Stock Gulf Navigation 4
Gulf Navigation turned in a neat profit for Q1-23, offering fresh ballast for the financial restructuring. Image Credit: Supplied

Dubai: The DFM-listed Gulf Navigation is steaming back into contention after an elaborate financial restructuring. The shipping company is reducing its capital base, in effect dealing with the accumulated losses of Dh637.69 million.

This will come from reducing the equity by a similar 637.69 million shares. And fully using the legal/options reserves to absorb the accumulated losses.

All of which meant that May 17 was the last trading date for the stock before the reduction and price adjustment came into effect.

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It’s been a tough 3-year ride for Gulf Navigation, during which it has had to deal with a run of financial losses, the loss of a ship at sea, and the uncertainties caused by the pandemic and global disruptions to global shipping movements.

The new capital of the company will be Dh637.69 million after the 50 per cent reduction. The stock will start trading under the revised ways on May 22. After the price adjustment on capital reduction, the stock will start at Dh3.04.

Will a new investor come in?

In recent months, there has been talks about a new investor coming in, injecting fresh funds into the company. So far, nothing has materialised. On Thursday (May 18). Gulf Navigation notified that the shareholding by Etmar Holdings – Sole Proprietorship has dropped below 5 per cent, and that of Global Equity Investment has increased to 7.6 per cent.

“This is a season of turnarounds for some of the stalwart stocks on DFM,” said an analyst. “There’s Union Properties and Amlak that came up with financial restructuring and better Q1-23 numbers. Gulf Navigation could well be the third.” (Another company, currently not trading, that would be hoping for such a comeback in Drake & Scull International.)

The other speculation is that a group of investors would come in, with their funds seeing through Gulf Navigation’s medium-term needs, including fleet expansion.

First-quarter numbers

On the operational side, the first three months also provided a fillip. There was a net profit of Dh13.5 million to show for it against Dh1.8 million profit a year ago.

“The prospects for growth remain promising for the company,” said Ahmad Kilani, Board Member and Managing Director.

We are determined to continue the corrective approach so that the focus during the coming period will be on enhancing revenues and improving profit margins by increasing the size of the fleet, managing it more effectively, reducing financing costs, and achieving the greatest amount of returns for our partners and shareholders.

- Ahmad Kilani

Total shareholders’ equity increased to Dh444 million as of end March. The company also reduced financing costs by 23 per cent to Dh6.6 million.

“The results comes at a time when the company has embarked on a new phase of growth and development,” said the MD. Gulf Navigation was ‘able to maintain profitability levels thanks to the measures taken by the board and the initiatives adopted throughout the previous period, along with the improvements to the company’s business model.

“The company recently restructured and settled one of its loans, thus obtaining a 40 per cent haircut on the remaining amount. In addition to that, we succeeded in selling ‘Gulf Mishref’ vessel in early May; and the surplus from the proceeds of selling the ship and settling all debts will give us the opportunity to benefit from the new liquidity in obtaining new vessels, expanding and increasing our fleet of petrochemical tankers.

“The sale proceeds will contribute to paying some of the company’s debts and enhancing the liquidity and profitability for the second quarter of this year”..