Gulf Navigation aims to repay US$35 million in outstanding debt this year and is working on a turnaround strategy that includes cost cuts to increase profitability, the shipping company’s new group chief executive said on Tuesday.
The shipping company, which lists its shares in Dubai, is negotiating to settle with its creditors.
Its board approved in January the first round of a $60m mandatory convertible bond programme, which it hopes would help to ease pressure from its creditors.
“We are in process of discussing this [settlement] with some of our stakeholders,” said Khamis Juma Buamim. “We believe this is something we have to clear very fast.”
Gulf Navigation announced in February a doubling of annual profits for last year to Dh20.1m, thanks to growth in the shipping services business, even as it remains in breach of several loan covenants incurred by its supertanker segment, which it has subsequently divested.
The company expects to increase profit through cost cuts and expansion of the services it offers.
“We are doing a lot of cost analysis and cost reduction in certain areas,” said Mr Buamim.
“We will pump more money into profit-making parts of the company, create synergy and create value. On the technical services side, we are creating also new tonnage capability, which will be added to our overall return.”
Despite the growth in revenue and profit, the company remains in breach of a number of covenant agreements with its lenders.
Such breaches, together with about Dh617m of liabilities at the end of last year, “indicate the existence of a material uncertainty which may cast significant doubt upon the ability of the group to continue as a going concern”, according to the auditors PwC.
Mr Buamim said the company has enough funds to help settle the debts and expand the company’s services. He declined to disclose the size of the funds.
“We have enough [funds] to sustain the company, ensure that all legacy issues are sorted out and keep moving forward and do our business in a right manner,” said Mr Buamim, who served as chairman of Dubai’s Drydocks World from 2010 to 2015. He was appointed this month as group chief executive.
Mr Buamim’s appointment comes after the company last month elected a new chairman, Abdulla Al Hemeiri, together with a new board of directors, after an overhaul in January.
The overhaul in senior management comes as two Gulf Navigation investors – Diamond Line General Trading and Tabarak Constructions – increased their shareholdings in the company in recent weeks to 8.55 per cent and 10.35 per cent respectively.
Gulf Navigation shares closed up 1 per cent to Dh1.03 in Dubai on Tuesday.
dalsaadi@thenational.ae
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