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U.S. Shipping Partners defaults

U.S. Shipping Partners defaults

U.S. Shipping Partners, an operator of a dozen Jones Act tankers and tug-barge units, said it did not make a payment due on Dec. 31 under senior credit agreement, but that lenders had granted it a forbearance agreement.

   The Edison, N.J.-based company said in a filing with the U.S. Securities and Exchange Commission that as a result of failing to make a principal and interest payment “an event of default has occurred under the senior credit agreement.” An aggregate of $332.6 million was outstanding under the senior credit agreement on Dec. 31.

   But U.S. Shipping said holders of a majority-in-interest of the outstanding loans under the senior credit agreement have entered into a forbearance agreement with the partnership under which they have agreed to refrain from taking any action.

   In November, U.S. Shipping said, “Cash flow from operations has come under increasing pressure due to the difficult current market conditions it is facing.”

   It said during the first half of 2008 all but one of its integrated tug-barges began to operate in the spot market for the transportation of petroleum products, which increased the volatility of its revenues and working capital requirements, and decreased the predictability of its cash flows and that beginning in late March market conditions “deteriorated substantially” due to overall declining economic activity and decreased demand for the domestic coastwise transportation of petroleum products.