UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of May 2007
Commission File Number: 001-33068
ULTRAPETROL (BAHAMAS) LIMITED
(Translation of registrant's name into English)
Ocean Centre, Montagu Foreshore
East Bay St.
Nassau, Bahamas
P.O. Box SS-19084
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): ___
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)7: ___
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [_] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82-______________.
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Set forth herein are a copy of the Company's report for the three months
ended March 31, 2007, containing certain unaudited financial information and a
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
ULTRAPETROL (BAHAMAS) LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND
2006 (UNAUDITED)
The following discussion and analysis should be read in conjunction with
the unaudited condensed consolidated financial statements of Ultrapetrol
(Bahamas) Limited (the "Company") and subsidiaries for the three months ended
March 31, 2007 and 2006 included elsewhere in this report.
Our Company
We are an industrial shipping company serving the marine transportation
needs of clients in the markets on which we focus. We serve the shipping markets
for grain, forest products, minerals, crude oil, petroleum, and refined
petroleum products, as well as the offshore oil platform supply market, and the
leisure passenger cruise market through our operations in the following four
segments of the marine transportation industry.
Our River Business, with approximately 502 barges, is the largest owner and
operator of river barges and push boats that transport dry bulk and liquid
cargos through the Hidrovia Region of South America, a large area with growing
agricultural, forest and mineral related exports.
Our Offshore Supply Business owns and operates vessels that provide
critical logistical and transportation services for offshore petroleum
exploration and production companies, primarily in the North Sea and the coastal
waters of Brazil. Our Offshore Supply Business fleet currently consists of
proprietarily designed, technologically advanced platform supply vessels, or
PSVs. During the first quarter of 2007, we had four PSVs in operation and four
under construction. Two PSVs were under construction in Brazil and contracted to
be delivered in the second quarter of 2007 and in 2008, respectively. We
recently contracted with a shipyard in India to construct two PSVs for delivery
commencing in 2009, with an option to build two more.
Our Ocean Business owns and operates eight oceangoing vessels, including
three Handysize/small product tankers which we use or intend to use in the South
American coastal trade where we have preferential rights and customer
relationships, three versatile Suezmax/Oil-Bulk-Ore, or Suezmax OBO, vessels,
one Aframax tanker and one semi-integrated tug/barge unit. Our Ocean Business
fleet has an aggregate capacity of approximately 651,000 dwt, and our three
Suezmax OBOs are capable of carrying either dry bulk or liquid cargos, providing
flexibility as dynamics change between these market sectors.
Our Passenger Business fleet consists of two vessels with a total carrying
capacity of approximately 1,600 passengers, and operates primarily in the
European cruise market.
Our business strategy is to continue to operate as a diversified marine
transportation company with an aim to maximize our growth and profitability
while limiting our exposure to the cyclical behavior of individual sectors of
the marine transportation industry.
Developments in the First Quarter of 2007
On January 2, 2007, we drew down on the initial $37.5 million of the $61.3
million facility agreed with DVB (DVB Bank AG) and on March 7, 2007 we completed
the drawdown of this facility.
On January 5, 2007, we took delivery of the Alejandrina and paid the 90%
balance of the purchase price, or $15.3 million. She was positioned for
employment in the South American cabotage trade where she commenced service in
March 2007.
On January 27, 2007, we entered into a $13.6 million senior secured term
loan agreement with Natixis as post delivery finance for the acquisition of the
Alejandrina.
On February 21, 2007, we entered into two shipbuilding contracts with a
shipyard in India to construct two PSVs with deliveries commencing in 2009, with
an option for two more. The price for each new PSV to be built in India is $21.7
million to be paid in five installments of 20% each prior to delivery.
On March 7, 2007, we executed a Stock Purchase Agreement and other
complementary agreements with the Shareholders of Compania Paraguaya de
Transporte Fluvial S.A. ("CPTF") and Candies Paraguayan Ventures LLC ("CPV")
whereby we purchased 100% of the stock of CPTF and CPV. Through the purchase of
these two companies, we acquired ownership of one 4,500 HP pushboat (the Captain
Otto Candies ) and twelve Jumbo 2,500 dwt barges (Parana barges) all built in
the United States in 1995. The total purchase price paid by us under the
respective agreements was $13.8 million.
On March 11, 2007, we signed an agreement with Maritima SIPSA S.A. through
which we have agreed to postpone the date for exercising our repurchase option
of the Princess Marina until September 25, 2007.
On March 19, 2007, we paid $8.7 million corresponding to the first
installment of the two PSVs under construction in India.
Recent Developments
On April 3, 2007, the Miranda I was dry docked in Buenos Aires to begin its
conversion to double hull.
On April 19, 2007, we successfully completed a follow-on offering of
12,650,000 shares of our common stock priced at $19.00 per share. The offering
included 5,903,922 shares offered by existing shareholders and 5,096,078 shares
issued by the company. It also included the exercise of an over-allotment
comprising 1,650,000 shares from one of the selling shareholders. Ultrapetrol
did not receive any of the proceeds from any sale of common stock by the selling
shareholders. The offering raised approximately $92 million in primary gross
proceeds for the company.
On May 9, 2007, we entered into a Forward Freight Agreement ("FFA") whereby
a subsidiary of ours sold via BNP Paribas Commodity Futures Limited ("BNP
Paribas") to LCH Clearnet ("LCH") the average of the 4 Capesize Time Charter
Routes (C4TC) for a total of 180 days (15 days per month from January 2008 up to
December 2008 both inclusive) at a price of $80,000 (eighty thousand U.S.
Dollars) per day.
On May 10, 2007, we entered into a second FFA whereby a subsidiary of ours
sold via BNP Paribas to LCH the average of the 4 Capesize Time Charter Routes
(C4TC) for a total of 180 days (15 days per month from January 2008 up to
December 2008 both inclusive) at a price of $79,500 (seventynine thousand and
five hundred U.S. Dollars) per day.
On May 15, 2007, we entered into a third FFA whereby a subsidiary of ours
sold via BNP Paribas to LCH the average of the 4 Capesize Time Charter Routes
(C4TC) for a total of 366 days (every calendar month from January 2008 up to
December 2008 both inclusive) at a price of $77,250 (seventyseven thousand and
two hundred fifty U.S. Dollars) per day.
In connection with these transactions, we transferred $2.0 million to cover
a large part of the initial margin required for these transactions. As of close
of business May 14, 2007, we had utilized approximately $0.23 million under a
credit facility of $1.5 million we have with BNP Paribas to cover margin
requirements in connection with these and other FFA transactions we might enter
into in the future. We pay interest of LIBOR plus 0.75% p.a. on the amounts
withdrawn under the BNP Paribas facility.
On May 15, 2007, we took delivery of the fifth PSV in our Offshore Supply
Business fleet, UP Diamante, from EISA - Estaleiro Ilha S.A. in Rio de Janeiro,
Brazil.
Factors Affecting Our Results of Operations
We organize our business and evaluate performance by the following
operating segments: the River Business, Ocean Business and, beginning in 2005,
Offshore Supply Business and Passenger Business. The accounting policies of the
reportable segments are the same as those for the unaudited condensed
consolidated financial statements. We do not have significant intersegment
transactions.
