Mercator Lines terminates M.V. Maria Laura Prem charter

It forecasts a loss of US$4,366,012.

According to a release, Mercator Lines has on 15 March 2013 entered into an early termination and settlement deed with the owner of M.V. “Maria Laura Prem”, pursuant to which the Company and the owner have agreed to the early termination of the existing charter of the Vessel and the replacement of the same with a new time charter subject to fulfilment of terms and conditions of the Early Termination Deed by both the parties.

The issue of the Compensation Shares will have a negative impact on the profit and loss of the Company to the extent of approximately US$4,366,012 which will in turn result in negative impact on the reserves and surplus of the Company to the extent of US$4,366,012.

This is assuming that the Compensation Shares are issued at an issue price of S$0.118 per Compensation Share being the closing price of the Shares on 12 March 2013 which was the last date on which the Shares had been traded on the SGX-ST and an exchange rate of US$1.00 to S$1.22.

The existing charter of the Vessel commenced under a charter party dated 21 December 2007 and provides that the term of the charter of the Vessel shall be for a period ending no later than ten years and two months from the time of delivery of the Vessel.

Under the terms of the Early Termination Deed, the Vessel will be deemed to be redeliveredto its owner by the earlier of (a) the date of completion of the existing voyage of the Vessel; or (b) 30th April 2013. 

Upon such redelivery and subject to the satisfaction of the obligations of the parties under the Early Termination Deed as further described below, the existing charter of the Vessel shall be deemed terminated and the New Charter Party shall take effect.

The New Charter Party is a time charter with a duration, subject to adjustment, until 1 May 2020 with one month more or less at the option of the Company. 

The value of the Compensation Shares to be issued to the Owner will be determined based on the closing price for the Shares on the SGX-ST on the market day preceding the date on which the Compensation Shares are issued to the Owner.

However, assuming the Compensation Shares are issued at an issue price of S$0.118 per Compensation Share being the closing price of the Shares on 12 March 2013 which was the last date on which the Shares had been traded on the SGX-ST, the value of the Compensation Shares to be issued to the Owner will be US$4,366,012, based on an exchange rate of US$1.00 to S$1.22.