Dubai's Gulf Navigation received shareholder backing to continue operating as well as approval for measures aimed at fixing its long-standing debt problems, including a write-off of accumulated losses and a convertible bond issue.
Dubai's only listed crude shipper has been in negotiations with creditors for months after an ambitious expansion plan at the end of the last decade crippled the company as oversupply hit the oil tanker business and transportation rates plummeted.
Shareholders agreed to a motion at a board meeting on Jan. 5 that the business would continue as a going concern and would not be dissolved, a statement to the Dubai stock exchange said on Monday.
Under market regulations in the United Arab Emirates, such a question must be put to shareholders if accumulated losses surpass 50 percent of the company's share capital, which it did in the third quarter of 2013.
Shareholders approved writing off these accumulated losses, totaling 1.1 billion dirhams ($299.5 million), by reducing Gulf Navigation's capital - an oft-used accountancy technique where a firm will use its own capital base to expunge its debts.
The sale of two very large crude carriers (VLCC) - Gulf Sheba and Gulf Eyada - ships at the heart of the firm's failed expansion plan, was also approved.
Local press reports have previously stated the company was in talks to sell the vessels but the process had been complicated by creditors' claims against them.
In October, it had both its supertankers seized in separate incidents after creditors sought their arrest for due payments.
Other measures agreed to by shareholders include a convertible bond sale worth up to $130 million and the increase in the cap on foreign ownership of shares in the company to 49 percent.
All resolutions still require the approval of the Dubai Department of Economic Development and the Emirates Securities and Commodities Authority, the statement added.
It was the third time Gulf Navigation had sought approval for the measures, with two previous meetings on November 28 and December ruled invalid due to a lack of legal quorum.
Shares in Gulf Navigation fell 6.9 percent on Monday, their sixth decline in the last seven sessions.
($1 = 3.6730 UAE dirhams)
Copyright Reuters 2013.
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