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Mercator Lines Sells Three Bulkers, CEO Resigns

Mercator
MLS vessel Guarav Prem (file photo courtesy Mercator Lines)

Published Dec 30, 2015 6:51 PM by The Maritime Executive

Mercator Lines Singapore (MLS) has announced the resignation of CEO Shalabh Mittal effective December 24.

MLS also said that it had finalized the forced sale of three bulkers – the Kesari Prem, Gauri Prem and Sri Prem Aparna – to settle outstanding debts. The vessels were reportedly sold to companies associated with its creditors for a total of about $15 million in retired debt. As of September, MLS' owned fleet size was 12 vessels, suggesting the sale reduces its capacity by a quarter.

Trading in MLS' stock has been suspended for some time and its last listed share price was $0.01, on November 11; the firm's website was down due to “changes” as of December 30.

MLS was in trouble well before the recent collapse of bulk shipping rates. In May, it reported a fiscal 2014 net loss of $125 million, deeper than the previous year's $25 million, citing unscheduled repairs and falling spot rates.

In September, the company requested a stay of judicial oversight and asked for four months to negotiate a restructuring plans with creditors. At least one, German shipping bank HSH Nordbank, had requested the appointment of a judicial manager.

Parent company Mercator Limited, based in Mumbai, conducts its bulk carrier shipping business through MLS. Mercator Limited has exposure to multiple commodities businesses, many of which face headwinds in an environment of oversupply. 

The company has a vertically integrated coal operation, from mining to trading, storage, transportation and delivery. Its oil and gas holdings include onshore interests in India and an offshore development in the Gulf of Guinea, and its maritime transportation operations include both domestic and overseas contracts. It stands to benefit from recent maritime regulation changes in India, including the cabotage requirement that half of government cargoes sail on Indian-flagged vessels.

In addition to commodities operations, Mercator is the second largest dredging firm in India, with nine owned dredgers.

Shalabh Mittal is the son of Mercator Limited founder H.K. Mittal; Shalabh’s brother Aayush sits on the company’s board. Together with the Agarwal family, related by marriage, the Mittals control a 40 percent stake in the company.