Standard & Poor’s drops ratings on International Shipholding

Standard & PoorÆs drops ratings on International Shipholding    Standard & Poor's Ratings Services has lowered its ratings on International Shipholding Corp., a shipping company based in New Orleans, after ISC reported net income of $1.828 million for the second quarter of 2004, down from $2.490 million for the same period of 2003.
   For the first six months of 2004, ISC reported net income of $4.725 million, compared to $5.484 million for the first-half of 2003.
   Standard & Poor's Ratings Services reduced its corporate credit rating on ISC from 'BB-minus' to 'B-plus,' and its senior unsecured rating to 'B-minus' from 'B.'
   While calling the outlook for ISC 'stable,' Kenneth L. Farer, a credit analyst for Standard & Poor's, said, 'the rating action reflects concerns that International Shipholding Corp.'s financial profile, while improving gradually, will remain below previous expectations and at levels more consistent with the revised rating.'
   ISC provides specialized ocean transportation services using U.S. and foreign-flag vessels, ship charter brokerage, and ship agency services. The company's assets comprise 35 ocean-going vessels, 917 LASH (lighter aboard ship combined shipping-barge units) barges for use with its LASH vessels, and various related handling facilities. ISC has approximately $300 million of lease-adjusted debt.
   The lowered ratings for ISC reflect 'an aggressive financial profile, characterized by significant debt leverage and somewhat constrained liquidity, participation in the competitive and capital-intensive shipping industry, and the modest size of the company. Positive credit factors include the company's stable, intermediate-to-long-term ship charter agreements, which provide a steady stream of revenue and cash flow, and its well-established operations in niche segments of the shipping industry,' Standard & Poor's Ratings Services said.
   'The three-month and six-month periods in 2004 benefited from improved results in our foreign-flag LASH liner service as a result of creased cargo volumes. Additionally, due to a stronger market and increased investment, we realized improved earnings ' attributable to our 50 percent investment in two Capesize bulk carriers which operate in an international bulk carrier pool,' ISC said in a statement.
   'Unfortunately, the aforementioned improvements were offset by lower results ' from our U.S.-flag pure car/truck carriers and our Mexican rail/ferry service. The results from our pure car/truck carriers were affected by a casualty on one vessel resulting in 26 unplanned out-of-service days in the current quarter. This out-of-service casualty time, together with regularly scheduled dockings and maintenance, resulted in a total of 54 out-of-service days for our car carrier fleet in the first six months of 2004, compared to eight days in the same period of 2003,' ISC explained.
   'The poor performance of our Mexican rail/ferry service in the current quarter stemmed primarily from higher costs associated with unanticipated maintenance problems,' the company said.