Bankruptcy of customer pushes International Shipholding deeper into the red
Pre-payment penalties and financing costs caused by the Chapter 11 bankruptcy proceedings of U.S. Generating New England, Inc., a charterer of International Shipholding Corp., forced the New Orleans-based diversified shipping company to report a net loss of $1.6 million for the third quarter, as compared to a net loss of $1.1 million in the same quarter of 2002.
U.S. Generating New England is the charterer of the shipping company’s U.S.-flag coal carrier, the “Energy Enterprise.”
“The primary factor contributing to the third quarter 2003 loss was the recognition of costs associated with the necessity for retirement of debt related to… ‘Energy Enterprise,’ amounting to $2.6 million before tax or $1.7 million after tax as a result of U.S. Generating New England… having filed a petition for bankruptcy protection on July 8,” International Shipholding said.
This filing became an event of default under the vessel’s debt indenture, resulting in the acceleration of principal and interest.
During the third quarter of 2003, International Shipholding also incurred unexpected vessel repair costs on certain vessels due to machinery deficiencies.
The company reported an operating income of $3 million for the third quarter, up from $1.9 million a year earlier, and revenue of $63.6 million, up from $49.9 million in the third quarter of 2002.
International Shipholding is the parent company of Forest Lines and Waterman Steamship, which operates Lighter-Aboard-Ships barge carriers.
“Results in the third quarter of 2003 were improved in our foreign-flag transatlantic and U.S.-flag LASH liner services as compared to 2002, although the third quarter 2003 compared unfavorably to the second quarter of 2003 for the transatlantic liner service as a result of lower cargo volumes,” the company said.
For the first nine months of 2003, International Shipholding earned a net income of $3.8 million, as compared to a net loss of $929,000 for the same period of 2002. Revenue rose to $195.9 million from $167 million in the first nine months of last year.
During the latest nine-month period, the company reported improved results in its rail/ferry service as a result of higher cargo volumes, and said that its U.S.-flag liner service made positive contributions.