Troubles Deepen for TORM

TORM said it has no credit lines available

Danish shipping firm TORM A/S (TORM) [NASDAQ:TRMD] has delivered a second quarter 2012 consolidated net loss $132.1 million due to "challenging market conditions as well as TORM's difficult financial situation," according to CEO Jacob Meldgaard. 

Loss from operations in Q2 2012 was $99 million compared to a $7 million loss in Q2 2011. 

TORM said it lost $11 million on forward freight agreements (FFAs) and bunker derivatives, with the overall non-cash adjustment reduced to an $8 million loss as a result of a $3 million profit from other financial derivatives, compared to Q2 2012's adjustment of $2 million.

Its bulk division made an unrealised bunker hedge loss of $10 million.

During the quarter $18 million in fees were incurred for the company to work with creditors on a restructuring package and TORM has stated in two previous news announcements that it is working closely with banks and time charter partners on a financing and restructuring plan which it said is imperative for TORM's continued operation. 

Total assets were down from $2,779 million as at December 31, 2011 to USD 2,544 million as at June 30, 2012, with net interest-bearing debt at $1,852 million as at June 30, 2012, compared to $1,838 million as at March 31, 2012.

TORM said it was now in breach of its financial covenants under the existing loan agreements and no longer has the right to defer payments until such time as the final restructuring agreement has been entered into.

The firm said it had cash of $17 million at the end of the second quarter of 2012 and no credit lines available.

Jacob Milgaard said that the company has the full support for a final restructuring agreement from all involved parties.