Ultrapetrol Reports Financial Results for Second Quarter 2014

Ultrapetrol (Bahamas) Limited (ULTR), an industrial transportation company serving marine transportation needs in three markets (River Business, Offshore Supply Business and Ocean Business), announced financial results for the second quarter ended June 30, 2014.

Second Quarter 2014 and subsequent events highlights:

• Recorded second quarter 2014 revenues of $99.4 million;
• Recorded adjusted consolidated EBITDA of $25.4 million in the second quarter of 2014,1 which includes adjusted EBITDA of $8.1 million from our River Business, adjusted EBITDA of $12.5 million from our Offshore Supply Business, adjusted EBITDA of $2.2 million from our Ocean Business, and adjusted EBITDA of $2.7 million from other activities — primarily foreign currency exchange cash gains;
• Operating profit for the second quarter 2014 was $10.0 million;
• Recorded total adjusted net income and adjusted net income per share of $2.9 million and $0.02, respectively, in the second quarter of 2014, which excludes the effect of a $(0.3) million loss for deferred taxes on unrealized foreign exchange gains on U.S. dollar-denominated debt of our Brazilian subsidiary in our Offshore Supply Business; and excludes a $0.1 million gain related to the sale of dry barges which were subsequently leased back to the Company (for accounting purposes, the gain from the sale is being deferred over the term of the lease up to the present value of the lease payments).2 Before adjusting for these effects, the recorded total net income and net income per share are $2.8 million and $0.02, respectively;
• Adjusted EBITDA for our Offshore Supply Business segment increased 84% to $12.5 million in the second quarter of 2014, as compared to $6.8 million in the same period of 2013;
• On May 13, 2014, our Parana Iron transshipment station began successfully its services under a long term agreement with Vale where she is expected to load close to 1.0 million tons per year from barges into ocean vessels;
• In August, our PSVs UP Opal and UP Safira (whose current contract expires in September 2014) were awarded and confirmed by the directors of Petrobras four-year time charter contracts at approximately $31,000 and $30,000 per day, respectively; and
• The Company has been informed that: On July 13, 2014, major shareholders of Ultrapetrol (Bahamas) Limited entered into a share purchase agreement with respect to the sale of shares of Ultrapetrol and of certain affiliates of the major shareholders between such shareholders. Under the agreement, Sparrow Capital Investments Ltd. (“Sparrow”), a subsidiary of Southern Cross Latin America Private Equity Funds III and IV (“Southern Cross”), reached an agreement with Hazels (Bahamas) Investments Inc. (“Hazels”) and Inversiones Los Avellanos S.A. (“Los Avellanos”), each a subsidiary of SIPSA S.A (“SIPSA”), to purchase all of Hazels’ and Los Avellanos’ outstanding equity interests in the Company, increasing Southern Cross’ interest in the Company from 67% to 85%. Under the terms of the agreement, Sparrow will acquire from Hazels, Los Avellanos, and certain entities affiliated with them, the rights to 25,326,821 shares of common stock of the Company (“Common Stock”). The price has been agreed at the equivalent of $4.00 per share of Common Stock. Upon completion of the transaction, the capital of the Company will be comprised exclusively of single voting shares. The transaction is expected to close in the next 60 days and the agreement sets forth certain customary closing conditions, including having SIPSA and Los Avellanos receive approval from its shareholders for the transaction and the receipt of certain waivers from lenders of Ultrapetrol. The agreement also provides Hazels with the opportunity to offer to purchase Ultrapetrol’s Ocean Business for a price to be determined, subject to terms and conditions including the approval of the independent director of Ultrapetrol. In connection with the transaction, it has been agreed with Felipe Menendez and Ricardo Menendez that the Company will terminate their respective employment and consulting agreements upon closing and enter into new employment and consulting agreements. Felipe Menendez and Ricardo Menendez will remain with Ultrapetrol as directors. The terms of the new employment and consulting agreements will be for up to six months. The vesting of unvested options and restricted stock awards will be accelerated so that they will be exercisable and vested immediately before the termination of the agreements. Under certain of the Company’s existing loan agreements, it will need to receive a waiver from the applicable lender before Messrs. Felipe and Ricardo Menendez leave their management positions with the Company. A new Chief Executive Officer of Ultrapetrol is expected to be appointed effective as of the closing of the transaction. The Company also announced today that it has appointed Rodrigo Lowndes to its board of directors, effective immediately, following the resignation of Fernando Barros. Mr. Lowndes, a Brazilian national, is a partner with Southern Cross in the Sao Paolo office and has been with the firm since 2009. Prior to joining Southern Cross, Mr. Lowndes co-founded Emerging Capital, a Brazilian asset management company. Before then, he worked for Morgan Stanley in New York and Brazil where he was President and Head of Investment Banking. He has served on the board of several Southern Cross portfolio companies.
Source: Ultrapetrol (Bahamas) Limited (ULTR)