D'Amato di Navigazione’s recent filing for bankruptcy court protection or concordato preventivo under Italian law is likely to lead to the liquidation of the company’s assets to pay off creditors, sources close to the operation said on Monday.
Sources said that over the next three to four months a court-appointed commissioner would present a payment plan to the creditors and the court.
The procedure will allow the mortgage holders to get 100% of what they are owed and the other creditors 65%.
A spokeswoman for the company said the aim was to satisfy the creditors while maintaining the company as a going concern, though industry sources cast serious doubt on its prospects of survival.
The process could take one of several possible forms, including an immediate liquidation of the assets, or their assignment to the creditors to be run or sold.
The company’s fleet of owned vessels currently operating consists of three bulk carriers and a tanker, but according to data from shipbroker Clarkson, the company has five vessels on order thought to be worth in excess of $150m. This includes two panamaxes on order at the newly established china yard Jiangsu New YZJ, a capesize on order at Jiangsu Rongsheng and two handysize bulkers at SPP Shipbuilding.
The company also holds assets worth €16m-€20m ($23m-$28m) in real estate.
The filing for concordato preventivo indicates that strenuous efforts to hammer out a restructuring plan for the company with its creditors have failed.
The sources suggested that the creditors were likely to accept such a payment plan rather than force the company into bankruptcy, a course that could open up the prospect of lengthy and costly litigation with no guarantee of a better outcome.
Naples-based D’Amato di Navigazione ran into serious difficulties at the end of last year following a wave of defaults by sub-charterers, among them Britannia Bulk, Glory Wealth, Daebo and SW Shipping. SW’s default alone is understood to have cost the company $50m.
At the same time, the stroke suffered by founder Michele D’Amato badly hampered its ability to respond to the crisis. As one source noted, “the company was effectively a one-man show”.
The extent of the company’s financial difficulties emerged in a PricewaterhouseCoopers analysis released by major creditor Deutsche Schiffsbank last month.
PWC forecasted that its revenues would decline from $481m last year to $80m this year.
It added that D’Amato’s net debt had leaped from $62.1m at the end of 2007 to $174m at the end of first quarter 2009. Company management expected a cash flow deficit of $77.3m for the last nine months of the year.
At the same time, sources confirmed that the company’s vessels were operating normally, with a tanker under long-term charter to Eni, one of its three bulkers on long-term charter to a Chinese operator and the other two working on spot.
They also claimed that the company’s two main creditor banks — Italy’s Efibanca and Deutsche Schiffbank — had not faced any short payments since the company ran into difficulty.
“It is one of the bizarre things about this whole affair that the company is running normally,” the source said, adding that its inability to find a way out of the morass was in part a reflection of the times, and particularly the tightness in credit markets.
Last Friday, a company spokeswoman insisted that “there is no bankruptcy or insolvency and the company is operating regularly”.
She stressed that there was “great commitment and will” to protect the creditors of D’Amato di Navigazione.
“This procedure has nothing to do with bankruptcy but it is a guarantee for the creditors, who will be satisfied thanks to the business continuity and the conduct of regular operations in the manner and within the terms agreed.”
Sources said that over the next three to four months a court-appointed commissioner would present a payment plan to the creditors and the court.
The procedure will allow the mortgage holders to get 100% of what they are owed and the other creditors 65%.
A spokeswoman for the company said the aim was to satisfy the creditors while maintaining the company as a going concern, though industry sources cast serious doubt on its prospects of survival.
The process could take one of several possible forms, including an immediate liquidation of the assets, or their assignment to the creditors to be run or sold.
The company’s fleet of owned vessels currently operating consists of three bulk carriers and a tanker, but according to data from shipbroker Clarkson, the company has five vessels on order thought to be worth in excess of $150m. This includes two panamaxes on order at the newly established china yard Jiangsu New YZJ, a capesize on order at Jiangsu Rongsheng and two handysize bulkers at SPP Shipbuilding.
The company also holds assets worth €16m-€20m ($23m-$28m) in real estate.
The filing for concordato preventivo indicates that strenuous efforts to hammer out a restructuring plan for the company with its creditors have failed.
The sources suggested that the creditors were likely to accept such a payment plan rather than force the company into bankruptcy, a course that could open up the prospect of lengthy and costly litigation with no guarantee of a better outcome.
Naples-based D’Amato di Navigazione ran into serious difficulties at the end of last year following a wave of defaults by sub-charterers, among them Britannia Bulk, Glory Wealth, Daebo and SW Shipping. SW’s default alone is understood to have cost the company $50m.
At the same time, the stroke suffered by founder Michele D’Amato badly hampered its ability to respond to the crisis. As one source noted, “the company was effectively a one-man show”.
The extent of the company’s financial difficulties emerged in a PricewaterhouseCoopers analysis released by major creditor Deutsche Schiffsbank last month.
PWC forecasted that its revenues would decline from $481m last year to $80m this year.
It added that D’Amato’s net debt had leaped from $62.1m at the end of 2007 to $174m at the end of first quarter 2009. Company management expected a cash flow deficit of $77.3m for the last nine months of the year.
At the same time, sources confirmed that the company’s vessels were operating normally, with a tanker under long-term charter to Eni, one of its three bulkers on long-term charter to a Chinese operator and the other two working on spot.
They also claimed that the company’s two main creditor banks — Italy’s Efibanca and Deutsche Schiffbank — had not faced any short payments since the company ran into difficulty.
“It is one of the bizarre things about this whole affair that the company is running normally,” the source said, adding that its inability to find a way out of the morass was in part a reflection of the times, and particularly the tightness in credit markets.
Last Friday, a company spokeswoman insisted that “there is no bankruptcy or insolvency and the company is operating regularly”.
She stressed that there was “great commitment and will” to protect the creditors of D’Amato di Navigazione.
“This procedure has nothing to do with bankruptcy but it is a guarantee for the creditors, who will be satisfied thanks to the business continuity and the conduct of regular operations in the manner and within the terms agreed.”