Revenues
In our River Business, we contract for the carriage for cargos, in
substantially all cases, under contracts of affreightment, or COAs. Most of
these COAs currently provide for adjustments to the freight rate based on
changes in the price of fuel.
In our Offshore Supply Business we contract our vessels under Time Charter
in both Brazil and the North Sea. During the first quarter of 2006, prior to the
acquisition of 66.67% of the stock of UP Offshore, the revenues and expenses of
UP Offshore were not consolidated with ours; however, two PSVs owned by UP
Offshore were operated by us in the North Sea under charters. The revenues of
these charters were recognized in our financial statements.
In our Ocean Business, we contract our vessels either on a time charter
basis or on a COA basis. Some of the differences between time charters and COAs
are summarized below.
Time Charter
------------
o We derive revenue from a daily rate paid for the use of the vessel,
and
o the charterer pays for all voyage expenses, including fuel and port
charges.
Contract of Affreightment (COA)
-------------------------------
o We derive revenue from a rate based on tonnage shipped expressed in
dollars per metric ton of cargo, and
o we pay for all voyage expenses, including fuel and port charges.
Our ships on time charters generate both lower revenues and lower expenses
for us than those under COAs. At comparable price levels both time charters and
COAs result in approximately the same operating income, although the operating
margin as a percentage of revenues may differ significantly.
One of our passenger vessels is chartered to a European tour operator who
guarantees a minimum number of passengers and pays for fuel and port expenses.
Our second passenger vessel Blue Monarch is scheduled to operate in Greece and
Turkey; we will pay for fuel and port expenses and there is no minimum number of
passengers.
Time charter revenues accounted for 51% of the total revenues from our
businesses for the first quarter of 2007, and COA revenues accounted for 49%.
With respect to COA revenues in the first quarter of 2007, 79% were in respect
of repetitive voyages for our regular customers and 21% in respect of single
voyages for occasional customers.
In our River Business, demand for our services is driven by agricultural,
mining and forestry activities in the Hidrovia Region. Droughts and other
adverse weather conditions, such as floods, could result in a decline in
production of the agricultural products we transport, which would likely result
in a reduction in demand for our services. Further, most of the operation in our
River Business occurs in the Parana and Paraguay Rivers, and any changes
adversely affecting either of these rivers, such as low water levels, could
reduce or limit our ability to effectively transport cargo on the rivers.
In our Ocean Business, we employed a significant part of our ocean fleet on
time charter to different customers during the three months ended March 31,
2007. During the first quarter of 2007 the international dry bulk freight market
was on average higher than it was in the first quarter of 2006.
In our Passenger Business, demand for our services is driven primarily by
movements of tourists during the European summer cruise season.
Expenses
Our operating expenses generally include the cost of all vessel management,
crewing, spares and stores, insurance, lubricants, repairs and maintenance.
Generally, the most significant of these expenses are repairs and maintenance,
wages paid to marine personnel, catering and marine insurance costs. However,
there are significant differences in the manner in which these expenses are
recognized in the different segments in which we operate.
In addition to the vessel operating expenses, our other primary operating
expenses in 2006 included general and administrative expenses.
In our River Business, our voyage expenses include port expenses and fuel
as well as charter hire paid to third parties.
In our Offshore Supply Business, voyage expenses include offshore and
brokerage commissions paid by us to third parties including Gulf Offshore North
Sea (UK) Ltd. which provide brokerage services.
In our Passenger Business, operating expenses include all vessel
management, crewing, stores, insurance, lubricants, repairs and maintenance and
may include catering, housekeeping and entertainment staff if the charter party
so specifies. Voyage expenses may include port expenses and bunkers if such
services are for our account. Similarly, they may include the cost of food and
beverages for passengers if such amounts are for our account under the charter
agreement.
Through our River Business, we own a dry dock and a repair facility for our
River Business fleet at Pueblo Esther, Argentina, land for the construction of
two terminals in Argentina and 50% joint venture participations in two grain
loading terminals in Paraguay. UABL also rents offices in Asuncion (Paraguay)
and Buenos Aires (Argentina) and a repair and shipbuilding facility in Ramallo
(Argentina).
Through UP Offshore, we hold a lease for office space in Rio de Janeiro,
Brazil and Aberdeen, United Kingdom. In addition, through Ravenscroft, we own a
building located at 3251 Ponce de Leon Boulevard, Coral Gables, Florida, United
States of America. Through our assumption of the administrative functions
previously performed by Oceanmarine, a related party, we now hold a sublease to
an office in Buenos Aires, Argentina.
Foreign Currency Transactions
During the three months ended March 31, 2007, 87% of our revenues were
denominated in U.S. dollars and 11% of our revenues were denominated and
collected in British Pounds and 2% of our revenues were denominated in Brazilian
Reais. Furthermore, 19% of our total revenues were denominated in U.S. dollars
but collected in Argentine Pesos, Brazilian Reais and Paraguayan Guaranies.
Significant amounts of our expenses were denominated in dollars and 25% of our
total out of pocket operating expenses were paid in Argentine Pesos, Brazilian
Reais and Paraguayan Guaranies.
Our operating results, which we report in U.S. dollars, may be affected by
fluctuations in the exchange rate between the U.S. dollar and other currencies.
For accounting purposes, we use U.S. dollars as our functional currency.
Therefore, revenue and expense accounts are translated into U.S. dollars at the
average exchange rate prevailing on the month of each transaction.
Inflation and Fuel Price Increases
We do not believe that inflation has had a material impact on our
operations, although certain of our operating expenses (e.g., crewing, insurance
and drydocking costs) are subject to fluctuations as a result of market forces.
In 2005 and prior, in our River Business, we adjusted the fuel component of
our cost into the freights on a seasonal or yearly basis, and therefore we were
adversely affected during that period by rising bunker prices only partially
offset by a hedge of a minor part of our consumption and by bunker price
adjustment formulas on some of our contracts. In 2006, we negotiated and intend
to continue to negotiate fuel price adjustment clauses in most of our River
Business contracts.
In our Ocean Business, inflationary pressures on bunker costs are not
expected to have a material effect on our immediate future operations which are
currently time chartered to third parties, since it is the charterers who pay
for fuel. When our ocean vessels are employed under COAs, freight rates for
voyage charters are generally sensitive to the price of a vessel's fuel.
However, a sharp rise in bunker prices may have a temporary negative effect on
results since freights generally adjust only after prices settle at a higher
level.
In the Offshore Supply and Passenger Businesses (with the exception of the
Blue Monarch), the risk of variation of fuel prices under the vessels' current
employment is generally borne by the charterers, since they are generally
responsible for the supply of fuel.
