November 12, 2008
Problems mount at U.S. Shipping Partners
U.S. Shipping Partners L.P. says in a filing with the SEC that "due to continued liquidity constraints, there remains substantial doubt about the partnership's ability to repay its indebtedness and, accordingly, in such circumstances to continue as a going concern."
U.S. Shipping Partners, which is now trades on the OTC market under the symbol USSPZ, filed with the SEC saying that its next 10-Q quarterly report will be filed late.
The partnership said that it "requires additional time to analyze (i) whether, in light of current market conditions, the value of its Integrated Tug Barge (ITB) fleet is impaired and, if so, the amount of such impairment to the value of its ITBs, (ii) the effect on its interest rate swap agreements of the changes to the interest rate paid under its senior credit facility as a result of the October 20, 2008 amendment to the senior credit facility, and (iii) whether under GAAP the financial condition and results of operations of the partnership's joint venture to construct up to nine product tankers should continue to be consolidated in the partnership's financial statements in light of the partnership's conclusion that, in light of the partnership's financial condition and current market conditions, it is unlikely that the partnership will recover its equity investment in the joint venture."
The SEC filing said that the partnership currently carries its ITB fleet on its balance sheet at a value of $103.2 million. "If the value of the ITB fleet is impaired, which is likely, the partnership must, under generally accepted accounting principles, write-down the value of the ITBs to their current estimated value, based on the discounted expected future cash flows of the ITBs," said the filing. "At this time, based on a preliminary analysis, the partnership expects that the ITB impairment charge will range from $66 million to $77 million. Any write-down will reduce the partnership's assets and partner's equity and increase the partnership's net loss for the three and nine months ended September 30, 2008.
"Consistent with generally accepted accounting principles, the condensed consolidated financial statements for the quarter ended September 30, 2008 are expected to be prepared on the basis that the partnership will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, due to continued liquidity constraints, there remains substantial doubt about the partnership's ability to repay its indebtedness and, accordingly, in such circumstances to continue as a going concern."