Bad Weather Drives Up Bunker Costs at Eitzen as Losses Widen

Eitzen is working with new creditors to adjust its finances

Rough weather conditions drove bunker consumption up for debt-burdened Eitzen Chemical ASA (Eitzen) in the first quarter of 2014, while falling transpacific freight rates contributed to rising losses, the company reports.

The Norway-based company's loss widened to $25.9 million, compared with $10.7 million in Q1 2013, while freight revenues dropped 9 percent to $87.0 million.

"The extremely bad weather in the Atlantic basin continued well in to February, affecting the result negatively on our vessels trading Continent to/from Mediterranean, East coast Canada to/from US Gulf and vessels going transatlantic, as bunker consumption increased and several voyages were significantly delayed," the company said.

The company said it anticipates improved supply-demand balance for chemical tankers going forward, as long as economic growth continues at a moderate rate.

Eitzen, which now has a negative equity value of $132.6 million, said a majority of its senior debt was traded in the first quarter, and it is "in a constructive dialogue" with the new debt holders, seeking ways to invest in the business.

"The Board currently considers the Company's capital situation as adequate based on the agreements with the Company's lenders and the ongoing constructive dialogue with the new holders of the senior debt to strengthen the Company's balance sheet," Eitzen said.

The company is one of a number of shipping companies that have received investment from private equity firms, which are increasing their involvement in the industry.