Torm working the rounds in search of a permanent solution

Shipping company A/S Dampskibsselskabet TORM (OMX: TORM,NASDAQ: TRMD) has had to do a lot of negotiating with banks to try to get out of its current predicament. On March 8th the company said it had reached a temporary deferral of instalments and covenant standstill until 15 March 2012. On that day the company said it expects this temporary agreement with the banks to be renewed shortly.

On Friday the stock gained on the news of a cancellation of one MR product tanker newbuilding. The company said that a substantial CAPEX reduction has been the key to achieve long-term financial solution. With this move the order book for newbuildings is now empty. The transaction has no short-term cash implications and will results in a P&L loss of approx. USD 2 million in Q1 2012 accounts.

Last week the company agreed to sell MR product tanker TORM Lana with approximately 15 million USD P&L loss for Q1 2012. The agreement is cash-flow positive at around 4 million USD. Following these moves the over 120-year old product tanker & bulk carrier firm has a fleet of 66.5 product tankers and two dry bulk vessels.