Commission File No. 333-8878
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May, 2003
ULTRAPETROL (BAHAMAS) LIMITED
(Translation of registrant's name into English)
H & J Corporate Services Ltd.
Shirlaw House
87 Shirley Street
Nassau, The Bahamas
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
----- -----
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
----- -----
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Set forth herein is a copy of the Company's report for the three months
ended March 31, 2003, containing certain unaudited financial information and a
Management's Discussion and Analysis of Financial Condition and Results of
Operations. ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
ULTRAPETROL (BAHAMAS) LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION FOR THE THREE
MONTHS ENDED MARCH 31, 2003 AND 2002
The following discussion and analysis should be read in conjunction with the
unaudited condensed consolidated financial statements of Ultrapetrol (Bahamas)
Limited, or the Company, and subsidiaries for the three months ended March 31,
2003 and 2002 included elsewhere in this report.
General
-------
The Company was formed on December 23, 1997 to hold all the capital stock of
Princely International Finance Corporation (a Panamanian Company) and
Ultrapetrol S.A. (an Argentine Company). The following discussion covers the
unaudited financial results of the consolidated entity for the three month
period ended March 31, 2003 with a comparison to the unaudited consolidated
financial results for the same three month period in 2002.
Currently the Company owns and operates fourteen oceangoing vessels
primarily in South America with additional operations between the Caribbean,
United States, Europe, Far East and West Africa. One of our vessels is owned by
Ultracape (Holdings) Ltd., or Ultracape, an affiliate company that was formed
through an association between us and the AIG-GE Capital Latin America
Infrastructure Fund L.P., or LAIF, in 2002 of which we own 60%. The Company also
charters three push boats and 69 wet and dry barges to UABL (Bahamas) Limited,
or UABL, a company that we formed in a joint venture with ACBL Hidrovias, Ltd.
in October 2000 and which we own 50% of.
During the first three months of 2003 the Company employed a significant
part of its fleet on time charter for different customers.
During the first three months of 2003, the international freight market
maintained rates significantly above those experienced in 2002.
The Princess Susana was out of service undergoing major repairs during 15
days and the Princess Pia and Princess Eva were out of service due to accidents
for 42 days and 62 days, respectively, during the first quarter of 2003.
In January 2003 the Company renewed the employment of its vessel Princess
Katherine for another 11 months on a time charter contract.
On March 13th the Princess Marina was delivered under a time charter for
three years to the National Petroleum Company of Chile. As a requirement of this
transaction the vessel was re-flagged and registered under the ownership of a
related company which ownership shall return to us upon expiration of the
charter, all of the financial arrangements with DVB Nedship Bank (America) N.V.,
who finances the vessel, remain in place.
On March 11, 2003 we entered into a Memorandum of Agreement, or MOA, under
the standard format NSF 1993 to sell the Princess Sofia for a total price of
$2.3 million. The vessel was delivered to its new owners on April 25th, 2003.
Our affiliate UABL Limited (50% of which we hold through our unrestricted
subsidiary UP River Holdings Ltd.) entered into loan agreements on February 27,
2003 the International Finance Corporation, or IFC, and Kreditanstalt Fur
Wiederaufbau with a repayment schedule that starts in June 2005 and continues
until December 2011 in the case of the (A) tranche of the IFC Loan until
December 2009 in the case of the (B) tranche and the KFW Loan. IFC and KFW have
agreed to provide a total of $40 million to finance the capital expenditures of
UABL Limited over the next 3 years. The loans are provided under two separate
agreements to wholly owned subsidiaries of UABL Limited: UABL Barges (Panama)
Inc. $30 million and UABL Paraguay S.A. $10 million with a repayment schedule
starting in June 2005 through December 2009. The agreements in connection with
this financing impose restrictions on the ability of UABL to pay dividends or
make other payments to its shareholders if UABL is in default of its obligations
under the loan and require that in conjunction with ACBLH the Company retain
control of UABL Limited
Revenue
-------
The majority of the Company's vessels are employed on time charters to
affiliated and unaffiliated companies. The revenue from this operation is
derived from a daily rate that is paid to the Company for the use of its vessel.