Seasonality
Each of our businesses has seasonal aspects, which affect its revenues on a
quarterly basis. The high season for our River Business is generally between the
months of March and September, in connection with the South American harvest and
higher river levels. However, growth in the soy pellet manufacturing, minerals
and forest industries may help offset some of this seasonality. The Offshore
Supply Business operates year-round, particularly off the coast of Brazil,
although weather conditions in the North Sea may reduce activity from December
to February. In the Ocean Business, demand for oil tankers tends to be strongest
during the winter months in the Northern hemisphere. Demand for dry bulk
transportation tends to be fairly stable throughout the year, with the
exceptions of the Chinese New Year in our first quarter and the European summer
holiday season in our third quarter, which generally show lower charter rates.
Under existing arrangements, our Passenger Business currently generates its
revenue during the European cruise season, typically from May through October of
each year.
Legal Proceedings
Ultrapetrol S.A. was involved in a customs dispute with the Brazilian Customs
Tax Authorities over the alleged infringement of customs regulations by the
Alianza G-3 and Alianza Campana (collectively, the "Alianza Campana") in Brazil
during 2004. As a result, the Brazilian Customs Tax Authorities commenced an
administrative proceeding and applied the penalty of apprehension against the
Alianza Campana which required the Alianza Campana to remain in port or within a
maximum of five nautical miles from the Brazilian maritime coast. The maximum
customs penalty that could be imposed would be confiscation of the Alianza
Campana, which is estimated by the Brazilian Customs Tax Authorities to be
valued at $4.6 million. The Secretary of Brazilian Federal Revenue decided to
cancel the penalty of confiscation of the Alianza Campana by means of a decision
issued on August 14, 2006. However, the Secretary conditioned his decision on
the compliance with the following requirements: (1) the classification of the
Alianza Campana under the Regime Aduaneiro Especial para a Industria do
Petroleo, or REPETRO regime, and if such classification is confirmed; (2) the
payment by Ultrapetrol S.A. of a penalty in the amount of one percent (1%) of
the customs value of the Alianza Campana, or $45,600 (forty five thousand and
six hundred US Dollars). In order to comply with the above described
requirements, our customer, Petroleo Brasileiro S.A., presented on September 15,
2006, a formal request to obtain from Brazilian Customs Tax Authorities the
recognition of the classification of the Alianza Campana under the REPETRO
regime which has since been received. We subsequently paid the penalty mentioned
above, with the effect that the confiscation penalty was automatically canceled
and the administrative proceeding was finalized with no further consequences to
us.
On September 21, 2005, the local customs authority of Ciudad del Este,
Paraguay issued a finding that certain UABL entities owe taxes to that authority
in the amount of $2.2 million, together with a fine for non-payment of the taxes
in the same amount, in respect of certain operations of our River Business for
the prior three-year period. This matter was referred to the Central Customs
Authority of Paraguay (the "Paraguayan Customs Authority"). We believe that this
finding is erroneous and UABL has formally replied to the Paraguayan Customs
authority contesting all of the allegations upon which the finding was based.
After review of the entire operations for the claimed period, the Paraguayan Tax
authorities, asserting their jurisdiction over the matter, confirmed that the
UABL entities did paid their taxes on the claimed period, but held a dissenting
view on a third issue (the tax base used by the UABL entities to calculate the
applicable withholding tax). Finally, the primary case was appealed by the UABL
entities before the Tax and Administrative Court, and when summoned, the
Paraguayan Tax Authorities filed an admission, upon which the Court on November
24, 2006, confirmed that the UABL entities were not liable for the first two
issues. Nevertheless, the third issue continued, and through a resolution which
was provided to UABL on October 13, 2006, the Paraguayan Undersecretary for
Taxation has confirmed that, in his opinion, UABL was liable for a total of
approximately $0.5 million and has applied a fine of 100% of this amount. UABL
have entered a plea with the respective court contending the interpretation on
the third issue where we claim to be equally non liable. We have been advised by
UABL's counsel in the case that there is only a remote possibility that a court
would find UABL liable for any of these taxes or fines.
On November 3, 2006 and April 25, 2007, the Bolivian Tax Authority
(Departamento de Inteligencia Fiscal de la Gerencia Nacional de Fiscalizacion)
issued a notice in the Bolivian press advising that UABL International S.A. (a
Panamanian subsidiary of the Company) would owe taxes to that authority in the
amount of approximately $2.5 million (including interest), together with certain
fines that have not been determined yet. We believe that this finding is
incorrect and UABL International S.A. will formally reply to the Bolivian Tax
Authority contesting the allegations of the finding. We have been advised by our
local counsel in the case that there is only a remote possibility that UABL
International S.A. would finally be found liable for any of these taxes or
fines.
Various other legal proceedings involving us may arise from time to time in
the ordinary course of business. However, we are not presently involved in any
other legal proceedings that, if adversely determined, would have a material
adverse effect on us.
Results of Operations
Three months ended March 31, 2007 compared to the three months ended March 31,
2006.
The following table sets forth certain unaudited historical income
statement data for the periods indicated above derived from our unaudited
condensed consolidated statements of operations expressed in thousands of
dollars.
Three Months Ended March 31
2007 2006 Percent Change
Revenues
Attributable to River Business $21,528 $15,590 38%
Attributable to Offshore Supply Business 8,395 3,441 144%
Attributable to Ocean Business 12,753 9,426 35%
Attributable to Passenger Business 2,750 1,824 51%
Total 45,426 30,281 50%
Voyage expenses
Attributable to River Business (8,642) (7,450) 16%
Attributable to Offshore Supply Business (198) (2,643) (93%)
Attributable to Ocean Business (329) (319) 3%
Attributable to Passenger Business (759) (401) 90%
Total (9,928) (10,813) (8%)
Running costs
Attributable to River Business (5,539) (3,977) 39%
Attributable to Offshore Supply Business (2,623) (757) 246%
Attributable to Ocean Business (3,855) (3,175) 21%
Attributable to Passenger Business (2,629) (1,236) 113%
(14,646)
Total (9,145) 60%
Amortization of dry dock & intangible assets (2,108) (2,063) 2%
Depreciation of vessels and equipment (5,946) (3,417) 74%
Management fees and administrative and commercial expenses (4,493) (2,277) 97%
Other operating income 63 - -
Operating profit 8,368 2,566 226%
Financial expense 5,097) (4,849) 5%
Financial income 190 218 (13%)
Investment in affiliates 169 528 (68%)
Other, net (129) 60 -
Total other expenses (4,867) (4,043) 20%
Income before income taxes and minority interest 3,501 (1,477) -
Income taxes (1,398) (50) 2,696%
Minority interest (139) (86) 62%
Net income (loss) for the period $1,964 $(1,613) -
Revenues. Total revenues from our River Business increased by $5.9 million
from $15.6 million for the three months ended March 31, 2006 to $21.5 million
for the same period in 2007. This growth is mainly attributable to a 41%
increase in volumes transported and a 2% increase in average freight rates
charged in the period.
Total revenues from our Offshore Supply Business increased from $3.4
million for the three months ended March 31, 2006 to $8.4 million for the same
period in 2007. This increase is mainly attributable to the operation of the UP
Topazio and UP Agua-Marinha for the full three months ending March 31, 2007
compared to zero and one month, respectively, of operation in the same three
months of 2006, together with higher rates obtained in the North Sea operation
when compared to rates for the same period in 2006.
