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• Adjusted Net Loss of $3.3 million, which excludes non-cash losses of $13.2 million incurred on the sale of a vessel and $11.8 million impairment losses of a vessel. Six Months 2012 • Net Revenues of $35.6 million. • Adjusted EBITDA of $10.3 million, which excludes non-cash losses of $15.6 million incurred on the sale of two vessels and $11.8 million impairment losses of a vessel. • Adjusted Net Loss of $7.4 million, which excludes non-cash losses of $15.6 million incurred on the sale of two vessels and $11.8 million impairment losses of a vessel. For more information we refer you to the EBITDA and adjusted EBITDA reconciliation section contained in this press release. Management Discussion: Dale Ploughman, the Company’s Chairman and Chief Executive Officer, stated: “Over the second quarter and first half of the year, Seanergy’s financial results were affected by the prevailing market weakness, as more vessels were employed under both short term contracts and index linked agreements in the current year as compared to 2011. So far in 2012, Seanergy has sold three of its oldest vessels for a total gross consideration of about $25.3 million. The proceeds have been used to repay debt outstanding under the Marfin facility and Citibank syndicate facility. We expect this to reduce our interest and finance expenses and the cash outflows associated with future dry docking surveys, as well as the average daily operating expenses incurred by our fleet. During the first half of 2012 the dry bulk market was particularly unfavorable. Compared to last year, rates for all vessel classes fell across the board and the BDI averaged 31% lower than in the same period of 2011. Market weakness caused by the oversupply of vessel tonnage was largely expected, while the economic uncertainty surrounding the developments, or rather, the lack thereof in the Eurozone crisis was the unexpected factor preventing a meaningful and sustained rise in charter rates over the second quarter of 2012, by dampening expectations about future growth in dry bulk demand. Looking forward, we believe a drop in demand growth is likely to be prevented, as central banks have openly expressed their intention to support economic growth by easing monetary conditions and we expect that most governments would also have an interest to take proactive measures if economic conditions start to deteriorate. Moreover, China, whether through the government or private sector, is generally expected to continue approving major investments in steel-intensive projects that are likely to support demand for more iron ore imports. Lastly, demand for the transportation of thermal coal remains strong and the shifting dynamics of world trade in many bulk commodities point to increases in ton-mile demand. The orderbook for dry bulk deliveries continues to shrink as the year progresses, and it is expected that the difficulty in obtaining finance, along with the bad market conditions will result in continued weakness in new-building ordering for the rest of this year.” Christina Anagnostara, the Company’s Chief Financial Officer, stated: “Over the second quarter of 2012 Seanergy’s revenue fell by 35% when compared to the same quarter of 2011. For the six month period ended June 30, 2012 the corresponding decline in revenues was 33%. Furthermore, Seanergy reported a net loss of $28.4 million for the second quarter of 2012, compared to a profit of $0.6 million in the second quarter of 2011. The financial result for second quarter of 2012 includes $13.2 million of non-cash losses stemming from the sale of the BET Scouter in June, as well as an $11.8 million non-cash loss from the impairment of BET Fighter. Excluding these, net losses would have amounted to $3.3 million. The deterioration in performance during the second quarter of 2012 was mainly a result of a 43% decrease in the average Time Charter Equivalent (“TCE”) rate earned by our vessels, from $15,404 to $8,763, as earnings of vessels employed under floating rate contracts and on short term charter parties reflected the weak spot market conditions. It is also worth noting that the sales of the African Zebra and the BET Scouter in 2012 have resulted in a reduction in the average number of vessels owned during the second quarter to 18.8 from 20 in the second quarter of 2011. In terms of our effort to limit expenses so as to improve our operating performance, quarterly daily average vessel operating expenses were reduced by 11%, while daily general and administrative expenses per vessel have been reduced by 62%, compared to the second quarter of 2011. As of June 30, 2012 our outstanding debt was $296.2 million and our cash reserves amounted to $17.7 million. As a result of prolonged challenging market conditions, the Company is no longer in compliance with some financial covenants. The Company has entered into discussions with its lenders to develop a realistic financial plan that will improve liquidity and operating flexibility while maintaining a sustainable capital structure. The Company has appointed Houlihan Lokey and Axia Ventures Group as its financial advisors to assist with this process.” Second Quarter 2012 Financial Results: Net Revenues Net Revenues in the second quarter of 2012 decreased to $18.1 million from $27.8 million in the same quarter in 2011, a reduction of 35%. Reduced net revenue was a result of the pronounced