Gulf Navigation has struck an agreement to sell its two oil tankers for US$98 million, providing some relief to the beleaguered company.
The Dubai-based shipping company announced yesterday it had signed a memorandum of understanding with DHT Holdings of Bermuda for the sale of its Gulf Sheba and Gulf Eyadah tankers.
The agreed price comes in higher than the Dh312.4m Gulf Navigation had estimated it could recover for the vessels in its third-quarter results published in November.
Gulf Navigation has already received 10 per cent of the funds and expects the deal to be concluded by about the middle of next month, said the managing director Sandeep Kadwe.
The sale announcement comes after Gulf Navigation won approval for the deal at an extraordinary general meeting of shareholders on January 5.
The Gulf Sheba was held in Rotterdam in September and the Gulf Eyadah was arrested in Bermuda in October under the order of Gulf Navigation’s creditors after the company defaulted on two of its term loans.
Mr Kadwe confirmed the vessels remained under arrest but insisted the company was working with creditors to close the deal by mid-February.
“The lenders have approved the sale and we’re working with them very closely to conclude it by then,” he said.
However, he admitted the proceeds from the sale of the vessels was insufficient to meet the shortfall on its loans but insisted that would be made up “in the fullness of time”.
The sale of the two vessels is part of an extensive restructuring programme for the Dubai-listed company in the face of crippling losses.
Gulf Navigation plans to launch a road show for a convertible bond of up to $130m a week after the sale of the vessels closes, said Mr Kadwe.
National Bank of Abu Dhabi has been appointed to manage the issue.
Gulf Navigation also plans to reduce the company’s share capital to Dh552m from its current level of Dh1.66 billion.
The move comes after the company’s accumulated losses grew to Dh1.12bn at the end of September, representing 68 per cent of its total share capital.
UAE law obliges companies whose accumulated losses exceed 50 per cent of their share capital to put a vote to shareholders as to whether to continue as a going concern.
Gulf Navigation has gained approval for a reduction in its share capital from its shareholders and the Department of Economic Development, and is currently in discussions with the Securities and Commodities Authority (SCA).
“We need to get further indications from [SCA] as to what processes they want us to implement and when they want us to implement them,” said Mr Kadwe.
Gulf Navigation’s shares finished the day up 3 per cent at 41.5 fils yesterday.