U.S. Shipping says it would consider recapitalization; financial covenants amended

By Jennifer Lanning Drey

Portland, Ore., Aug. 6 - U.S. Shipping Partners LP would consider a recapitalization if the company were to identify an opportunity for a transaction that would increase liquidity, U.S. Shipping's chief financial officer, Albert E. Bergeron, said Monday during the company's second-quarter earnings conference call.

Additionally, the company announced it has amended certain financial covenants in its senior credit facility in order to eliminate previously anticipated compliance issues caused by a delay in the delivery of, and increased cost of constructing, the first articulated tug barge (ATB) in its ATB newbuild series.

U.S. Shipping executives on the call said if the business performs as planned, no additional issues related to maintenance covenants are expected.

The company is currently in discussions regarding a sale and leaseback of its newly built ATB Freeport, which was placed in service in the third quarter and, at this point, provides the company's primary option for increasing liquidity, according to Bergeron.

If a deal is negotiated, the added liquidity would be used to finance the fifth ATB in the newbuild series.

Under a current agreement between U.S. Shipping and Manitowoc Marine Group, U.S. Shipping must decide whether it will proceed with financing the fifth ATB by Aug. 15. However, Bergeron said the company anticipates extending that deadline.

U.S. Shipping's distributable cash flow for the second quarter was $9.8 million, which Bergeron pointed out was 1.17 times the amount needed to cover its $8.4 million cash distribution declared in respect of the period.

The company's EBITDA grew to $15.7 million for the second quarter, compared with $12.4 million in the comparable period in 2006.

U.S. Shipping is an Edison, N.J.-based provider of long-haul marine transportation services, principally for refined petroleum products.

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