Hire revenue accounted for 65% of the Company's total revenues for the three
months ended March 31, 2003.
Also, the Company's vessels are employed on a contract of affreightment, or
COA, basis either for single or repetitive voyages. For a COA, the vessel owner
or operator generally pays all voyage and vessel operating expenses and has the
right to substitute one vessel for another. The rate is generally expressed in
dollars per metric ton of cargo. Revenues earned under COA's are referred to as
"freight". COA revenue accounted for 35% of the Company's total revenues for the
three months ended March 31, 2003.
From the total revenues obtained from COA's during the first quarter of
2003, 54% were in respect of repetitive voyages for the Company's regular
customers and 46% in respect of single voyages for occasional customers.
Expenses
--------
When vessels are operated on a COA basis (as well as any time when they are
not operating under time or bareboat charter), all costs relating to a given
voyage, including port charges, canal dues and fuel costs, are paid by the
vessel owner and are recorded as voyage expenses.
The Company's operating expenses, or running expenses, are generally paid
through Ravenscroft Shipping Inc., or Ravenscroft, a Miami based affiliate of
the Company, which provides ship management services for the Company's vessels.
Operating expenses include the cost of all ship management, crewing, spares and
stores, insurance, lubricants, repairs and maintenance. The most significant of
these expenses are maintenance and repairs, wages paid to marine personnel and
marine insurance costs. In the case of our river barges chartered to UABL
(Bahamas) Ltd. the Company has contracted the shipmanagement responsibilities to
Lonehort Inc, an affiliate of UABL Ltd.
Vessels are depreciated to an estimated scrap value on a straight-line basis
over their estimated useful lives. The Company follows the deferral method of
accounting for survey and dry-dock costs, whereby actual survey and dry-dock
costs are capitalized and amortized over a period of two and one-half years
until the date of the next dry-dock or special survey.
The Company's other primary operating expenses include general and
administrative expenses as well as ship management and administration fees paid
to Ravenscroft and Oceanmarine S.A., another affiliate of the Company, which
provides certain administrative services. The Company pays Oceanmarine, or
Oceanmarine, a monthly fee of $9,000 per vessel for administrative services
including general administration and accounting (financial reporting,
preparation of tax returns), use of office premises, a computer network,
secretarial assistance and other general duties. The Company pays Ravenscroft a
monthly ship management fee of $12,500 per vessel for services including
technical management, crewing, provisioning, superintendence and related
accounting functions. The Company does not expect to pay fees to any affiliated
entity other than those described here for management and administration
functions.
The Company does not own any buildings and does not pay any rental expense
other than as a portion of the administration fees paid to Oceanmarine.
Foreign Currency Transactions
-----------------------------
Substantially all of the Company's revenues are denominated in U.S. dollars,
but 9% of the Company total revenues is denominated in US dollars but collected
in Argentine pesos at the equivalent amount of US dollars at the payment date
and 11% of our total out of pocket operating expenses are paid in Argentine
pesos. However, the Company's operating results, which are reported in U.S.
dollars, may be affected by fluctuations in the exchange rate between the U.S.
dollar and the Argentinean peso. For accounting purposes, revenue and expense
accounts are translated into U.S. dollars at the exchange rate prevailing on the
date of each transaction. The Company does not hedge its exposure to foreign
currency fluctuations.
Inflation
---------
The Company does not believe that inflation has had a material impact on the
Company's operations, although certain of the Company's operating expenses
(e.g., crewing, insurance and dry docking costs) are subject to fluctuations as
a result of market forces.
Inflationary pressures on bunker costs are not expected to have a material
effect on the Company's future operations since freight rates for voyage
charters are generally sensitive to the price of ship's fuel. A sharp rise in
bunker prices may have a temporary negative effect on results since freights
generally adjust after prices settle at a higher level.
