This will result in an improved balance sheet structure, the company claimed. Documentation relating to the restructuring is due to be finalised by the end of this year.
Included in the re-negotiated financing agreements were - the major shareholder providing additional liquidity in the form of loans; an increase in interest margin, and covenants and undertakings modified/relieved in order to secure more time - up to September, 2020 - to finalise the implementation of its various strategies.
Nordic Shipholding also disclosed that the legal dispute totalling $1.5 mill, disclosed in the 2017 Annual Report, was resolved at the end of September, 2018. This involved a sizeable demurrage and deviation claim and the exit from the pool.
The company said that it had received the full amount earlier this month.
The tanker market, however, continued to soften into 3Q18. Compounded by higher bunker prices, the average daily TCE rates earned by the six vessels deployed in the three pools came in below the forecast daily rate in the first nine months of the financial year.
Compared to the same period last year, total TCE revenue fell to $13.4 mill from $18 mill in the previous nine month period.
Furthermore, the TCE revenue from the LR1 deployed in Straits Tankers Pool during the nine month period was $1.7 mill lower than the TCE revenue derived from the three-year timecharter locked in for the LR1 in the same period last year.
For the nine months ended 30th September, 2018, Nordic Shipholding incurred a loss after tax of $20.8 mill, which included a one-off impairment loss of $13.2 mill for the vessels, compared to a loss after tax of $2.2 mill in the same period last year.
Excluding the impairment loss, the Group suffered a loss after tax of $7.6 mill. Lower tanker TCE revenue from the vessels deployed in the three pools in 2018 contributed to the higher losses for the period.
EBITDA fell to $0.7 mill ($5.4 mill in nine months of 2017), due to the reduction in TCE revenue.
Between 31st December, 2017 and 30th September, 2018, equity decreased from $35.8 mill to $14.8 mill, as a result of the cumulative loss during the period and the downward adjustment of $239,000, due to the adoption of IFRS 15, ‘Revenue from Contracts with Customers’.
During the period, the Group paid $0.8 mill for the drydocking of ‘Nordic Ruth’, which was repaired from late June, 2018 to mid-July, 2018. The majority shareholder extended a $1 mill shareholder loan to the Group in June to support the drydocking.
As at 30th September, 2018, cash and cash equivalents stood at $0.7 mill ($3.5 mill in first nine months of 2017).
As a result of the above, the Board revised its forecast for 2018. Including the impairment loss of $5 mill recognised in 3Q18 and the estimated loss of $2.6 mill arising from the modification of certain terms under the bank loan in 4Q18, the result before tax is expected to be between minus $28 mill and minus $25 mill. EBITDA is expected to be between $1.5 mill and $4.5 mill, unchanged from that indicated in 1H18 interim report.
With a considerably improved balance sheet structure, the company said was in a more favourable position to pursue growth and potential consolidation opportunities that are accretive.