Norwegian shipping tycoon Arne Blystad has disposed of almost all his stock in domestic shipping lender Maritime & Merchant Bank.
The selldown comes as the investor and other shareholders in boxship owner Songa Container are being asked to dig into their pockets for fresh injections of cash.
The Henning Oldendorff-backed bank told the Oslo over-the-counter exchange that Blystad had sold stock in two tranches this week and last week, in deals worth NOK 38.6m ($3.89m).
The first transaction saw his Songa Investments shed 410,000 shares at an average of NOK 73.80 each.
The second saw him sell at 120,000 shares at NOK 70 each. This leaves him with just 29,881 shares in the lender.
Songa Investments was previously listed as the fourth biggest shareholder in the niche lender, with 6.9%. Blystad sits on the board of the bank.
Covenant breach warning
At the end of April, Songa Container said it faced a potential breach of a bond covenant as it warned of charterer "distress" in the coronavirus crisis.
The Norwegian boxship owner is being hit by an uncertain market, delays at shipyards over scrubber retrofitting and potential uncertainty over payments of outstanding receivables.
There is also the possibility of "charterers coming into financial distress", as well as challenges if crew members are affected by the virus.
"As a consequence of this, there is a risk of a potential breach of the group’s financial covenants in the loan agreement," the company said.
This could be addressed by another cash injection, Songa Container added.
More money needed
Songa has revealed in a letter to bondholders this week that shareholders are to put another $5m into the company, plus up to $4m more if they can get the bondholders to agree to taking additional bonds instead of two quarterly interest payments.
The company also wants the bond maturity dates extended by 18 months and a waiver of a loan-to-value covenant.
Songa Container had cash of $13m as of 30 April.
The company is expecting an operating loss of $2.41m in the first quarter.
It said: "Going into Q2, idle time in the market and in pools are increasing and average durations on employment is coming down."
With fuel spreads narrowing, it is halting scrubber fitting on two vessels. Songa was facing an extra $18m in costs if it pressed ahead with the work.
"2020 appears to be lost and 2021 remains a question mark, as the market will require time to recover, but the company remains positive it can harvest cash flow from its investments during 2021/2022," it said.
"While the company is facing challenging times ahead, the shareholders of the company retain an optimistic view of the future. The road back towards a normalised market is bound to take time, but ... global trade volumes will return and that the oil market will regain balance."
Cash already committed
Blystad and other Songa Container shareholders have pumped an extra $5m into the company in March after a fourth-quarter loss of $4.29m, which compared with a deficit of $1.59m in 2018.
The total injected by shareholders since September is $9m.
Songa Container has been contacted for comment.
