Gulf Navigation has won shareholder approval to sell its two super tankers as part of a plan to restructure the company in the face of crippling losses.
But that was not enough to stop the Dubai-listed company’s stock from dropping 6.9 per cent yesterday.
The plan will also involve the sale of convertible bonds and raising the company’s foreign ownership threshold.
The measures were approved by shareholders at an extraordinary general meeting held on Sunday.
The meeting was the company’s third attempt to win shareholder approval for the proposals, with previous meetings thwarted by a failure to reach the required quorum levels.
Gulf Navigation’s board is proposing to reduce the company’s share capital to Dh552 million from its current level of Dh1.66 billion.
The company posted a loss of Dh614.3m for the third quarter of the year.
That was attributable to a Dh292.8m impairment of goodwill and a write-off of Dh308.6m of the value it expects to receive for the sale of its two very large crude carriers (VLCCs).
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.
The company also finally won approval for its long-touted plan to sell off its two VLCCs, effectively exiting the oil tankering market to instead focus exclusively on chemical transportation.
The two vessels were held in September and October under the order of creditors, after the company defaulted on two of its term loans. The vessels remain under arrest in Rotterdam and the Bahamas.
The company has held discussions with a number of parties interested in acquiring the vessels, and hopes to agree a sale in conjunction with lenders in the near future, said Sandeep Kadwe, the managing director of Gulf Navigation.
“We want to close the sale of the vessels as soon as possible, hopefully by the end of this month or even before then,” he said.
He declined to disclose details of the potential buyer of the vessels, or the pricing range of the sale.
The company’s management estimates a recoverable amount of Dh312.4m for both vessels in the event of a consensual sale, according to its third-quarter results published in November.
Shareholders also approved management’s plans to raise up to $130m in convertible bonds, and to raise the maximum threshold of the company’s shares that can be owned by foreign investors.
The company has appointed National Bank of Abu Dhabi to manage the bond issue, and is currently putting out feelers in the market to test investor sentiment, said Mr Kadwe.
He declined to comment on when the bond issue would be launched.
The company is looking to increase the company’s foreign ownership threshold to 49 per cent of its share capital, from its current level of 20 per cent.
Despite its financial woes, Gulf Navigation’s shares ended 2013 in the black, posting a 60 per cent increase for the year.
jeverington@thenational.ae
