Dubai: A second Gulf Navigation vessel has been seized after the company once again defaulted on loan repayments, according to Dr Sandeep Kadwe, Gulf Navigation Managing Director.
The Gulf Eyadah, one of the company’s two very large crude carrier (VLCC) vessels, was seized “late last week” in Port Bahama, Kadwe said. It is believed that the vessel is now in anchorage just outside the port.
The latest news from the apparent struggling Gulf Navigation follows the seizure of its other VLCC vessel Gulf Sheba last month in a Dutch port.
In a statement to the Dubai Financial Market (DFM) on Saturday, Gulf Navigation stated that claims made against the Dubai-based shipping company by European lenders DNB and BNP Paribas had been dismissed by a Dutch court.
The ruling by the Dutch court means that the lenders cannot force a distress sale.
Kadwe said that the ruling was “very positive” for Gulf Navigation.
He said the company has always maintained its willingness to sell the vessel but had to complete certain processes of the sale including shareholder approval before proceeding.
Gulf Navigation is now in the process of obtaining the permission from the Securities & Commodities Authority to call an extraordinary general meeting (EGM).
The seizure of the second vessel comes at a difficult time for the Dubai-based shipping company. Earlier this year, in a consolidated financial statement, the company said it had a net liability of Dh854,522,000 as of July 20.
Tariq Qaqish, Head of Asset Management at Al Mal Capital, said it was known that Gulf Navigation had previous issues with cash flow and that there had been several changes in the managerial levels of the company.
The company is now looking to exit the VLCC shipping segment and focus on its revenue generating fleet of chemical tankers.
Following news of the planned VLCC sell-off late last month, Gulf Navigation stocks on the DFM rallied by more than 12 per cent. However, in the wake of the latest seizure, its shares opened down on Sunday by 5 per cent to 0.488 fils.
Petr Molik, CFO and Head of Financial Advisory at Menacorp Finance, said Gulf Navigation stock over the next month could be profitable for a short-term investor driven by appetite for risk and quick return. He said he would not recommend it to the medium to long-term investor because he does not see the path to profitability.
He said that while Gulf Navigation had Dh41 million as of June 2013, it had a total debt of Dh870 million.
Kadwe said the company has continued to cooperate with the lenders but was expecting more cooperation from them.
He said that the seizure of the vessels served no purpose as they are now unable to move and generate revenue.
Gulf Navigation has appointed lawyers “to protect owner’s interest and challenge the seizure,” the company said in its DFM statement.
European banks DNB and DVB bank are the lenders behind the seizure of Gulf Eyadah in Port Bahama.
Authorities in the Caribbean could not be reached to confirm the location of the vessel due to time difference.
Gulf Navigation shares closed down by 2.06 per cent at 0.475 fils on Sunday.
