Hello fellow unit-holders,
Q3 2010 results was released a few hours ago
http://info.sgx.com/webcoranncatth.nsf/V...90035552A/$file/Announcement_Financial_Statement_3_Qtr_2010_12_11_2010.pdf?openelement [Results announcement]
RMT's cash-flow remains stable with income available for distribution standing at US$18.3 million. The Trust has proposed a dividend payout amounting to US$2.4 million (US$0.0057/unit) to unit-holders which represent a 13% payout ratio. This represents a dividend yield of 7.6%. The remaining cash was retained as part of its de-leveraging plans.
This is an expected and 'boring' quarter with the exception of the implementation of the loan restructuring proposals approved in the previous EGM which consist primarily of -
1) Regular loan amortization over the next 10 years.
2) Payment of US$64 million cancellation fee to Polaris in the form of cash and convertible bond.
3) 3 year LTV waiver with higher interest rates.
4) DPU cap of US$0.0060 per quarter until the Trust exits the LTV waiver.
RMT booked a one time cancellation fee expense of US$64 million in 3Q for the proposed acquisition of 7 vessels. This was approved in the latest EGM. This fee compromised of a US$15 million payment and a US$49 million convertible bonds (strike price is S$0.48/unit) due by 2014. The convertible bonds are held by the parent company at the moment. This has led to a sharp drop in NAV to US$322 million.
The trust enacted its bank loan repayment plan by repaying US$86.4 million in 3Q 2010 and a further US$15 million cancellation fee to Polaris. The loan repayment schedule remains the same as previously stated. RMT has earmarked a further US$32.6 million to be repaid within the next 1 year.
At the moment, the Trust owes US$681 million worth of secured loans, carries US$49 million convertible bonds and has a cash hoard of US$46 million in the bank. It retains around US$15 million worth of cash per quarter. Essentially, this means that Rickmers is still highly geared with a secured debt to secured vessel ratio of 63.8% which is much higher than Pacific Shipping Trust ratio. The Trust will take time (at least 1-2 years) before it can resume its growth path as it needs to build up its equity while reducing its loans.
In short, there isn't much upside to RMT for the next 1-2 years. Its dividend payouts should remain stable barring a major double dip though its 5 counter-parties are blue chip companies may be a small source of comfort for unit-holders. Moreover, its small payout ratio may provide a source of buffer in the event of a drop in revenue.
(Vested)
Disclaimer: Not a call to buy or sell. This is a stock which is highly unlikely to go anywhere for the next few quarters. I may be wrong so do your own research.
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.