dry-bulk market weakness, as the average of the BDI over 2Q 2012 fell by 26% compared to the already low levels seen in the second quarter of 2011. Furthermore, Seanergy completed the sale of the African Zebra in the first quarter of 2012, as well as the sale of the BET Scouter in June 2012. This resulted in less operating days for our fleet during the quarter, as an average of 18.8 vessels were owned, compared to 20 in the corresponding quarter of 2011. EBITDA, Adjusted EBITDA Excluding $13.2 million of non-cash losses resulting from the BET Scouter sale and $11.8 million of non-cash loss from the impairment of BET Fighter, adjusted EBITDA was $5.4 million for the second quarter of 2012, as compared to $13.6 million in 2011. Including the aforementioned non-cash items, we recorded negative EBITDA of $19.6 million for the quarter ended June 30, 2012. For more information we refer you to the EBITDA and adjusted EBITDA reconciliation section contained in this press release. Net Loss For the second quarter of 2012, Net Loss amounted to $28.4 million or $2.37 loss per basic and diluted share, as compared to a Net Profit of $0.65 million or $0.09 profit per basic and diluted share in the same quarter of 2011, based on weighted average common shares outstanding of 11,957,064 basic and diluted for 2012; 7,314,930 basic and diluted for 2011, on a reverse split adjusted basis. Debt Repayment and capital expenditure requirements for 2012 Seanergy ended the second quarter of 2012 with $296.2 million of outstanding debt. This reflects the repayment of $50.2 million of debt principal during the six month period ended June 30, 2012. Assuming no changes, scheduled repayment of debt principal is expected to reach $14.2 million over the next two quarters of 2012. In terms of maintenance capital expenditure, we expect to incur approximately $0.5 million in drydocking costs for the remainder of 2012. Six Months Ended June 30, 2012 Financial Results: Net Revenues Net Revenues for the first half of 2012 decreased to $35.6 million from $53 million in the same period in 2011. The decrease in revenue is due to the reduced size of our fleet, which resulted in 5% less operating days and the market-induced weakness in the daily rates earned by our vessels. EBITDA, Operating Income Excluding non-cash losses resulting from the African Zebra and BET Scouter sales, as well as the non-cash impairment loss of BET Fighter, adjusted EBITDA was $10.3 million for the first half of 2012, as compared to $26.5 million in 2011. Including non-cash losses of $27.3 million, we recorded negative EBITDA of $17.1 million for the six month period ended June 30, 2012. Operating loss amounted to $27.8 million for the six months ended June 30, 2012, as compared to an operating income of $7.1 million for the same period in 2011. As mentioned above, the decreases in EBITDA and Operating Income compared to the first half of 2011 were a result of lower revenue due to the smaller size of the fleet and the weakness in the shipping market, as reflected by a 31% reduction in the BDI from the same period of 2011. Please refer to the EBITDA reconciliation section contained in this press release. Net Loss For the first six months of 2012, Net Loss was $34.7 million or $2.92 loss per basic and diluted share, as compared to a Net Loss of $0.88 million, or $0.12 loss per basic and diluted share, in the same period of 2011, based on weighted average common shares outstanding of 11,880,499 basic and diluted for 2012; 7,314,930 basic and diluted for 2011 on a reverse split-adjusted basis. Second Quarter Developments: Receipt of NASDAQ notice Seanergy received a written notification by NASDAQ, dated June 29, 2012 indicating that because the market value of publicly held shares of the Company’s common stock for 30 consecutive business days from May 16, 2012 through June 28, 2012 was below the minimum listing requirement of $5 million for the continued listing on the NASDAQ Global Market, the company is not in compliance with NASDAQ listing rule 5450 (b)(1)(c). The applicable grace period to regain compliance is 180 days from the receipt of the notice. The company intends to monitor the market value of the publicly held shares of the Company’s common stock through December 26, 2012 and is considering its options for regaining compliance with the requirement. Fleet Employment The M/V Clipper Glory, a 30,570 dwt Handysize dry bulk carrier built in 2007, has entered into a time charter, for a period of about eleven to about thirteen months. The gross charter rate under the new agreement is $7,000 per day for the initial 60 days of the term and following this period the gross rate is linked to the adjusted Time Charter Average of the Baltic Handysize Index. The charter commenced at the end of June 2012. As of the date of this release, the Company has secured employment for 84% of its ownership days for 2012 and 32% for 2013. Impairment of vessel The Company entered into a memorandum of agreement (MOA) in June 2012 for the sale of the vessel BET Fighter. The vessel had an additional ten years of estimated useful life prior to the sale. The reduction in BET Fighter’s estimated useful life resulted in an impairment loss of $11.8 million. Sale of the BET Scouter On June 12, 2012 Seanergy sold the BET Scouter, a 172,173 DWT capesize vessel built in 1995. Gross proceeds amounted to $12.1 million and were used to repay debt outstanding