EMEA News
Lithuanian Shipping Company on the "Brink of Collapse" but Has Credit to Buy Bunkers for Arrested Ships
Lithuanian Shipping Company (LSC) is on the "brink of collapse," according to reports, but the troubled dry-bulk operator says despite a number of its vessels being placed under arrest, financing has been arranged to pay for bunkers and other essentials.
"The Ministry of Transport and Communications together with [Sweden's SEB Group commercial bank subsidiary] AB SEB bankas have agreed that the company will be given a minimum credit necessary in order to provide crew with food, fuel, insurance and other urgently needed measures," Arvydas Stropus, Chief Accountant, said in a statement.
However the state-controlled shipowner says European Union (EU) rules prevent the Government from giving the loss-making company extended assistance in what it described as an "extremely complex financial situation."
"The Government, owning 56.66 percent of LSC shares, cannot financially bail out the company as the European Union law prohibit for the state to directly support business companies," said LSC.
The news follows a statement earlier this month denying that LSC had filed for insolvency.
LSC notes that its OMX Baltic-listed business has failed to turn a profit since 2008, and since 2013 has sold off six vessels in an effort to reduce its financial burden, most recently the April 2015 sales of Audre and Akvile, which it described as "inefficient smaller vessels."
LSC's 2014 year end report, released in April, shows it owned seven vessels as at December 31, 2014 and Ship & Bunker understands that at least three of its remaining fleet are currently under arrest.
"The Ministry of Transport and Communications of the Republic of Lithuania shall take every effort in order to ensure that the crews on the company's owned vessels could be provided with basic resources and could safely return to Lithuania," LSC pledged.
2015 has been a terrible year for dry-bulk, with vessel scrapping at an all time high and Braemar ACM shipping analyst Peter Malpas last month warning there was "at least two and a half years of pain" for the sector.
In June, a struggling Scorpio Bulkers Inc. (Scorpio Bulkers) said it would have to "face the music" and admitted it had made mistakes as it unloaded a further five vessels for a total of $236 million having seen its share price plunge 70 percent sine last fall.
