Torm Tankers is “Sailing on the Edge of Bankruptcy, Analyst
STOCKHOLM (Dow Jones)–Troubled Danish shipping company Torm A/S (TORM.KO) expects to announce an extension of its financing agreement Thursday or Friday, Chief Executive Jacob Meldgard said on a conference call, as question marks hang over the company’s future.
Torm’s most recent temporary deferral of installments and covenant standstill, which was announced on Jan. 17, expires Thursday.
The company earlier Thursday reported a widened loss for 2011 and said it won’t provide any earnings guidance for 2012 given its precarious position.
NASDAQ OMX Copenhagen, the Danish exchange, has transferred Torm to its observation list as the company’s auditors express insecurity about its ability to remain a going concern, at least until Dec. 31.
Sydbank analyst Jacob Pedersen told Dow Jones Newswires that the company is “sailing on the verge of bankruptcy or chapter 11 [of the bankruptcy code],” noting that the shipper has a debt of $1.9 billion and doesn’t have the money to repay it. “The banks could demand repayment this afternoon or tomorrow,” Pedersen said.
He also noted that it is deeply concerning and surprising that the company’s auditors have refrained from approving the company’s financial statements. The auditors said Torm hasn’t been able to show that it will get the financing needed to keep it going until the end of this year.
However, Pedersen said that in the past a day or two has gone by before the company reached extension agreements with banks.
-By Jens Hansegard, Dow Jones Newswires
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