Legal proceedings
-----------------
On February 21, 2003, Ursa Shipping Ltd., or Ursa, brought suit in the
United States District Court for the District of New Jersey against the Princess
Susana and Noble Shipping Ltd. seeking damages arising out of the delay in
delivery of a cargo of Kirkuk crude oil to the Valero terminal in Paulsboro, New
Jersey. (Ursa Shipping v. the Princess Susana, et al. Civil Action No.
03-CV-747(FLW).) The Princess Susana was detained by the United States Coast
Guard prior to her arrival in Paulsboro when, during a routine Coast Guard tank
vessel examination, a small amount of cargo was found to have leaked from one of
the cargo tanks into one of the void spaces aboard the Princess Susana. On or
about February 25, 2003, Valero Marketing and Supply Co., or Valero, commenced
an action against Noble Shipping Ltd. (Valero Marketing and Supply Co. v. Noble
Shipping Ltd., Civil Action No. 03-CV-843 (FLW). The Valero and Ursa complaints
seek damages in excess of $9 million.
In connection with the above complaints, the Princess Susana was arrested.
Security was posted by the vessel's owners' protection and indemnity insurers in
the amount of $11.2 million and the Vvssel was released from arrest (insurance
coverage is in place). Both the Ursa and the Valero complaints have been
answered, defenses have been raised, and a counterclaim has been raised in the
Ursa action seeking, inter alia, unpaid freight and demurrage.
Discovery is presently underway and the parties have exchanged documents.
It is too early in the course of the litigations to form an opinion as to their
ultimate outcome.
We believe this claim is covered by insurance. The insurer is actively
participating in its defense and has not asserted any objections or defenses to
the claim. We would expect any damages arising from this action (less our policy
deductible) to be covered by the proceeds of such insurance.
Results of Operations
---------------------
Three months ended March 31, 2003 compared to the three months ended March 31,
2002.
The following table sets forth certain historical income statement data for
the periods indicated derived from the Company's statements of operations
expressed in thousands of dollars.
Three months ended March 31,
2003 2002
(dollars in thousands)
Freight revenues
Attributable to wholly owned vessels 5,939 5,600
Attributable to wholly chartered-in vessels 42 88
------------ ------------
Total 5,981 5,688
Hire revenues
Attributable to wholly owned vessels 10,900 12,667
Attributable to wholly chartered-in vessels 0 0
------------ ------------
Total 10,900 12,667
------------ ------------
Total Revenues 16,881 18,355
------------ ------------
Voyage expenses
Attributable to wholly owned vessels (2,582) (2,643)
Attributable to wholly chartered-in vessels (23) (87)
------------ ------------
Total (2,605) (2,730)
Running costs (7,382) (6,734)
Amortization of dry-dock expense (2,074) (1,932)
Depreciation of property and equipment (4,046) (4,093)
Management fees and administrative expenses (1,595) (1,784)
Loss on involuntary conversion of - (988)
Argentine receivables
------------ ------------
Operating profit (821) 94
Interest expense (4,090) (4,254)
Revenues
--------
Total revenues from freight net of commissions increased from $5.7 million
in the first three months 2002 to $5.9 million in 2003, or an increase of 4%.
This increase is primarily attributable to the Princess Susana and Princess
Veronica COA's employment instead of time charter operation of the Princess
Marisol.
Hire revenues net of commissions, decreased by 14% from $12.7 to $10.9
million. This decrease is attributable to the Princess Susana and Princess
Veronica COA's employment instead of time charter employment, partially
compensated by the time charter employment of the Princess Marisol and Cape
Pampas, a new vessel incorporated in July 2002.
The total of 58 days out of service experienced by our Princess Marina and
Princess Susana due to major repairs, Princess Eva and Princess Pia which were
out of service due to accidents for 104 days, in the aggregate, during the first
quarter affected negatively our revenues in this period. Part of this off hire
time is compensated by our loss of hire insurance for which a total of $1.4
million has been included as other income (outside our operational result).
