Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / Mercator’s Singapore unit looks to ward off judicial management
BackBack

Mercator’s Singapore unit looks to ward off judicial management

Company also asks the court's permission to negotiate with its creditors within four months to consider and approve a scheme of arrangement

Premium


Bengaluru: Mercator Lines (Singapore) Ltd, the Singapore-listed dry bulk ship-owning unit of India’s Mercator Ltd, has asked the city state’s high court to stay proceedings in a case seeking to put the company under judicial management.

The shipping company, which has been hit by plunging dry bulk freight rates, has also asked the court’s permission to negotiate with its creditors within four months to consider and approve a scheme of arrangement.

On 10 September, the Singapore unit of German shipping bank HSH Nordbank AG, a creditor, has filed an application with the court seeking to place Mercator Lines (Singapore) under the management of a court-appointed company. Nordbank did not disclose how much money Mercator owes it.

The application is slated to come up for hearing on 29 September. Mercator Lines (Singapore) is the only Indian-owned shipping company listed in Singapore.

“The board and management (of the company) believe that the appointment of a judicial manager is not in the interests of the company, its creditors and its shareholders and thus, the company intends to oppose the judicial manager application," Shalabh Mittal, managing director and chief executive officer of the Singapore company, said in a statement.

The board and management are working closely with the company’s creditors, independent financial advisor and legal advisors to establish a restructuring plan and negotiations with creditors and potential investors in relation to the restructuring plan are reaching a conclusion. It is envisaged that the restructuring plan will be implemented by the scheme of arrangement.

A primary aim of the scheme is to strengthen the company’s financial position and resolve all outstanding matters with all of its creditors, thus enabling a swift return to normalized operations and a strong focus on the company’s operations, Mittal added.

Mercator Lines (Singapore) reported a loss of $9.9 million in the quarter ended June from a loss of $7.1 million a year earlier.

The company runs a fleet of 13 dry bulk ships—12 owned and one hired.

Falling commodity prices, an oversupply of new bulk carriers and weakening international demand have resulted in a considerable slowdown in global trade and downward pressure on dry bulk freight rates, hurting the company’s ability to run its ships profitably.

The firm has posted three continuous years of losses and risk being put on the watch list by the Singapore stock exchange.

In 2005, Mercator spun-off its dry bulk shipping business into a separate company and listed it on the Singapore stock exchange. Many global fleet owners have set shop in Singapore because of the investor-friendly policies of the city state. Mercator weathered the aftermath of the global meltdown in 2008 well, but a prolonged weakness in dry bulk freight rates now appears to be taking its toll.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 16 Sep 2015, 01:23 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie