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The reason that RBS reached an agreement with the Company on 21/4/2011 after many meetings and tough negotiations was the support of the Company so as to have financial stability due to the cash flow problems that resulted as follows: a) The non-payment of the accrued delays based on the Contract from the Cyprus government during the transfer of water of €4 million. b) The arbitration, although it vindicated fully the company, did not calculate the total cost/expenses that had already been certified by the accountants/auditors of the government (€27m) for the 93 days of delay for the transfer of water from Greece and finally the Arbitrator decided that the Company will receive €10 million only. This unexpected decision by the Arbitrator, with regard to the hearing sum only, since the Company was fully vindicated, in February 2011 (after 16 months of cash problems) affected negatively both the company and the banks and stressed the need for stabilization measures immediately. c) The ongoing unfavourable conditions and the very low fares in the shipping industry, which affected negatively the ships in the spot market. d) The further drop in the fares of 8 tankers from the time charters to Litasco/Lukoil and the 2 tankers from Henring charters. However, following the constant contacts that the Company had with banks for a financial support on the basis of the agreement dated 21/4/2011, the banks terminated the cooperation without any warning and confiscated the Company’s tankers, although the agreement/promise dated 21/4/2011 was activated by both parties, the banks and the company. One of the most significant terms of this agreement, apart from the financial support and the strengthening of the Company, was the Company to pay $2.25 million for the release of Stavrodromi tanker, which had been seized by the creditors concerning the transfer of water. According to the agreement, the Board of Directors was forced to accept the arbitration sum so as to save the Company and submitted part of the money from the water arbitration, $2.1 million, although the legal advisors were opposite and wanted to lodge an appeal, because they believed that the Company deserved more money than the Arbitrator decided. The Board of Directors proposed to the banks this sum to be used for working capital and the support of the Company’s fleet, but unfortunately the banks insisted on the payment of the sum as an inviolable condition of the agreement dated 21/4/2011 so that the Company is saved and this sum is paid for the release of the Stavrodromi tanker. It is, therefore, proved that the banks tricked the company, not only for the payment of the €2,1 million but also for the fact that the Company did not appeal the decision and did not receive €17 million. Also, the banks paid the sum of $7 million gradually based on the agreement and received €4 million for the payment off from the revenues of ships, that is, net support of $3 million, a sum used for the payment of the trade creditors and ensured the Company for a further financial aid so that it is considered as going concern. However, all of a sudden and despite the promises, they tricked the company, for unknown reasons, possibly due to their inability to reach an agreement as a result of the problems that the banking system faces and although most provisions of the agreement dated April 21, 2011 had been fulfilled, they terminated their support to the Company and started confiscating the tankers, taking advantage of the provisions of previous agreements and ignoring the latest agreement and promise to support the company. Also, the nerves of the RBS employees and consultants went one step further: 1) One of the terms of the agreement dated 21/4/2011 was a meeting with Bank of Cyprus so that the latter ensures RBS that it will support the company, stopping all lawsuits in relation to the Company’s obligation (water debt) to Bank of Cyprus, Bank of Cyprus supported the Company unlike the managers and consultants of RBS, who tricked both the Company and Bank of Cyprus. The Company will defend its rights and will proceed with a written complaint and counterclaim to the British government, which is the major shareholder of RBS so as to carry out investigation since their fast and opaque moves as well as the concealment of truth from the courts, allowing the confiscation and sale of ships and taking advantage of the Company’s economic weakness as well as that of the Administrators (to whom according to the agreement dated 21/4/2011 they committed to pay outstanding sums from the management contracts of $4.5 million), raise serious questions for lack of transparency and unprofessional behaviour that must be investigated. 2) During the negotiations with the banks, the Company was not apathetic, waiting for the banks’ help only, but found four investors, who were ready to invest $10 million. The banks’ reaction was positive but they told the Company that it should wait to receive their help first so as to achieve a stable liquidity and then to have talks with the investors for a loan restructuring. So, why the banks didn’t give us enough time and proceeded with the confiscation of ships? We were once again tricked, since they had already decided of their next steps, obviously for the interests of third parties. Finally, the Company would like to announce that it was already warned Litasco/Lukoil that it will file a legal action against it for enormous compensations in case of a loss of assets and future revenues etc, due to its unconventional behaviour and the unilateral reduction of the fares, which contributed heavily to the cash liquidity and the general economic condition of the Company, challenging the banks to take advantage of the Company’s economic weakness. The Board of Directors opposes to the banks’ decision not to support the Company and based on their commitments and promises stemming from the agreement 21/4/2011, the Board of Directors decided to take legal measures against those responsible to defend its interests in Cyprus and London and to proceed with counterclaims for losses stemming from the banks’ moves of $728 million. We believe that the confiscations of ships and their sale in humiliating prices, much lower than 1/3 of the sum of borrowing of the tankers, is wrong since they are disaster for both the banks and the Company. It is neither rational nor acceptable the banks to sell the ships in auctions, losing $240 million instead of helping and supporting the company with $10 million for the safe operation of the fleet, until the crisis ends. This means that something else is going on and we hope that it is proved in courts and the company continues with its activities. What the Company asks from its shareholders is understanding, patience and support until it is vindicated fully. Also, the Company is pledged to release announcements on the developments. With regard to the auditors’ view in the audited financial statements for 2010, in case that the banks act contrary to the agreement of April 21, 2011, the basis of preparation of the accounts as going concern is no longer considered appropriate and any changes or readjustments deemed necessary in the presentation of the financial statements, will be included in the audited financial statements for 2011. Ocean Tankers Holdings Public Company Limited |
Ocean: Information on Company’s economic condition