Operating loss for the first three months of 2003 was $ 0.8 million, a
decrease of $0.9 million from the same period in 2002. In comparing the results
of the first quarter 2003 with the same period 2002 in addition to the factors
mentioned above it should also be considered that during the first quarter of
2002 our Suezmax vessels were all under comparatively higher time charters fixed
in 2001 while during the first quarter of 2002 a significant portion of our
Suezmax fleet was still under lower charters fixed in 2002 all of which expired
during this period.
Voyage expenses
---------------
The first three months of 2003 voyage expenses were $2.6 million, as
compared to $2.7 million for the first quarter of 2002, a decrease of $0.1
million, or 4%. The decrease is primarily attributable to the combined effect of
a large portion of the fleet operating on time charter contract instead of COA
and the lower activity of our Panamax fleet.
Running costs
-------------
Running costs increased by about 10%, to $7.4 million in the first quarter
of 2003 as compared to $6.7 million in the equivalent 2002 period. This increase
is mainly attributable to the new vessel incorporated in July 2002, the Cape
Pampas.
Amortization of dry-dock expense
--------------------------------
Amortization of dry docking and special survey costs increased by $0.2
million, or 11%, to $2.1 million in the first quarter of 2003 as compared to
$1.9 million in 2002. The increase was due to the amortized portion of dry-docks
(i.e., repairs) carried out on the Princess Marisol, Princess Pia and Princess
Marina.
Depreciation of property and equipment
--------------------------------------
Depreciation and amortization decreased by $0.1 million, or 2%, to $4.0
million in the first three months of 2003 as compared to $4.1 million in 2002.
This decrease is primarily due to the sale of the Princess Fatima partially
compensated by an increase attributable to the purchase of the Cape Pampas.
Management fees and administrative expenses
-------------------------------------------
Management fees and administrative expenses were $1.8 million in the first
three months of 2002 as compared to $1.6 million in 2003 this decrease $0.2
million is attributable mainly to a decrease in administrative expenses.
Interest expense
----------------
Interest expense decreased by $0.2 million, or 5%, to $4.1 million in the
first quarter of 2003 as compared to $4.3 million in 2002. The decrease is
primarily attributable to the lower level of financial debt and consequential
interest costs associated
Liquidity and Capital Resources
-------------------------------
The Company is a holding company with no material assets other than those
of its subsidiaries. Consequently, it must fund its capital requirements through
other sources, including cash dividends from subsidiaries, borrowings and
shareholder contributions. The Company operates in a capital-intensive industry
requiring substantial ongoing investments in revenue producing assets. The
Company's subsidiaries have historically funded their vessel acquisitions
through a combination of bank indebtedness, shareholder loans, cash flow from
operations and equity contributions. As of March 31, 2003, the Company had total
indebtedness of $170.4 million, $135 million from the proceeds of the Note
Issue, $2.0 million drawn under a revolving credit facilities from Allfirst Bank
(as from April 1st, 2003 is known as M&T Bank), the trustee of the Company's
Notes, for Majestic Maritime Ltd., a wholly owned subsidiary, $5.8 million in a
senior loan facility with Nedship Bank (America) N.V. for Kattegat Shipping
Inc., a wholly owned subsidiary, for the purchase of the vessel Princess Marina,
$8.4 million in a senior loan facility with Allfirst Bank for Majestic Maritime
Ltd, a wholly owned subsidiary, for the purchase of the vessel Princess
Katherine, $11.0 million in a senior loan facility with Credit Agricole Indosuez
for Braddock Shipping Inc, a 60% owned subsidiary, for the purchase of the
vessel Cape Pampas. The Company has a revolving credit facilities of $1.0
million from the Allfirst Bank for Stanmore Shipping Inc., a wholly owned
subsidiary and accrued interest expenses for these loans of $ 7.2 million.
At March 31, 2003, the Company had cash and cash equivalents on hand of
$9.8 million.
