World Bunkering > News > Industry News > K-Sea raises $100m

K-Sea Transportation Partners says that a partnership between First Reserve and Kayne Anderson Capital Advisors, KA First Reserve,  will invest up to US$100m in cash in the major US tank barge operator in exchange for about 18.4m convertible preferred units. All of the proceeds  will be used to reduce outstanding indebtedness and pay fees and expenses related to the transaction.

K-Sea president and CEO Timothy Casey said, "We are very pleased with our new association with First Reserve and Kayne Anderson. These organizations have a wealth of experience and expertise in the MLP and energy businesses. Their decision to invest in us is a testimony to K-Sea’s leading industry position and the strength of our Company. With our balance sheet recapitalization behind us, we will be able to focus on operations, results and new opportunities. We remain convinced the domestic market for marine transportation of refined petroleum products will rebound significantly when demand recovers and single hull vessels leave the market permanently."

He added: "As we stated on our last conference call, we continue to concentrate on cost control and eliminating low-return assets. On the latter point, we have a definitive agreement to sell two tugboats and our two oldest double-hulled barges to an international buyer, and we have a definitive agreement to sell our environment services property in Norfolk, Virginia. Both transactions should close in the September 2010 quarter."

He said that the company results for the current quarter would benefit from having eight of its vessels, including five single hull units, working in the US Gulf as part of the oil spill clean-up effort. These vessels will be employed for most of the quarter.

Mr Casey noted: “We have reduced our overhead by approximately 13% from our run-rate 18 months ago. We expect our general and administrative expenses to be $25 to $26 million in fiscal 2011. We extended our labour union agreement for one year, with no increase in wages. We disposed of one tug and eight single hull barges in the fourth quarter and recorded a net gain."

The company also reported an operating loss of $0.5, excluding a $54.3 million write-off of goodwill and an impairment charge of $5.1 million on excess tugs, in its Q4 ended June 30, 2010.. This represents a decrease of $8.8m, compared to $8.3m of operating income for for the previous Q4. For the year  ended June 30, 2010, K-Sea had operating income of $1.8m, excluding the $54.3 goodwill write-off and a $12.6m asset impairment charge on single-hull vessels and excess tugs. This compares with an operating income of $36.5m June 30, 2009. Including the write-off of goodwill and the asset impairment charge, the Company reported an operating loss of $65.1 million for the fiscal year ended June 30, 2010.