Total revenues from our Ocean Business increased from $9.4 million for the
three months ended March 31, 2006 to $12.8 million for the three months ended
March 31, 2007, or an increase of 35%. This increase is primarily attributable
to the higher time charter rates obtained by our vessels Princess Katherine
Princess Nadia and Princess Marina as compared to first quarter 2006 and the
start of operations of the Alejandrina.
Total revenues from our Passenger Business increased 51% from $1.8 million
in the first three months of 2006 to $2.8 million in the same period of 2007.
This increase is primarily attributable to the off season employment the New
Flamenco obtained as a floating hotel for various events during January and
February 2007, partially offset by the fact that New Flamenco started her
European summer season in March 2006 while in 2007 she commenced this service in
the second quarter.
Voyage expenses. In the three months ended March 31, 2007, voyage expenses
of our River Business were $8.6 million, as compared to $7.4 million for the
same period of 2006, an increase of $1.2 million. The increase is mainly
attributable to an increase in our fuel expenditure on the River Business,
consistent with a larger volume of cargo carried.
In the three months ended March 31, 2007, voyage expenses of our Offshore
Supply Business were $0.2 million, as compared to $2.6 million in 2006. This
decrease is primarily attributable to the effect of the bareboat charter paid
for our PSVs UP Esmeralda and UP Safira during the three months of 2006 prior to
the consolidation of UP Offshore as from the second quarter of 2006.
Voyage expenses of our Ocean Business have not changed significantly, since
the increase due to the start of operations of the Alejandrina was largely
offset by lower voyage expenses in our other vessels.
In the three months ended March 31, 2007, voyage expenses of our Passenger
Business were $0.8 million as compared to $0.4 million for the same period in
2006. This increase is attributable to the higher off season activity of the New
Flamenco.
Running costs. For the three months ended March 31, 2007, running costs of
our River Business were $5.5 million, as compared to $4.0 million for the same
period in 2006, an increase of $1.5 million. This increase was mainly
attributable to an increase in our boat costs.
For the three months ended March 31, 2007, running costs of our Offshore
Supply Business were $2.6 million, as compared to $0.8 million for the same
period in 2006. This increase is primarily attributable to the operation of the
UP Agua-Marinha and UP Topazio for the full three months ended March 31, 2007
compared with one month and zero, respectively, of operation in the same three
months of 2006.
For the three months ended March 31, 2007, running costs of our Ocean
Business were $3.9 million, as compared to $3.2 million for the same period in
2006. The increase is mainly attributable to the start of operations of our new
product carrier Alejandrina.
For the three months ended March 31, 2007, running costs of our Passenger
Business were $2.6 million, compared to $1.2 million for the same period in
2006. This increase is mainly attributable to the higher off season activity of
the New Flamenco.
Amortization of dry docking and intangible assets. Amortization of dry
docking and special survey costs have not changed significantly. Amortization of
intangible assets was $0.2 million for the three months ended March 31, 2007 as
compared to $0 million for the same period in 2006. The increase is primarily
attributable to the amortization of intangible assets related to the purchase of
Ravenscroft as our subsidiary from the second quarter of 2006.
Depreciation of vessels and equipment. Depreciation increased by $2.5
million, or 74%, to $5.9 million for the three months ended March 31, 2007 as
compared to $3.4 million for the same period in 2006. This increase is primarily
attributable to the combined effect of the consolidation of UP Offshore as our
subsidiary from the second quarter of 2006, the acquisitions of the Alejandrina
and the Otto Candies convoy for our river business, a full period of
depreciation of our vessel Blue Monarch (which was set in service in April
2006), and the increased value of our vessel New Flamenco which was fully
refurbished in the first quarter of 2006.
Management fees and administrative expenses. Management fees and
administrative expenses were $4.5 million for the three months ended March 31,
2007 as compared to $2.3 million for the same period in 2006. This increase of
$2.2 million is mainly attributable to the effect of the consolidation of UP
Offshore as our subsidiary from the second quarter of 2006, the increase in
administrative expenses associated with the take over of the administrative
functions formerly performed by Oceanmarine, and the cost of the compensation
granted to the Board in the form of stock options and grants of stock.
Other operating income. Did not change significantly.
Operating profit. Operating profit for the three months ended March 31,
2007 was $8.4 million, an increase from $2.6 million for the same period in
2006. This increase is mainly attributable to the effect of the consolidation of
UP Offshore which had four ships also working for the full first quarter,
improved performance of our River and Ocean Business, partially offset for a
higher loss in the Passenger Business of $1.9 million.
Financial expense. Financial expense increased by approximately $0.3
million or 5%, to $5.1 million in the three months ended March 31, 2007 as
compared to $4.8 million in the same period of 2006. This variation is mainly
attributable to the effect of the consolidation of UP Offshore as our subsidiary
from the second quarter of 2006, partially offset for the full cancellation of
our indebtedness in the River Business in October 2006.
Minority Interest. Did not change significantly.
Income tax. The charge for three months ended March 31, 2007 was $1.4
million, compared with $0.1 million for the same period in 2006. The higher
charge in 2007 compared with 2006 principally reflects the deferred income tax
charge from unrealized foreign currency exchange gains on US dollar-denominated
debt of our Brazilian subsidiary in the Offshore Supply Business (which is
consolidated since the second quarter of 2006) of $1.0 million.
Liquidity and Capital Resources
We are a holding company and operate in a capital-intensive industry
requiring substantial ongoing investments in revenue-producing assets. Our
subsidiaries have historically funded their vessel acquisitions through a
combination of bank indebtedness, shareholder loans, cash flow from operations
and equity contributions.
The ability of our subsidiaries to make distributions to us may be
restricted by, among other things, restrictions under our credit facilities and
applicable laws of the jurisdictions of their incorporation or organization.
As of March 31, 2007, we had aggregate indebtedness of $273.0 million,
consisting of $180.0 million aggregate principal amount of our First Preferred
Ship Mortgage Notes due 2014, or the Notes, indebtedness of our subsidiary UP
Offshore of $73.5 million under two senior loan facilities with DVB Bank AG, and
indebtedness of our subsidiary Stanyan Shipping Inc. of $13.6 million under a
senior loan facility with Natixis, plus accrued interest of $6.0 million.
At March 31, 2007, we had cash and cash equivalents on hand of $34.1
million. In addition, we had $1.1 million in non current restricted cash.
Operating Activities
In the three months ended March 31, 2007, we generated $15.8 million in
cash flow from operations compared to $2.6 million in the same period of 2006.
We had a net income of $2.0 million for the first three months ended March 31,
2007, as compared to a net loss of $1.6 million in the same period of 2006, an
increase of $3.6 million.
Net cash provided by operating activities consists of our net income (loss)
increased by non-cash expenses, such as depreciation and amortization of
deferred charges, and adjusted by changes in working capital and expenditures
for dry docking.
