Wednesday, November 07, 2007
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3 comments:
USS could be in trouble. Management today suggested that the distribution payment may have to be reduced:
"...and we continue to examine our capital structure and other alternatives with the goal of increasing liquidity, including taking actions which could result in a reduction in the amount of the quarterly distribution paid on our subordinated units. Our inability to adequately address any liquidity issues that may arise in the future could impact our ability to pay the minimum quarterly distribution in full. It should be noted that the full minimum quarterly distribution on the common units of $0.45 will be paid prior to the payment of any distribution on the subordinated units."
thanks for the info..i will post about it in the morning.
I listened to USS's Conference Call. They said (not verbatum) that they put the "quoted paragraph" in their Q PR because of the experation of 3/4 of their long term charter ITB unit leases at the end of 2007. These ITB units ( 4 integrated tug barges ) represent 4 out of the 20 vessels owned by the partnership.
These expired charters were for app 38k per day, spot rates for charters are now 42k+ per day, but spot charters lack the certainty and comfort of a long term contract. That's why they put the distribution paragraph in the PR.
They expect similar capacity utilization (and decent pricing) through the first quarter 2008, and perhaps it will continue going forward).
Otherwise a mixed bag, Jones charter ships more competitive on some routes than foriegn flags due to the decline in the dollar ( we picked up a grain shipment to Africs ). Also dollar/euro now benefits USS's chemical customers, so they ( and USS ) picks up business that would otherwise be EU sourced. New ships expected to be put in service.
Negatives include higher labor contracts, drydock expenses, potental delays on ship delivery,etc.
Conference call Link:
http://biz.yahoo.com/cc/9/86939.html
Link to PR:
http://biz.yahoo.com/iw/071107/0325402.html
The question of course is the risk of a potental ( but not certain ) distrribution cut fully priced in at current levels? $16.50 price 1.80 distribution or almost 11%?
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