International Shipholding Corp. (ISH) is attempting to shed assets and refocus its business as it reaches waiver agreements with creditors.
The moves come as the Mobile, Ala.-based company this week reports a third quarter loss of $7.2 million compared to a $2.6 million loss for the same quarter last year. Revenue was $66.5 million, down from $74.4 million in 2014.
ISH will keep its Jones Act, rail-ferry and pure car/truck carrier (PCTC) services and sell dry bulk and specialty contract segments as well as minority investments in chemical and asphalt tankers, and rail car repair facilities near Mobile. Deadlines in the deals with lenders range from early December to next June.
If successful, they would reduce their debt from $214 million to between $90 million and $100 million, CFO Manuel Estrada told analysts.
If they can’t sell the assets and keep the lenders at bay, “there would be substantial doubt about our ability to continue as a going concern,” ISH said in regulatory filings.
One analyst noted they are selling into a very difficult market with a limited number of buyers, and another asked what would happen if the sales aren’t completed in time. “We continue to have excellent relations with our lenders and lessors,” Estrada said. Discussions will continue.
ISH, whose subsidiaries operate 49 vessels, acknowledged in its filings that it faces “highly competitive and challenging market conditions.” The supply of vessels exceeds the demand, charter and cargo rates are at depressed levels in many places, and despite its downsizing plans, “these market conditions will continue to impact our operating revenues, earnings and asset values.”
Founded as Central Gulf Steamship Corp. in 1947, ISH is moving its headquarters early next year to New Orleans where it will lease space. The relocation costs will be partially offset by about $10.3 million in incentives from Louisiana, ISH said. If they can’t sublet their Mobile office, they’ll have to pay $3.1 million to cancel the lease.