Fresh setback for Gulf Navigation as recovery plan stalls

Extraordinary general meeting postponed after required number of shareholders fail to attend.

Gulf Navigation’s plans to stay afloat hit a fresh obstacle after the company failed to gain shareholder approval for its recovery plans.

The company announced yesterday that an extraordinary general meeting (EGM) scheduled to take place last Thursday has been postponed, after it failed to reach the required attendance of shareholders holding at least 50 per cent of the company’s capital. The meeting has been rescheduled for January 5.

“It’s very disheartening,” said Sandeep Kadwe, Gulf Navigation’s managing director. “We were only short by a couple of per cent.”

Gulf Navigation had sought shareholder approval in the meeting for the company to continue as a going concern, and for radical measures to ensure its continued survival.

These include the sale of its two very large crude carriers (VLCCs), a possible reduction of share capital to write off accumulated losses, the launch of convertible bonds to raise capital, and to increase the limit of shares available to foreign investors to 49 per cent for their current level of 20 per cent.

The Dubai-based shipping company last month posted a loss of Dh614.3 million for the third quarter of the year, attributable to a Dh292.8m impairment of goodwill and a write-off of Dh308.6m of the value it is expected to receive for the sale of its two VLCCs.

The VLCCs remain under arrest in Rotterdam and Bermuda, under the orders of creditors.

Mr Kadwe said that the company has signed a memorandum of agreeement with an interested buyer from outside the region for the sale of the vessels, declining to provide further details.

Gulf Navigation’s tankers have operated at a loss as a result of a global decline in tanker rates earlier in the year. Daily tanker rates averaged $7,397 in the first eight months of the year, in comparison with $229,484 in December 2007, according to data from Clarkson, the world’s biggest shipbroker.

The company’s attempts to sell off its tankers coincides with a surge in daily rates, which hit $50,801 per day on November 22, according to Clarkson.

“I wish we had the luxury to retain the vessels, but the current situation where they’re under arrest doesn’t allow it,” said Mr Kadwe.

“It is usual that towards the end of the year that the market picks up. How sustainable such an increase will be we don’t know.”

Last week’s meeting was the second attempt to hold an EGM, the first being on November 28.

Regulations from the Securities and Commodities Authority stipulate that an EGM is valid only if it is attended by shareholders representing at least 75 per cent of the company’s capital. This threshold is rarely achieved by UAE companies in the first instance.

If such a quorum is not achieved in the first meeting, a second meeting may be called to convene within 30 days with an attendance requirement of shareholders representing 50 per cent of the company’s capital.

If the 50 per cent quorum is not met, a third meeting, valid with any attendance figure, can be called to convene within 30 days of the second meeting.