Cargo shipper International Shipholding on Monday filed for bankruptcy protection after it was unable to generate enough cash through asset sales to satisfy its creditors.
The company said its financial position and weak conditions in the shipping industry have made it “impossible for International Shipholding to refinance all of its existing indebtedness in the near term, come into compliance with its existing facilities, or generate necessary liquidity.”
According to court papers, International Shipholding owed lenders $124 million as of March 31. It has been negotiating for more than a year with lenders to fix its balance sheet.
“Today, we took a critical step toward right-sizing the company’s balance sheet,” CEO Erik Johnsen said in a news release. “While the company is facing challenges with its debt and capital structure, we believe our core business segments are performing satisfactorily.”
International Shipholding, which was founded in 1947, operates a fleet of 21 ships that transport cargo for commercial and government customers primarily under medium- to long-term contracts. Like other dry-bulk shippers, it has been hit hard by the slump in commodity prices.
In November, the company announced it would sell some of its ships as part of a strategic restructuring plan to focus on its Jones Act, pure car-truck carrier, and rail ferry segments. The proceeds from sales have reduced its gross debt obligations, in addition to regularly-scheduled principal payments, from $242.9 million at the end of 2014 to $117.1 million at the end of the first quarter of 2016.
But Johnsen said in a bankruptcy court document that assets have been sold “at values that are much lower than previously anticipated, and, as a result, International Shipholding continues to lack the necessary liquidity to operate at the required levels.”
The company reported a loss of $8.4 million in the first quarter of 2016, following a loss of nearly $180 million for the year ended Dec. 31, 2015. DVB Bank and Seacor Capital have agreed to provide $16 million to help keep International Shipholding afloat during the Chapter 11 process.