under the Citibank syndicate facility. The sale resulted in a book loss of $13.2 million. Drydocking and Maintenance The scheduled survey for the Hamburg Max took place from May 11, 2012 to June 4, 2012 at a cost of approximately $0.5 million. Subsequent Developments: The Appointment of New Chief Executive Officer Effective as of October 1, 2012, Stamatis Tsantanis will succeed Dale Ploughman as the Chief Executive Officer of the Company. Mr. Tsantanis has also been appointed to the Board of Directors. Mr. Ploughman will continue to serve as the Chairman of the Board and as a Director of the Company. Stamatis Tsantanis brings more than 14 years of experience in shipping and finance and held senior management positions in prominent shipping companies. He served as Group Chief Financial Officer of Target Marine S.A. from September 2008, responsible for its corporate and financial strategy. Mr. Tsantanis previously served as the Chief Financial Officer and as a Director of TOP Ships Inc. from its initial public offering and listing on Nasdaq in 2004 until September 2008. Prior to that, he was an investment banker at Alpha Finance, a member of the Alpha Bank Group, with active role in a number of shipping corporate finance transactions. Mr. Tsantanis holds a Masters degree in Shipping Trade and Finance from the City University Business School in London, and a Bachelors degree in Shipping Economics from the University of Piraeus. 2012 Annual General Meeting The Company announced on September 6th, 2012 the results of its annual meeting of its shareholders held on Wednesday, September 5, 2012 at the Company's executive offices. At the meeting the following proposals were approved and adopted: (1) the election of Mr. George Tsimpis and Mr. Dimitris Anagnostopoulos, as Class C Directors to serve until the 2015 Annual Meeting of Shareholders and 2) the appointment of Ernst & Young (Hellas) Certified Auditors Accountants S.A. as the Company's Independent Registered Public Accounting Firm for the Fiscal Year ending December 31, 2012 were approved and adopted. Dry-docking Surveys The scheduled survey of the Asian Grace commenced on August 22, 2012 and was completed on September 14, 2012. The total cost will be approximately $0.6 million. Financial Developments As of June 30, 2012 the Company’s subsidiary, Maritime Capital Shipping Limited (“MCS”), did not comply with the covenant relating to the market value of the fleet (Security Value to Security Requirement covenant) under the DVB facility. The Company is in discussions with the bank to request waiver for the breach or amendment of the facility. The Company expects that the waiver/amendment will be granted by the bank, thus the presentation of the DVB long term debt in the attached unaudited condensed consolidated financial statements assumes that the waiver will be granted and accordingly the Company’s long term debt continues to be classified as non-current as of June 30, 2012. If the waiver is not granted, then the full amount drawn under the facility will be classified as current, reflecting the lenders’ ability to call the debt at any time at their option. The Company continues to classify the Citibank syndicate long term debt as non-current as of June 30, 2012. If the Company is not in compliance with the minimum Liquidity Funds requirement, minimum Equity Ratio and/or Security Value to Security Requirement covenants after January 1, 2013, and the Company has not extended the existing waiver, the Citibank syndicate will be re-classified as a current liability in full. Together with the Company’s appointed advisors, we have engaged in a constructive dialogue with our lenders aimed at developing and implementing a realistic plan for improving the Company's liquidity and operating flexibility. This plan is focused on developing a capital structure that allows us to manage today's difficult market conditions and prosper in the long term The Company is seeking waivers from its lenders related to various restrictive covenants, amendment of debt profile and maturities and an agreement that they will forbear from exercising remedies under their respective debt arrangements. Although the Company is optimistic that it will reach an agreement with its lenders on the short-term waivers of defaults and on the terms of the restructuring of the Company's indebtedness, no assurances can be provided that these agreements will be concluded, in which case the Lenders could exercise their remedies. Sale of the BET Fighter On July 16, 2012 Seanergy sold the BET Fighter, a 173,149 DWT Capesize vessel built in 1992. Gross proceeds amounted to $9.1 million and were used to repay debt. No gain or loss resulted from the sale. About Seanergy Maritime Holdings Corp. Seanergy Maritime Holdings Corp. is a Marshall Islands corporation with its executive offices in Athens, Greece. The Company is engaged in the transportation of dry bulk cargoes through the ownership and operation of dry bulk carriers. The Company’s current fleet consists of 17 dry-bulk carriers (two Capesize, three Panamax, two Supramax, and ten Handysize vessels) with a total carrying capacity of approximately 911,914 dwt and an average fleet age of 13.6 years. The Company's common stock trades on the NASDAQ Global Market under the symbol “SHIP”. Seanergy Maritime Corp. press release |
Seanergy Maritime Holdings Corp. Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2012