The Company believes, based upon current levels of operation, cash flow
from operations, together with other sources of funds, that it will have
adequate liquidity to make required payments of principal and interest on the
Company's debt, including obligations under the Notes, complete anticipated
capital expenditures and fund working capital requirements.
Operating Activities
--------------------
In the first three months of 2003, the Company generated a positive $8.4
million in cash flow from operations compared to $9.2 million for in the same
period in 2002. Net losses for the first quarter of 2003 were $ 3.3 million
which is $1.2 million less than net losses in the first quarter of 2002.
Net cash provided by operating activities consists of our net income
increased by non-cash expenses, such as depreciation and amortization of
deferred, and adjusted by changes in working capital.
Investing Activities
--------------------
During the first three months of 2003 the Company disbursed $2.3 million
in dry dock and major repair expenses compared to $3.0 million in the same
period of 2002.
Financing Activities
--------------------
Net cash provided by financing activities decreased by $1.2 million. The
decrease in cash provided by financing activities in first quarter 2003 is
mainly attributable to capital payments made during the first quarter.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2003 AND 2002
(Unaudited)
Contents Page
---------------------------------------------------------------- ------------
o Financial Statements
- Condensed Consolidated Balance Sheets as of March 31,
2003 and 2002 - F-1 -
- Condensed Consolidated Statements of Income for the
three months periods ended March 31, 2003 and 2002 - F-2 -
- Condensed Consolidated Statements of Changes in
Stockholders' Equity for the three months periods ended
March 31, 2003 and 2002 - F-3 -
- Condensed Consolidated Statements of Cash Flows for the
three months periods ended March 31, 2003 and 2002 - F-4 -
- Notes To Condensed Consolidated Financial Statements as
of March 31, 2003 and 2002 - F-5 -
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars, except par value and share amounts)
2003 2002
----------- -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents 9,818 11,153
Restricted cash 2,029 8
Investments 301 198
Accounts receivable 8,970 8,027
Due from affiliates 9,392 22,115
Inventories 1,487 1,847
Prepaid expenses 4,519 4,599
Other receivables 4,442 6,704
--------- --------
Total current assets 40,958 54,651
--------- --------
NONCURRENT ASSETS
Dry Dock 9,068 14,023
Other receivables 6,800 3,821
Property and equipment 130,750 131,203
Investment in affiliates 22,591 22,204
Other assets 4,744 3,514
--------- -------
Total noncurrent assets 173,953 174,765
--------- -------
Total assets 214,911 229,416
========= =======
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses
6,753 7,294
Due to affiliates 727 9,939
Other financial debt 14,795 19,183
Other payables 297 505
--------- -------
Total current liabilities 22,572 36,921
--------- -------
NONCURRENT LIABILITIES
Long-term debt 135,000 135,000
Other financial payable, net of
current portion 20,592 14,120
--------- -------
Total noncurrent liabilities 155,592 149,120
--------- -------
Total liabilities 178,164 186,041
--------- -------
MINORITY INTEREST 4,949 -
--------- -------
SHAREHOLDERS' EQUITY
Common stock, $.01 par value: authorized 21 20
shares 2,134,451, issued and outstanding
2,109,239 in 2003 and 2,080,840 in 2002
Additional paid-in capital 68,884 67,781
Treasury stock (20,332) (20,332)
Accumulated deficit (16,775) (4,094)
--------- --------
Total shareholders' equity 31,798 43,375
--------- --------
Total liabilities, minority interest and
shareholders' equity 214,911 229,416
========= ========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollar)
2003 2002
----------------------
REVENUES
Freight revenues 5,954 5,543
Freight revenues from related parties 27 145
Hire revenues 8,448 9,523
Hire revenues from related parties 2,452 3,144
---------- ----------
Total revenues 16,881 18,355
--------- ---------
OPERATING EXPENSES
Voyage expenses (2,605) (2,730)
Running costs
(7,382) (6,734)
Amortization of dry dock (2,074) (1,932)
Depreciation of property and equipment (4,046) (4,093)
Management fees to related parties (814) (810)
Administrative expenses (781) (974)
Loss on involuntary conversion of Argentine (988)
