Jones Act tanker company exploring “strategic alternatives”

Jones Act tanker company exploring “strategic alternatives”

Jones Act tanker company exploring “strategic alternatives”

Tanker and tank-barge operator U.S. Shipping Partners L.P. said it is “exploring a number of strategic alternatives, which could include, among other things, a recapitalization of the partnership, the sale of new equity and other ways to increase liquidity and strengthen the financial resources of the Partnership.”
   The Edison, N.J.-based company said it has hired the firms Greenhill & Co. LLC and Jefferies & Co. Inc. to assist it.
   The company said it is “in compliance with all its financial covenants as of the end of the first quarter of 2008. However, the partnership’s earnings before interest, taxes and depreciation and amortization (EBITDA) and liquidity have come under increasing pressure due to the current difficult market conditions.'
   The company reported a first quarter net loss of $5.8 million compared to profit of $5.7 million in the same 2007 period.
   Voyage revenue in the most recent quarter was $51.5 million compared to $42.1 million in the comparable 2007 period.
   “Unless there is a significant improvement in utilization of, and charter rates for, the Integrated Tug Barge units (ITBs) and a resumption of growth in the partnership’s chemical business, and/or an amendment to the partnership’s financial covenants, it is possible that the partnership will fall out of compliance with certain financial ratio covenants,” the company said.
   “We are facing difficult current market conditions. Demand in the spot market has recently deteriorated significantly due to overall declining economic activity and decreased demand for the domestic coastwise transportation of petroleum products. Additionally, refinery utilization has declined considerably, fuel prices for operating our vessels are at record levels and increased industry capacity from newbuilds is serving the Jones Act market,” said Paul Gridley, U.S. Shipping Partners’ chief executive officer.
   “Due to these market shifts, the ITBs have recently incurred idle periods greater than, and charter rates below, our previous expectations. Additionally, we have observed modest decreased demand for the domestic coastwise transportation of chemical products served by our chemical transporting vessels, which we believe is due to our customers working off inventory levels,” he added.