The orderbook for dry bulk deliveries continues to shrink as the year progresses, and it is expected that the difficulty in obtaining finance, along with the bad market conditions will result in continued weakness in new-building ordering for the rest of this year."
Christina Anagnostara, the Company's Chief Financial Officer, stated: "Over the second quarter of 2012 Seanergy's revenue fell by 35% when compared to the same quarter of 2011. For the six month period ended June 30, 2012 the corresponding decline in revenues was 33%. Furthermore, Seanergy reported a net loss of $28.4 million for the second quarter of 2012, compared to a profit of $0.6 million in the second quarter of 2011. The financial result for second quarter of 2012 includes $13.2 million of non-cash losses stemming from the sale of the BET Scouter in June, as well as an $11.8 million non-cash loss from the impairment of BET Fighter. Excluding these, net losses would have amounted to $3.3 million. The deterioration in performance during the second quarter of 2012 was mainly a result of a 43% decrease in the average Time Charter Equivalent ("TCE") rate earned by our vessels, from $15,404 to $8,763, as earnings of vessels employed under floating rate contracts and on short term charter parties reflected the weak spot market conditions. It is also worth noting that the sales of the African Zebra and the BET Scouter in 2012 have resulted in a reduction in the average number of vessels owned during the second quarter to 18.8 from 20 in the second quarter of 2011.
In terms of our effort to limit expenses so as to improve our operating performance, quarterly daily average vessel operating expenses were reduced by 11%, while daily general and administrative expenses per vessel have been reduced by 62%, compared to the second quarter of 2011.
As of June 30, 2012 our outstanding debt was $296.2 million and our cash reserves amounted to $17.7 million.
As a result of prolonged challenging market conditions, the Company is no longer in compliance with some financial covenants. The Company has entered into discussions with its lenders to develop a realistic financial plan that will improve liquidity and operating flexibility while maintaining a sustainable capital structure. The Company has appointed Houlihan Lokey and Axia Ventures Group as its financial advisors to assist with this process."
Second Quarter 2012 Financial Results:
Net Revenues in the second quarter of 2012 decreased to $18.1 million from $27.8 million in the same quarter in 2011, a reduction of 35%. Reduced net revenue was a result of the pronounced dry-bulk market weakness, as the average of the BDI over 2Q 2012 fell by 26% compared to the already low levels seen in the second quarter of 2011. Furthermore, Seanergy completed the sale of the African Zebra in the first quarter of 2012, as well as the sale of the BET Scouter in June 2012. This resulted in less operating days for our fleet during the quarter, as an average of 18.8 vessels were owned, compared to 20 in the corresponding quarter of 2011.
EBITDA, Adjusted EBITDA
Excluding $13.2 million of non-cash losses resulting from the BET Scouter sale and $11.8 million of non-cash loss from the impairment of BET Fighter, adjusted EBITDA was $5.4 million for the second quarter of 2012, as compared to $13.6 million in 2011. Including the aforementioned non-cash items, we recorded negative EBITDA of $19.6 million for the quarter ended June 30, 2012.
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