receivables
---------- ----------
Total operating expenses (17,702) (18,261)
---------- ----------
Operating profit (821) 94
========== ==========
OTHER INCOME (EXPENSES)
Interest expense (4,090) (4,254)
Interest income 61 67
Investment in affiliates 123 (307)
Other net income 1,538 8
--------- ---------
Total other expenses (2,368) (4,486)
--------- ---------
(Loss) income before income tax and minority (3,189) (4,392)
interest
Tax on minimum presumed income / Income tax (30) (71)
Minority interest (72) -
--------- -----------
Net loss for the period (3,291) (4,463)
========== ===========
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
Additional
Common paid-in Treasury Accumulated Total Total
Balances stock capital stock deficit 2003 2002
---------------------------------- --------------------------------------------- ----------
At beginning of period 21 68,884 (20,332) (13,484) 35,089 47,838
- Net loss for the
period - - - (3,291) (3,291) (4,463)
------- ------- -------- -------- ------- -------
At end of period 2003 21 68,884 (20,332) (16,775) 31,798 -
======= ====== ======= ======== ======= =======
At end of period 2002 20 67,781 (20,332) (4,094) - 43,375
======= ======= ======= ======== =======
The accompanying notes to condensed consolidated financial statements are an integral part
of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
2003 2002
---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period
(3,291) (4,463)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation of property and equipment 4,046 4,093
Amortization of dry dock expenses 2,074 1,932
Note issuance expenses amortization 146 146
Net loss from investment in affiliate (123) 307
Changes in assets and liabilities, net:
(Increase) decrease in assets:
Accounts receivable (1,326) 2,937
Due from affiliates 3,647 (3,825)
Inventories 105 (334)
Prepaid expenses (1,220) (805)
Other receivables (772) 38
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 1,724 3,444
Due to affiliates 460 1,673
Other payables (438) 329
Accrued expenses 3,397 3,688
--------- ---------
Net cash provided by operating activities 8,429 9,160
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of roperty and equipment - (6)
Decrease in loan to affiliate 207 -
Dry dock expenses (2,285) (3,036)
Increase in current investments (31) (6)
--------- ---------
Net cash used in investing activities (2,109) (3,048)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of financial debt (800) (830)
Funds used in acquisition of treasury stock (1,200) -
Increase in restricted cash (367) (8)
Capital contribution of minority shareholder to 1,517 -
subsidiary
Other (376) 7
--------- ---------
Net cash used in financing activities (1,226) (831)
--------- ---------
Net increase in cash and cash equivalents 5,094 5,281
Cash and cash equivalents at the beginning of year 4,724 5,872
--------- ---------
Cash and cash equivalents at the end of period 9,818 11,153
======= =======
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements for the three months
periods ended March 31, 2003 and 2002, were prepared by the Company
without audit. In the opinion of management, all normal recurring nature
adjustments necessary to present fairly the financial position, results of
operations, and cash flows for the interim periods were made.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, were condensed or omitted. Accordingly, these
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in
the consolidated financial statements for the years ended December 31,
2002, 2001 and 2000.
2. SHARE SALE AGREEMENTS SIGNED BY THE COMPANY
On June 28, 2001, the Company issued 138,443 new shares for 5,295 which
were totally subscribed by Los Avellanos, one of the Company's original
shareholders and was paid 3,297 in 2001 and 1,104 in 2002 and the balance
are payable in July 2003.
3. LONG-TERM DEBT AND OTHER FINANCIAL PAYABLES
On March 30, 1998, the Company successfully completed its offering of
135,000 in principal amount of its 10.5% First Preferred Ship Mortgage
Notes due in full in 2008. In accordance with the terms provided in such
Offering, the Notes are fully and unconditionally guaranteed on a joint
and several basis by certain subsidiaries of the Company, and are secured
by first ship mortgages on vessels already owned by the guarantors and on
additional vessels that the Company purchased with the proceeds obtained
from the Offering.