Investing Activities
During the three months ended March 31, 2007, we disbursed $15.3 million to
pay the 90% remaining of the Alejandrina, $13.8 million to purchase the 100% of
the shares of Compania Paraguaya de Transporte Fluvial and 100% of the shares of
Candies Paraguayan Ventures LLC, $8.7 million to fund the 20% of the two PSVs
that are being constructed in India, $3.7 million to enlarge and refurbish
barges and purshboats, $1.1 million to refurbish the Blue Monarch, $1.9 million
to convert the Amadeo and the Miranda I into double hull and $5.0 million in
respect to PSV vessels UP Rubi and UP Diamante under construction in Brazil.
Financing Activities
Net cash provided by financing activities was $47.6 million during the
three months ended March 31, 2007, compared to net cash used in financing
activities of $0.9 million during the same period of 2006. The increase in cash
provided by financing activities form 2007 to 2006 is mainly attributable to the
proceeds of our $61.3 million loan agreement with the DVB Bank AG in our
Offshore Supply Business and the draw down of our senior loan facility with
Natixis for $13.6 million, partially offset for the paying off of our
indebtedness in the Offshore Supply Business for $26.9 million.
Future Capital Requirements
Our near-term cash requirements are related primarily to funding
operations, constructing new vessels, potentially acquiring second-hand vessels,
increasing the size of many of our barges and replacing the engines in our line
pushboats. We cannot assure that our actual cash requirements will not be
greater than we currently expect. If we cannot generate sufficient cash flow
from operations, we may obtain additional funding through capital market
transactions, although it is possible these sources will not be available to us.
Supplemental Information
The following table reconciles our EBITDA to our net income:
($000) Three Months Ended March 31,
2007 2006
---- ----
Net income (loss) $1,964 $(1,613)
Plus
Financial expense 5,097 4,849
Income taxes 1,398 50
Depreciation and amortization 8,054 5,480
====== =======
EBITDA(1) 16,513 8,766
The following tables reconcile our EBITDA to our Operating profit for the three
months ended March 31, 2007 and 2006, on a consolidated and a per segment basis:
Offshore
Three months ended March 31, 2007 ($ 000's) River Supply Ocean Passenger TOTAL
----- -------- ----- --------- ------
Operating profit (loss) 3,480 3,609 3,258 (1,979) 8,368
Depreciation and amortization 2,285 904 3,738 1,127 8,054
Investment in affiliates /
Minority interest 4 (139) 165 - 30
Other, net(3) (151) - 22 - (129)
------- -------- ------- --------- --------
Segment EBITDA 5,618 4,374 7,183 (852) 16,323
Items not included in segment EBITDA
Financial income 190
-------
Consolidated EBITDA(2) 16,513
Offshore
Three months ended March 31, 2006 ($ 000's) River Supply Ocean Passenger TOTAL
----- -------- ----- --------- ------
Operating profit (loss) 1,436 41 1,137 (48) 2,566
Depreciation and amortization 1,929 - 3,489 62 5,480
Investment in affiliates /
Minority interest (132) 329 245 - 442
Other, net(3) (138) - 198 - 60
------- -------- ------- --------- --------
Segment EBITDA 3,095 370 5,069 14 8,548
Items not included in segment EBITDA
Financial income 218
--------
Consolidated EBITDA(2) 8,766
(1) EBITDA consists of net income (loss) prior to deductions for interest
expense and other financial gains and losses, income taxes, depreciation
and amortization of drydock expense and financial gain (loss) on
extinguishment of debt. We believe that EBITDA is intended to exclude all
items that affect results relating to financing activities. The gains and
losses associated with extinguishment of debt are a direct financing item
that affects our results, and therefore should not be included in EBITDA.
We do not intend for EBITDA to represent cash flows from operations, as
defined by GAAP (on the date of calculation), and should not be considered
as an alternative to net income as an indicator of our operating
performance or to cash flows from operations as a measure of liquidity.
This definition of EBITDA may not be comparable to similarly titled
measures disclosed by other companies. We have provided EBITDA in this
prospectus because we believe it provides useful information to investors
to measure our performance and evaluate our ability to incur and service
indebtedness.
(2) The reconciliation of our consolidated EBITDA to our Net income is set
forth in the first table shown under section "Supplemental Information" in
this filing.
(3) Individually not significant.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
Condensed Consolidated Financial Statements at March 31, 2007
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
TABLE OF CONTENTS TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS PAGE
--------------------------------------------------------------------------------
o Financial statements
- Condensed consolidated balance sheets as of March 31,
2007 (unaudited) and December 31, 2006 -F-1-
- Condensed consolidated statements of operations for the
three-month periods ended March 31, 2007 and 2006
(unaudited) -F-2-
- Condensed consolidated statements of changes in
shareholders' equity for the three-month periods ended
March 31, 2007 and 2006 (unaudited) -F-3-
- Condensed consolidated statements of cash flows for the
three-month periods ended March 31, 2007 and 2006
(unaudited) -F-4-
- Notes to condensed consolidated financial statements -F-5-
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Stated in thousands of U.S. dollars, except per value and share amounts)
At March 31, At
2007 December
(Unaudited) 31, 2006
----------- --------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 34,123 $20,648
Accounts receivable, net of allowance
for doubtful accounts of $690 and $709
in 2007 and 2006, respectively 11,721 17,333
Receivables from related parties 3,884 3,322
Marine and river operating supplies 2,913 3,020
Prepaid expenses 5,773 2,530
Other receivables 7,991 7,917
--------- ---------
Total current assets 66,405 54,770
--------- ---------
NONCURRENT ASSETS
Other receivables 6,600 6,368
Receivables from related parties 2,280 2,280
Restricted cash 1,110 1,088
Vessels and equipment, net 377,677 333,191
Dry dock 10,968 9,673
Investment in affiliates 2,454 2,285
Intangible assets 3,552 3,748
Goodwill 5,015 5,015
Other assets 6,015 6,014
Deferred tax assets 1,884 1,947
--------- ---------
Total noncurrent assets 417,555 371,609
--------- ---------
Total assets $483,960 $426,379
========= =========
LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 15,500 $13,491
Payable to related parties - 420
Accrued interest 5,991 1,691
Current portion of long-term financial debt 7,108 4,700
Other payables 2,251 2,469
--------- ---------
Total current liabilities 30,850 22,771
--------- ---------
NONCURRENT LIABILITIES
Long-term debt 180,000 180,000
Financial debt, net of current portion 79,958 34,294
Deferred tax liability 7,866 6,544
Other payables - 250
--------- ---------
--------- ---------
Total noncurrent liabilities 267,824 221,088
--------- ---------
Total liabilities 298,674 243,859
--------- ---------
MINORITY INTEREST 3,230 3,091
--------- ---------
SHAREHOLDERS' EQUITY
Common stock, $.01 par value: 100,000,000 authorized
shares; 28,346,952 shares issued and outstanding 283 283
Additional paid-in capital 174,284 173,826
Accumulated earnings 7,195 5,231
Accumulated other comprehensive income 294 89
---------- --------
Total shareholders' equity 182,056 179,429
---------- --------
Total liabilities, minority interest and
shareholders' equity $483,960 $426,379
========= =========
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statemen
