturity.
"The proposal is constructive from a bondholder’s perspective, as it reduces liquidity uncertainty and depicts a potential runway to a normalised market where the bonds can be refinanced," the analysts said.
Fearnley estimates MPCC's Ebitda for 2020 and 2021 of $7m and $24 respectively.
Global boxship cargo volumes are down 15% to 20% in the second quarter, with carriers blanking an "unprecedented" amount of sailings, it added.
Time charter portfolios have "remarkably low durations", with tonnage providers taking the largest hit, Fearnley said.
The idle fleet is now nearly 12% of total capacity, the Norwegian investment bank added.
The investment bank is expecting volumes to decline by about 10% in 2020, suggesting a rebound in the third quarter.
"Unfortunately, it also suggests that charter rates will remain weak throughout 2020," Fearnley added.
