ECONOMYNEXT – The slump in charter rates has worsened losses at Mercantile Shipping Company forcing the Sri Lankan ship-owner to renegotiate a loan from a German bank until a market turnaround emerges.
Auditors Ernst & Young, in the group’s 2014-15 annual report, have drawn attention to the net asset position turning a negative 321.4 million rupees with current liabilities exceeding current assets by 67.2 million rupees.
Mercantile Shipping chairman A. N. U. Jayawardena said that given continuing losses, the Board decided to write-off the investment of 238 million rupees in the ship-owing subsidiary Mercantile Emerald Shipping (Pvt) Ltd.
“The present charter rates are 5,350 US dollars per day for both vessels ‘Mercs Uva”and ‘Mercs Uhana’,” he told shareholders in the annual report.
“The indications are that there will be a marginal increase in charter rates in the near future and it is hoped that the rates will continue on an upward trend in time to come.”
Jayawardena said Germany’s Bremer Landesbank was continuing to co-operate with the firm and agreed to reschedule loan repayments.
Mercantile Shipping will pay only the interest and a 25 percent component of the capital of the loan instalment, he said.
(Colombo/September 3 2015)