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Stated in thousands of U.S. dollars, except share and per share data)
For the three-month
periods ended March 31,
-----------------------------
2007 2006
---- ----
REVENUES
Revenues from third parties $ 44,357 $ 30,051
Revenues from related parties 1,069 230
------------ ----------
Total revenues 45,426 30,281
------------ ----------
OPERATING EXPENSES
Voyage expenses (9,928) (10,813)
Running costs (14,646) (9,145)
Amortization of dry docking (1,912) (2,063)
Depreciation of vessels and equipment (5,946) (3,417)
Management fees to related parties - (511)
Amortization of intangible assets (196) -
Administrative and commercial expenses (4,493) (1,766)
Other operating income 63 -
------------ ----------
(37,058) (27,715)
------------ ----------
Operating profit 8,368 2,566
------------ ----------
OTHER INCOME (EXPENSES)
Financial expense (5,097) (4,849)
Financial income 190 218
Investment in affiliates 169 528
Other, net (129) 60
------------ ----------
Total other expenses (4,867) (4,043)
------------ ----------
Income (loss) before income taxes
and minority interest 3,501 (1,477)
Income taxes (1,398) (50)
Minority interest (139) (86)
------------ ----------
Net income (loss) 1,964 $ (1,613)
===========================
Basic net income (loss) per share 0.07 $ (0.10)
Diluted net income (loss) per share 0.07 $ (0.10)
Basic weighted average number of shares 28,000,000 15,500,000
Diluted weighted average number of shares 28,251,523 15,500,000
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
(Stated in thousands of U.S. dollars, except share data)
Accumulated
Additional Accumulated other
Shares Common paid-in earnings comprehensive
Balance amount stock capital (losses) income Total
------- ------ ----- ------- -------- ------ -----
December 31, 2005 15,550,000 $155 $48,418 $(5,295) $196 $43,474
Comprehensive loss:
- Net loss - - - (1,613) - (1,613)
- Net loss on EURO hedge
agreement designated as
cash flow hedge - - - - (2) (2)
Total comprehensive loss ----------
March 31, 2006 (1,615)
------------ ------- ---------- ---------- ------- ----------
15,550,000 $155 $48,418 $(6,908) $194 $41,859
=========== ======= ========== ========= ======= ==========
December 31, 2006 28,346,952 $283 $173,826 $5,231 $ 89 $179,429
Compensation related to options 458 - 458
and restricted stock granted
Comprehensive income:
- Net income - - - 1,964 - 1,964
- Net loss on EURO hedge agreement
designated as cash flow hedge - - - - (2) (2)
- Net income on forward fuel purchase
agreement designated as cash flow hedge - - - - 207 207
----------
Total comprehensive income 2,169
March 31, 2007 ------------ ------- ---------- ---------- ------- ----------
28,346,952 $283 $174,284 $7,195 $294 $182,056
=========== ======= ========== ========= ======= ==========
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated in thousands of U.S. dollars)
For the three-month
periods ended March 31,
-----------------------------
2007 2006
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $1,964 $(1,613)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation of vessels and equipment 5,946 3,417
Amortization of dry docking 1,912 2,063
Expenditure for dry docking (3,207) (383)
Amortization of intangible assets 196 -
Share-based compensation 458 -
Note issuance expenses amortization 409 263
Minority interest in equity of subsidiaries 139 86
Net (gain) from investment in affiliates (169) (528)
Allowance for doubtful accounts (19) 60
Changes in assets and liabilities net of
effects from purchase of Otto Candies in
2007 and UP Offshore (Bahamas) and
Ravenscroft in 2006:
Decrease (increase) in assets:
Accounts receivable 5,710 (3,258)
Receivable from related parties (562) 935
Marine and river operating supplies 107 (20)
Prepaid expenses (3,228) (1,499)
Other receivables 60 (369)
Other 40 (254)
Increase (decrease) in liabilities:
Accounts payable 1,660 (45)
Payable to related parties (420) (770)
Other 4,808 4,543
------- -------
Net cash provided by operating activities 15,804 2,628
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of vessels and equipment (36,179) (8,085)
Purchase of Otto Candies companies, net of cash acquired (13,772) -
Decrease in loans to related parties - 11,391
Other (18) 346
--------- -------
Net cash (used in) provided by investing activities (49,969) 3,652
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of long-term financial debt (26,850) (636)
Proceeds from long-term financial debt 74,922 -
Other (432) (291)
------- -------
Net cash provided by (used in) financing activities 47,640 (927)
Net increase in cash and cash equivalents 13,475 5,353
Cash and cash equivalents at the beginning of year $20,648 $7,914
------- -------
Cash and cash equivalents at the end of period $34,123 $13,267
------- -------
The accompanying notes are an integral part of
these unaudited condensed consolidated financial statements
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Stated in thousands of U.S. dollars, except per share data
and otherwise indicated)
(Information pertaining to the three-month periods ended
March 31, 2007 and 2006 is unaudited)
1. NATURE OF OPERATIONS AND CORPORATE ORGANIZATION
Nature of operations
Ultrapetrol (Bahamas) Limited ("Ultrapetrol Bahamas", "Ultrapetrol", "the
Company", "us" or "we") is a company organized and registered as a Bahamas
Corporation since December 1997.
We are a shipping transportation company serving the marine transportation
needs of our clients in the markets on which we focus. We serve the
shipping markets for grain, forest products, minerals, crude oil,
petroleum, and refined petroleum products, as well as the offshore oil
platform supply market, and the leisure passenger cruise market through our
operations in the following four segments of the marine transportation
industry. In our Ocean Business, we are an owner and operator of oceangoing
vessels that transport petroleum products and dry cargo. In our Passenger
Business, we are an owner of cruise vessels that transport passengers
primarily cruising the Mediterranean and Black Sea. In our River Business
we are an owner and operator of river barges and pushboats in the Hidrovia
region of South America, a region of navigable waters on the Parana,
Paraguay and Uruguay Rivers and part of the River Plate, which flow through
Brazil, Bolivia, Uruguay, Paraguay and Argentina. In our Offshore Supply
Business we own and operate vessels that provide logistical and
transportation services for offshore petroleum exploration and production
companies, primarily in the North Sea and the coastal waters of Brazil.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Basis of presentation and principles of consolidation
The unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America ("US GAAP") for interim financial information. The
consolidated balance sheet at December 31, 2006, has been derived from the
audited financial statement at that date. The unaudited condensed
consolidated financial statements do not include all of the information and
footnotes required by US GAAP for complete financial statements. All
adjustments which, in the opinion of the management of the Company, are
considered necessary for a fair presentation of the results of operations
for the periods shown are of a normal, recurring nature and have been
reflected in the unaudited condensed consolidated financial statements.
When a cost that is expensed for annual reporting purposes clearly benefits
two or more interim periods, each interim period is charged for an
appropriate portion of the annual cost by the use of deferrals. The results
of operations for the periods presented are not necessarily indicative of
the results expected for the full fiscal year or for any future period.
