Rand Logistics fell into default on its bank loans but said it is seeking waivers to deal with the situation.
The New York-listed owner of Great Lakes bulkers said it failed to meet key requirements of a first-secured loan provided by a syndicate led by Bank of America and a second-secured loan from a Guggenheim Corporate Funding-led group.
According to a filing with the US Securities & Exchange Commission, Rand failed to meet the debt-to-earnings ratio required by both loans.
Bravener departs
Also, Rand said that it did not renew the employment agreement of Scott Bravener, the chief executive of Lower Lakes Towing, which triggered a provision on change of control of the key vessel-owning subsidiary.
“The company is actively pursuing waivers and amendments to address the covenant breaches discussed above,” Rand told the SEC. “There can be no assurance, however, that the company will be able to obtain any such waivers or amendments in a timely manner, on commercially reasonable terms, or at all.”
Meanwhile, Jersey City-headquartered Rand reported a bottom-line net loss of $2.97m for the second quarter, reversing a $2.61m profit a year earlier.
Earnings snapshot
| Q2 2016 | Q2 2015 | |
| Freight and other revenue | $33.1m | $39m |
| Vessel operating expenses | $18.8m | $26.6m |
| Operating income | $11.2m | $12m |
| Net income (loss) | ($2.97m) | $2.61m |
| Earnings (loss) per share | ($0.16) | $0.14 |
Without $4.3m in charges related to restructuring and the retirement of a vessel, the shipowner said it had adjusted net income of $1.3m.
“Our operating performance in our first quarter of fiscal 2017 reflected a choppy demand environment which led to the slow start of the sailing season,” said chief executive Ed Levy.
But he highlighted that operating income came in at $11.2m, down from $12m.
“This speaks to a more disciplined operating approach which is yielding an increase in the percentage of time that our vessels are operating in revenue loaded condition,” he said.
Revenue slumps
Freight and other revenue sank 15% to $33.1m compared to the second quarter of last year, while vessel operating expenses declined by 29% to $18.8m.
Levy struck an optimistic tone for the months ahead, pointing to encouraging signs for the remainder of the 2016 sailing season that could lead Rand to bring one of two vessels out of layup.
And he said Rand has been awarded new business that was not factored into its 2017 expectations.
