International Shipholding looks to reduce debt by at least $50 million

By Angela McDaniels

Tacoma, Wash., Feb. 24 – International Shipholding Corp. has reduced its debt by $90.3 million since Sept. 30 under its strategic plan and expects to reduce its overall debt to between $100 million and $110 million by June 30, according to a company news release.

The $90.3 million reduction includes $8.4 million from regularly scheduled debt payments.

During the fourth quarter the company reduced its debt from $213.7 million to the $159.8 million classified as current debt on its consolidated balance sheet.

The strategic plan, which was approved by the company’s board of directors on Oct. 21, previously targeted a debt balance of $85 million to $90 million by June 30, but the company has since revised that to the $100 million to $110 million range.

The company said this adjustment is primarily a result of changes in market conditions over the past several months, including lower-than-expected sales proceeds on disposition of assets and the company’s decision to exchange its shares in its mini-bulker venture for 100% ownership of a 2008-built mini bulker, which it has now placed in its specialty segment to service a contract through 2021. The company expects to realize accretion through the reassignment of the 100%-owned mini bulker to that long-term contract.

Strategic plan

Strategic plan initiatives have resulted in the completion of 10 transactions generating $98.6 million of proceeds, and the company has eliminated its dry bulk carriers operating segment.

The company said it will continue to look to other opportunities that would generate capital to fund ongoing working capital needs and further debt reduction.

The company has reached contingent agreements with all of its lenders and lessors amending its credit facilities with waivers of financial covenants through March 31, with relief from testing of covenant compliance until June 30 provided it continues to meet various specific requirements.

As previously reported, the company did not declare a quarterly dividend on its series A cumulative redeemable perpetual preferred stock or on its series B cumulative redeemable perpetual preferred stock on Oct. 30 or Jan. 30.

The company said that some of its credit agreements prohibit such payment until its outstanding debt is reduced to certain levels and that it will reinstate the dividends once it can do so under the creditor agreements.

The dividends for both series will increase by 2% until the company has paid all accrued dividends for three consecutive payment dates.

Mobile, Ala.-based International Shipholding provides maritime transportation services through its subsidiaries.

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