HOLT GROUP REPORTS MORE LOSSES, RECLASSIFIES DEBT
Holt Group, Inc., the Gloucester City, N.J.-based liner shipping and stevedoring company, reported a net deficit of $17 million for the third quarter and has reclassified $205 million of debts as current liabilities.
The deficit for the third quarter compares with a loss of $12 million in the same quarter in 1999.
Holt said that it became aware, in April, of the accounting impact of the existence of certain company guarantees of the indebtedness of related companies which had not been previously considered in the preparation of its financial statements for the nine months ended Sept. 30, 1999. The existence of those guarantees resulted in covenant defaults under certain company debt agreements.
“As a result of these defaults, $205.0 million of indebtedness under the defaulted agreements should have been presented in the company’s September 30, 1999 balance sheet as current liabilities rather than long-term liabilities,” Holt said in a statement filed with the U.S. Securities and Exchange Commission.
The Holt group owns Navieras, Holt Cargo Systems, New-Port Stevedores, San Juan International Terminals and other companies.
Holt reported an operating loss of $4 million for the latest quarter, compared to a deficit of $5 million in the year-earlier quarter. Total revenues were $78 million, down from $86 million.
The company reported a negative stockholder equity of $27 million as of Sept. 30, compared to a positive equity of $9 million in December 1999.
In August 2000, Holt sold its shareholding in Atlantic Container Line AB for $41.9 million and realized a loss of about $5.9 million on the sale. Proceeds from the sale of the ACL stock were used to repay a foreign term loan and a portion of its revolving credit facility.
Holt reported total debt obligations of $290 million as of Sept. 30, as compared to $318 million in December 1999.
To address its liquidity needs, the company has retained professional advisors to assist in developing and implementing its financial restructuring plan along with cashflow projections, Holt said.
Holt made an amendment to its revolving credit agreement in July, which provides that the company makes certain mandatory payments of its obligations under the credit agreement and extends the maturity date of the term loans and the revolving credit facility to June 30, 2001. The second amendment also resulted in a revision of financial covenants and a waiver of all defaults under the revolving credit agreement.
“As of Sept. 30, 2000, the company was in default with certain provisions of its loan agreements related to its industrial revenue bonds, the indenture for the senior unsecured notes and other equipment financing and bank loan agreements where certain of the company’s subsidiaries are either primary obligors or obligated as guarantor,” Holt reported. “As a result of these defaults and because the bondholders, trustees and banks have the right to accelerate the company’s indebtedness to each of them, all of the company’s long-term debt obligations have been reclassified as a current liability.”
However, for the nine months ended Sept. 30, 2000, net cash from operating, investing and financing activities was sufficient for the company to satisfy all debt service requirements and to make the necessary capital acquisitions and improvements, Holt reported.
The shipping and stevedoring group reported that it may face a withdrawal liability, following the transfer of Navieras’ northeastern port of call from Elizabeth, N.J. to Philadelphia, Penn., a move designed to consolidate operations. “As a result of the move, the company has been advised by counsel that it could trigger a future withdrawal liability that could approximate $12.8 million. However, the company has several options to mitigate this potential claim,” it said.