The unaudited condensed consolidated financial statements include the
accounts of the Company and its subsidiaries, both majority and wholly
owned. Significant intercompany accounts and transactions have been
eliminated in this consolidation. Investments in 50% or less owned
affiliates, in which the Company exercises significant influence, are
accounted for by the equity method.
b) Earnings per share:
In accordance with Statement of Financial Accounting Standards No.
128, Earnings per share ("SFAS 128") basic net income (loss) per share
is computed by dividing the net income (loss) by the weighted average
number of common shares outstanding during the relevant periods.
Diluted net income (loss) per share reflects the potential dilution
that could occur if securities or other contracts to issue common
shares result in the issuance of such shares. In determining dilutive
shares for this purpose the Company assumes, through the application
of the treasury stock method, all restricted stock grants have vested,
all common shares have been issued pursuant to the exercise of all
outstanding stock options and all common shares have been issued
pursuant to the issuance of all outstanding warrants.
The following table sets forth the computation of basic and diluted
net income (loss) per share:
For the three-month
periods ended March 31,
-----------------------
2007 2006
---- ----
Net income (loss) $1,964 $(1,613)
============ =========
Basic weighted average number of shares 28,000,000 15,500,000
Effect on dilutive shares:
Options and restricted stock 166,677 -
Warrants issued 84,846 -
----------- -----------
Diluted weighted average number of shares 28,251,523 15,500,000
=========== ===========
Basic net income (loss) per share $0.07 $(0.10)
=========== ===========
Diluted net income (loss) per share $0.07 $(0.10)
=========== ===========
3. BUSINESS ACQUISITIONS
Acquisition of 100% of Otto Candies
On March 7, 2007, the Company through its subsidiaries in the River
Business acquired all of the issued and outstanding shares of Candies
Paraguayan Ventures LLC and Compania Paraguaya de Transporte Fluvial S.A.
(the "Otto Candies acquisition") for $13,797 in cash. At time of
acquisition, Otto Candies owned 12 river barges and 1 pushboat valued at
$13,679 and had cash of $25, other current assets of $442 and outstanding
current liabilities of $349.
This purchase price allocation is preliminary and is subject to refinement.
The results of the Otto Candies acquisition are included in the unaudited
condensed consolidated financial statements since the date of acquisition.
Due to immateriality, the Company has not prepared pro forma information
related to this business combination.
4. VESSELS AND EQUIPMENT, NET
The capitalized cost of the vessels and equipment, and the related
accumulated depreciation at March 31, 2007 and December 31, 2006 were as
follows:
At March 31, At December 31,
2007 2006
---- ----
Ocean-going vessels $ 169,748 $ 152,122
River barges and pushboats 141,001 125,172
PSVs 87,710 87,599
Construction of PSVs in progress 39,790 34,943
Advance for construction of PSVs 8,684 -
Passenger vessels 39,439 38,321
Furniture and equipment 9,252 7,571
Building, land and operating base 9,318 8,782
-------------- -----------
Total original book value 504,942 454,510
Accumulated depreciation (127,265) (121,319)
-------------- -----------
Net book value $ 377,677 $ 333,191
============= ============
At March 31, 2007, the net book value of the assets pledged as a guarantee
of the debt was approximately $231,283.
- PSVs Construction
On February 21, 2007, UP Offshore (Bahamas) Ltd. signed a shipbuilding
contract with a shipyard in India for construction of two PSVs with a
combined cost of $43,300, will be delivered schedule begins in 2009.
On March 19, 2007, UP Offshore (Bahamas) Ltd. made a first advance of
$8,660.
UP Offshore (Bahamas) Ltd. has at its own, the option to acquire two
additional PSVs.
In June 2003, UP Offshore Apoio Maritimo Ltda. (our wholly owned
subsidiary in the Offshore Supply Business) signed shipbuilding
contracts for construction of four PSVs with EISA Estaleiro Ilha S/A
(EISA), a Brazilian corporation. During November 2005 UP Offshore
Apoio Maritimo Ltda. and EISA amended some conditions of the
shipbuilding contracts, including the purchase price and the delivery
dates.
The four PSVs are to be built by EISA at a combined cost of $69,750.
Two of the four PSVs, were delivered in 2006. The total remaining
commitment at March 31, 2007 for the two PSVs cost is approximately
$10,500, which includes the minimum contractual obligation with the
shipyard and the remaining necessary expenditure to commission the two
PSVs in service.
- Delivery of Alejandrina
On January 5, 2007 the Company took delivery of the Alejandrina and
paid the balance of the purchase price of $15,300.
5. LONG-TERM DEBT AND OTHER FINANCIAL DEBT
Balances of long-term debt and other financial debt at March 31, 2007 and
December 31, 2006:
Financial institution/ Nominal value
Other Due-year Current Noncurrent Total Average rate
----- -------- ------- ---------- ----- ------------
Ultrapetrol (Bahamas) Ltd. Private Investors (Notes) 2014 $ - $ 180,000 $ 180,000 9.000%
UP Offshore (Bahamas) Ltd. DVB AG Through 2016 4,633 55,514 60,147 Libor + 1.200%
UP Offshore Apoio DVB AG Tranche A Through 2016 900 11,125 12,025 Libor + 1.200%
UP Offshore Apoio DVB AG Tranche B Through 2009 667 611 1,278 Libor + 1.200%
Stanyan Shipping Inc. Natixis Through 2017 908 12,708 13,616 6.380%
---------- ----------- -----------
At March 31, 2007 $ 7,108 $ 259,958 $ 267,066
=========== ============ ===========
At December 31, 2006 $ 4,700 $ 214,294 $ 218,994
=========== ============ ===========
a) Loan with DVB Bank AG (DVB AG) of up to $61,306
On December 28, 2006 UP Offshore (Bahamas) Ltd. (our subsidiary in the
Offshore Supply Business) as Borrower, Packet Maritime Inc., Padow
Shipping Inc. and UP Offshore Apoio Maritimo Ltda. (collectively the
owners of our PSVs UP Safira, UP Esmeralda, UP Agua Marinha and UP
Topazio) and Ultrapetrol (Bahamas) Limited as Guarantors entered into
a $61,306 loan agreement with DVB AG for the purposes of providing
post delivery re-financing of our Panamanian registered PSVs named UP
Safira and UP Esmeralda and the Brazilian registered PSV UP Topazio.
The loan bears interest at LIBOR rate plus 1.20% per annum with
quarterly principal and interest payments and maturing through
December 2016. Beginning in March 2007, the principal payments equal
to the regularly scheduled quarterly principal payments ranging from
$1,075 to $1,325 with a balloon installment of $16,000 in December
2016. If a PSV is sold or becomes a total loss, the Borrower shall
prepay the loan in an amount equal to the stipulated value of such
PSV, which is initially stipulated in $18,750 and shall be reduced in
the amount of $387.5 on each repayment date.
