DUBAI: Gulf Navigation is fighting to survive in the face of mounting losses and legal setbacks, in spite of posting improved revenues and profit for the first quarter of the year.
The Dubai-based shipping company said in its first quarter results presentation that there is “a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern”.
Gulf Navigation’s accumulated losses stood at Dh288.1 million at the end of March, representing more than half of its share capital, obliging the firm to hold an extraordinary general meeting with shareholders over whether to continue operations.
Following the meeting on Thursday, the company plans to reduce accumulated losses to the extent of the company’s legal reserve of Dh32.5m, and to convert certain liabilities into shares in the company.
The company also announced yesterday that its managing director Sandeep Kadwe had stood down, with Parag Jain assuming the position of acting chief executive.
Gulf Navigation has suffered a number of high-profile setbacks over the past two years, including the seizure of two oil tankers by creditors in late 2013 (subsequently sold last year) following a default on loans, and a series of arbitral awards going against it.
The company remains in default on several loans, raising the possibility of further asset seizures by creditors.
One creditor, Norway’s DNB, obtained a judgment in the English High Court of Justice in September, ordering Gulf Navigation and an affiliated company to pay it $8.7m.
DNB has subsequently filed a claim in the DIFC Courts, seeking recognition and enforcement of the award against assets in the UAE.
Gulf Navigation is contesting DNB’s right to seek such a claim in the DIFC Courts.
The company’s struggles for survival come despite an uptick in revenues and profits for the first quarter. Revenues increased 11.8 percent to Dh34.5m, while net profit for the period stood at Dh4.9m for the quarter, compared with just Dh539,000 a year ago.
Gulf Navigation’s shares meanwhile have nearly doubled in value in the past month.
But while its shares surged nearly 10 percent in early trading yesterday, the stock finally reversed gains in afternoon trading, ending down 1.3 percent at 37.7 fils.
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