As of March 31, 2003, the Company's noncurrent portion of long-term debt
amounts to 135,000. It exclusively comprises the debt principal amount of
the Notes. The related interest expense, totaling 7,088 is accrued in
other financial debt.
The balances of financial payables as of March 31, 2003 and 2002 are as
follows:
Nominal value
------------------------
Financial institution Agreement Current Noncurrent Accrued Total Average rate
/ other year expenses
-----------------------------------------------------------------------------------------------
Total 2002 11,920 149,120 7,263 168,303
====== ======= ====== =======
Private Investors
Ultrapetrol Bahamas (Notes) 1998 - 135,000 7,088 142,088 10.5%
Majestic Allfirst Bank 2001 2,000 - - 2,000 Libor + 1.5%
Kattegat Nedship Bank 2000 1,000 4,750 5,750 Libor +
1.25%
Majestic Allfirst Bank 2000 1,200 7,200 8,400 Libor +
1.75%
Stanmore Allfirst Bank 2000 1,000 - - 1,000 Libor + 2%
Braddock Credit Agricole 2002 2,390 8,642 117 11,149 Libor + 1.5%
Indosuez
------- ------- ------- -------
Total 2003 7,590 155,592 7,205 170,387
====== ======= ======= =======
4. PROPERTY AND EQUIPMENT
On July, 2002, the Company purchased the Cape Pampas, a second hand
capsize bulk carrier through its wholly owned subsidiary, Braddock. The
amount of the acquisition was financed by a mortgage loan agreement with
Credit Agricole Indosuez.
On August 26, 2002, the Company entered into a Memorandum of Agreement
(MOA) through which it committed to sell its vessel Princess Fatima, to an
unrelated company for 1,867, net of associated expenses. On September 19,
2002 the Company delivered the Princess Fatima pursuant to the MOA and
received the purchase price.
The proceeds from the sale of the Princess Fatima Vessel were deposited in a
restricted cash account and can only be used to buy another vessel to
guarantee the Notes. Subsequently, the Princess Sofia was bought with part
of these proceeds and the remainder of the proceeds are included in
restricted cash as of March 31, 2003.
5. TREASURY STOCK
On October 12, 2000 the Company through a wholly owned subsidiary, Avemar
Holdings (Bahamas) Limited ("Avemar"), purchased 537,144 shares of the
Company previously owned by Societe Internationale D'Investissement S.A.
(Bahamas) ("SII"). The nominal purchase price of said shares was 20,000.
As of March 31, 2003 and 2002, the Company recorded 20,332 in the
"Treasury stock" account, 20,000 of which relates to the amount payable to
SII and 332 relates to direct cost of acquisition.
6. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Three months period
Ended, March 31
--------------------------
2003 2002
------------ ------------
- Interest
378 343
- Income taxes
23 84
7. CLAIMS AGAINST INSURANCE COMPANIES
As of March 31, 2003 and 2002, the "Other receivables" account includes
8,953 and 10,088, respectively, related to claims against insurance
companies. Claims for 3,200 have been made by the Company against the
insurance companies regarding the repair expenses incurred to date for
damage to some vessels in 2003. The "Other net income" account for the
period of three months ended March 31, 2003, includes 1,448 related to
claims for loss of income (business interruption) corresponding to the
Princess Pia and Princess Eva.
The "Other net income" account for the period of three months ended March
31, 2002, includes 361 related to claims for loss of income (business
interruption) corresponding to the Alianza G3.
8. CLAIMS AGAINST THE COMPANY
On February, 2003, Ursa Shipping Ltd. ("Ursa") brought suit in the United
States District Court for the District of New Jersey against M/T Princess
Susana and Noble Shipping Ltd. (a wholly owned subsidiary of the Company)
seeking damages arising out of the delay in delivery of a cargo of Kirkuk
crude oil to the Valero terminal in Paulsboro, New Jersey. Also in
February 2003, Valero Marketing and Supply Co. ("Valero") commenced an
action against Noble Shipping Ltd. The Valero and Ursa complaints seek
damages in excess of 9 million.
