Rickmers Maritime Ceases to Exist

rick
The declining value of Rickmers' fleet (VesselsValue)

By MarEx 2017-08-30 19:02:43

On Wednesday, Singapore-based boxship owner Rickmers Maritime announced that it has completed a final distribution to its creditors and has wound up its business. Unsecured creditors received about 12 percent of amounts owed, and Rickmers plans no further distributions. With disbursements now complete, the trust and its subsidiaries will cease to exist, and its notes will be delisted. 

Rickmers was hit hard by the downturn in the boxship market, especially in the Panamax segment. The value of its fleet plummeted from about $1 billion to $700 million from 2016-2017, putting it at risk of breaching loan covenants and failing to make repayment of maturing debt. It flagged a risk of inability to continue as a going concern in September and again in November as it sought to renegotiate the terms of its maturing bonds – a confirmation of warnings that auditor PricewaterhouseCoopers had raised as early as 2015. 

In late 2016 Rickmers set a record for youngest-ever container ship scrap sale – just shy of eight years, for the 2009-built India Rickmers. The record was quickly broken by Hammonia Reederei's 2010-built Hammonia Grenada. The back-to-back demolition records were widely seen as a symbol of the dismal state of the market. 

Months of talks with lenders did not result in a restructuring agreement, and in April, Rickmers concluded that it could not continue as a going concern "in light of the aggravated illiquidity and lack of new investors." But in a last-minute effort, Owner Bertram R.C. Rickmers attempted to fend off the dissolution of the firm by reducing his stake and allowing bank creditors to take control. The reprieve was short-lived: lead banker HSH Nordbank rejected the proposal the following month.

Rickmers was caught off guard by the sudden reversal. "HSH Nordbank AG has highly surprisingly informed Rickmers Holding AG that the board of HSH Nordbank AG has rejected the credit applications of Rickmers Group and denied approval to the term sheet dated 19 April 2017 and rejected further negotiations of the restructuring," the firm said in a statement. HSH Nordbank's decision forced Rickmers to file for bankruptcy and liquidate its assets. Rickmers proceeded to sell its remaining fleet of 14 ships to Navios Partners for about $110 million in order to fund a final payout. The trust said that shareholders could not to expect to recover the value of their investments during the winding-up of the firm's operations.