Reuters: Bankruptcy News: UPDATE 2-Shipping crisis sinks Italy's Deiulemar

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UPDATE 2-Shipping crisis sinks Italy's Deiulemar May 3rd 2012, 16:00 Thu May 3, 2012 12:00pm EDT * Company had about 860 mln euros of debt, mostly bonds * Dry bulk sector facing tough conditions * (Adds further industry comment, detail) By Silvia Antonioli and Jonathan Saul LONDON, May 3 (Reuters) - Italian shipping company Deiulemar Compagnia di Navigazione has been declared bankrupt owing about 860 million euros ($1.1 billion), raising fears that others could collapse as a four-year slump in the sector takes its toll. The move, announced on Thursday, comes as Italian financial regulator Consob investigates the legality of bonds issued by the company, once one of Europe's biggest dry bulk ship operators. Shipping companies worldwide ordered large numbers of new vessels between 2007 and 2009, when rates to carry cargo such as a coal, grain and iron ore hit record highs, and now they have a glut. As rates have crashed, fuel prices soar and banks hesitate to lend, the sector is struggling. Danish dry bulk and tanker operator Torm A/S said this week it expected banks to agree another extension to a freeze on repayments of its $1.9 billion of debt as it sought more time to find a financing solution. "This (Deiulemar) collapse is a clear sign that dry bulk industry is under immense pressure," a ship industry source said. "Dry bulk companies are no longer financially as strong as they were back in the immediate aftermath of the outbreak of the crisis. This means that shorter-term melt downs in freight rates may push some companies over the edge." Another added: "We had expected this, but it still comes as a shock, especially the fact that an owner/operator like this was able to rack up debt of $1.1 billion." Deiulemar was not immediately available for comment. Ratings agencies expect the dry bulk sector to continue to feel pain well into 2013 with Standard & Poor's expecting the segment to be the last to recover after oil tanker and ship container markets. Deiulemar's recently appointed company head Roberto Maviglia told Reuters in March the company was in difficulties and had to pull out of agreements to charter ships from other owners. Greece-based Paragon Shipping said at the time it would act to recoup damages. Paragon declined to comment on Thursday. BONDHOLDER ANGER The situation for family owned Deiulemar was compounded by protests from thousands of bondholders seeking compensation after learning of large borrowings by the firm that had not been properly accounted for. A judge rejected an agreement with creditors proposed by Deiulemar, the bankruptcy office of Torre Annunziata, Naples, told Reuters on Thursday. Lawyer Giuseppe Colapietro, who represents a committee of bondholders, said that the last-minute proposal submitted by the founding families to try and save the company was not satisfactory for the creditors and left no choice for the judge but to declare bankruptcy. "I am sorry for the company, which has been working for 40 years, for the bondholders and for the employees but the founding families should have offered a better deal to creditors," Colapietro said. Deiulemar was founded in 1969 by Giovanni della Gatta, Giuseppe Lembo and Michele Iuliano, who are members of three well-known families in the local community and in the Naples shipping sector. While the firm's 2010 balance sheet showed it had issued only about 40 million euros of bonds, an appeal by the company for bondholders to come forward and disclose their holdings in recent weeks pointed to the existence of more than 700 million euros ($920.64 million) in bonds. Deiulemar said in April it had liabilities of about 860 million euros, most of which were in bonds to be repaid. "When facing the final day, some companies may be kept alive if they get reconstructed in the right way - leaving satisfactory upside for key stakeholders. Alternatively the book gets closed," a shipping industry source said. ($1 = 0.7603 euros) (Editing by Erica Billingham) Link this Share this Digg this Email Reprints

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