In connection with the above complaints, the vessel was arrested. Security
was posted by the vessel owners' protection and indemnity insurers in the
amount of 11.2 million and the vessel was released from arrest (insurance
coverage is in place). Both the Ursa and the Valero complaints have been
answered, defenses have been raised, and a counterclaim has been raised in
the Ursa action seeking, inter alia, unpaid freight and demurrage.
Discovery is presently underway and the parties have exchanged documents.
It is too early in the course of the litigations to form an opinion as to
their ultimate outcome.
The Company's management and its legal counsel believe this claim is
covered by insurance. The insurer is actively participating in its defense
and has not asserted any objections or defenses to the claim. We would
expect any damages arising from this action (less our policy deductible)
to be covered by the proceeds of such insurance.
9. SUPPLEMENTAL GUARANTOR INFORMATION
As described in Note 3, the Notes are fully and unconditionally guaranteed
by certain subsidiaries of the Company.
The subsidiaries which offered its assets in collateral of the above -
mentioned indebtedness are: Ultrapetrol S.A., Regal International
Investments S.A., Baldwin Maritime Inc., Tipton Marine Inc., Kingsway
Shipping Inc., Plate Princess Shipping Company Ltd., Panpetrol Shipping
S.A., Oceanview Maritime Inc., Kingly Shipping Ltd., Sovereign Maritime
Ltd., Imperial Maritime Ltd., Monarch Shipping Ltd., Noble Shipping Ltd.,
Cavallier Shipping Inc., Oceanpar S.A. and Parfina S.A. ("Subsidiary
Guarantors").
Supplemental condensed combining financial information for the Guarantors
Subsidiaries is presented below. This information is prepared in
accordance with the Company's accounting policies. This supplemental
financial disclosure should be read in conjunction with these condensed
consolidated financial statements.
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
BALANCE SHEETS AS OF MARCH 31, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
2003 2002
--------- ---------
ASSETS
Current assets 24,964 35,243
Noncurrent assets 99,777 114,124
--------- ---------
Total assets
124,747 149,367
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 115,996 127,342
Commitments and contingencies - -
Shareholders' equity 8,745 22,025
--------- ---------
Total liabilities and shareholders' equity
124,741 149,367
========= =========
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
2003 2002
---------- --------
Freight revenues
5,954 5,661
Hire revenues 7,006 8,065
--------- ---------
Total revenues 12,960 13,726
Operating expenses (13,865) (14,206)
--------- ---------
Operating (loss) profit (905) (480)
Other expenses (2,054) (4,565)
--------- ---------
(Loss) income before income tax (2,959) (5,045)
Tax on minimum presumed income / Income tax (24) (71)
--------- ---------
Net loss (income) for the period
(2,983) (5,116)
======== =======
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS PERIODS ENDED MARCH 31, 2003 AND 2002
(Unaudited)
(stated in thousands of U.S. dollars)
2003 2002
--------- -------
Net (loss) income for the period
(2,983) (5,116)
Adjustments to reconcile net (loss) income to cash 3,429 8,652
provided by operating activities:
-------- -------
Net cash provided by (used in) operating activities 446 3,536
Net cash used in investing activities (1,255) (3,040)
Net cash provided by (used in) financing activities (31) 458
-------- -------
Net increase (decrease) in cash and cash equivalents (840) 954
Cash and cash equivalents at the beginning of the year 932 247
--------- -------
Cash and cash equivalents at the end of the period
92 1,201
======= =======
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ULTRAPETROL (BAHAMAS) LIMITED
(registrant)
Dated: May 15, 2003 By: /s/ Felipe Menendez
-----------------------------
Felipe Menendez
President
02351.0001 #404969