The loan is secured by a first priority mortgage on the UP Safira, UP
Esmeralda and UP Topazio and by a second priority mortgage on the UP
Agua - Marinha and is jointly and severally irrevocable and
unconditionally guaranteed by Packet Maritime Inc., Padow Shipping
Inc., UP Offshore Apoio Maritimo Ltd. and Utrapetrol (Bahamas)
Limited. The loan also contains customary covenants that limit, among
other things, the Borrower's ability to incur additional indebtedness,
grant liens over their assets, sell assets, pay dividends, repay
indebtedness, merge or consolidate, change lines of business and amend
the terms of subordinated debt. The agreement governing the facility
also contains customary events of default. If an event of default
occurs and is continuing, DVB AG may require the entire amount of the
loan be immediately repaid in full. Further, the loan agreement
requires until December 2009 that the PSVs pledged as security have an
aggregate market value of at least 117.6% of the value of the loan
amount and at all times thereafter an aggregate market value of at
least 133.3% of the value of the loan.
During the period we drew down the fully amount of the loan. At March
31, 2007 the principal outstanding balance was $60,147.
b) Loan with Natixis of up to $13,616
On January 29, 2007 Stanyan Shipping Inc. (our wholly owned subsidiary
in the Ocean Business and the owner of the M/V Alejandrina) drew down
an amount of $13,616 under a loan agreement with Natixis to provide
post-delivery finance secured on the Alejandrina. The loan shall be
repaid by 40 equal consecutive quarterly installments of $227 each
together with a balloon installment of $4,356 payable with the final
installment and maturing through January 2017. The loan accrues
interest at 6.38% per annum for the first five years of the loan and
LIBOR plus 1.25% per annum there after.
The loan is secured by a mortgage on the M/V Alejandrina and is
guaranteed by Ultrapetrol (Bahamas) Limited. The loan also contains
customary covenants that limit, among other things, the Borrower's and
the Guarantors' ability to incur additional indebtedness, grant liens
over their assets, sell assets, pay dividends, repay indebtedness,
merge or consolidate, change lines of business and amend the terms of
subordinated debt. The agreement governing the facility also contains
customary events of default.
During the period we drew down the fully amount of the loan. At March
31, 2007 the principal outstanding balance was $13,616.
c) Loan with the DVB Bank America (DVB NV) of up $30,000:
On April 27, 2005 UP Offshore (Panama) S.A. (our subsidiary in the
Offshore Supply Business), which was first consolidated in 2006) as
Holding Company entered into a $30,000 loan agreement with DVB NV for
the purpose of providing post delivery financing of two PSVs named UP
Esmeralda and UP Safira, which were delivered in May and June 2005,
and repaying existing financing shareholder loans.
In January 2007, the Company fully prepaid the outstanding principal
balance of the loan of $25,300 with the proceeds of the loan with DVB
Bank AG of up to $61,306 (see Note 5.a).
6. COMMITMENTS AND CONTINGENCIES
The Company is subject to legal proceedings, claims and contingencies
arising in the ordinary course of business. When such amounts can be
estimated and the contingency is probable, management accrues the
corresponding liability. While the ultimate outcome of lawsuits or other
proceedings against the Company cannot be predicted with certainty,
management does not believe the costs of such actions will have a material
effect on the Company's consolidated financial position or results of
operations.
a) Paraguayan Customs Dispute
On September 21, 2005 the local Customs Authority of Ciudad del Este,
Paraguay issued a finding that certain UABL entities owe taxes to that
authority in the amount of $2,200, together with a fine for
non-payment of the taxes in the same amount, in respect of certain
operations of our River Business for the prior three-year period. This
matter was referred to the Central Customs Authority of Paraguay. We
believe that this finding is erroneous and UABL has formally replied
to the Paraguayan Customs Authority contesting all of the allegations
upon which the finding was based.
After review of the entire case the Paraguayan Central Tax Authorities
who have jurisdiction over the matter have confirmed the Company has
no liability in respect of two of the three matters at issue, while
they held a dissenting view on the third issue. Through a Resolution
which was notified to UABL on October 13, 2006 the Paraguayan
Undersecretary for Taxation has confirmed that, in his opinion, the
Company is liable for a total of approximately $539 and has applied a
fine of 100% of this amount. On November 24, 2006, the court confirmed
that UABL is not liable for the first two issues. The Company has
entered a plea with the respective court contending the interpretation
on the third issue where the Company claims to be equally non-liable.
We have been advised by UABL's counsel in the case that they believe
that there is only a remote possibility that a court would find UABL
liable for any of these taxes or fines.
b) Tax claim in Bolivia
On November 3, 2006 and April 25, 2007, the Bolivian Tax Authority
(Departamento de Inteligencia Fiscal de la Gerencia Nacional de
Fiscalizacion) issued a notice in the Bolvian press advising that UABL
International S.A. (a Panamanian subsidiary of the Company in the
River Bussiness) would owe taxes to that authority in the amount of
approximately $2,500 (including interest) together with certain fines
that have not been determinated yet. No claims have been noticed to
this company.
We believe that this finding is incorrect and UABL International S.A.
will formally reply to the Bolivian Tax Authority contesting the
allegations of the finding, when we would be notified by the Bolivian
Tax Authority. We have been advised by our local counsel in the case
that there is only a remote possibility that UABL International S.A.
would finally be found liable for any of these taxes or fines.
7. INCOME TAXES
The Company operates through its subsidiaries, which are subject to several
tax jurisdictions, as follows:
a) Bahamas
The earnings from shipping operations were derived form sources
outside the Bahamas and such earnings were not subject to Bahamanian
taxes.
b) Panama
The earnings from shipping operations were derived from sources
outside Panama and such earnings were not subject to Panamanian taxes.
c) Paraguay
Two of our Ocean Business subsidiaries, Parfina S.A. and Oceanpar S.A.
and five of our River Business subsidiaries, UABL Paraguay, Parabal
S.A., Yataity, Riverpar and Compania Paraguaya de Transporte Fluvial
S.A. are subject to Paraguayan corporate income taxes.
d) Argentina
Ultrapetrol S.A., one of our Ocean Business subsidiaries and three of
our River Business subsidiaries, UABL S.A., Argenpar S.A. and Sernova
S.A., are subject to Argentine corporate income taxes.
In Argentina, the tax on minimum presumed income ("TOMPI"),
supplements income tax since it applies a minimum tax on the potential
income from certain income generating-assets at a 1% tax rate. The
Company's tax obligation in any given year will be the higher of these
two tax amounts. However, if in any given tax year TOMPI exceeds
income tax, such excess may be computed as payment on account of any
excess of income tax over TOMPI that may arise in any of the ten
following years.
e) Brazil
Our subsidiaries in the Offshore Supply Business, UP Offshore Apoio
Maritimo Ltda. and Agenciamientos Afretamentos e Apoio Maritimo Ltda.
are subject to Brazilian corporate income taxes.
UP Offshore Apoio Maritimo Ltda., has foreign currency exchange gains
recognized for tax purposes only in the period the debt (including
intercompany transactions) is extinguished. A deferred tax liability
is recognized in the period the foreign currency exchange rate changes
equal to the future taxable income at the applicable tax rate.
f) Chile
Our subsidiary in the Ocean Business, Corporacion de Navegacion
Mundial S.A. (Cor.Na.Mu.S.A.) is subject to Chilean corporate income
taxes.
g) US federal income tax
Under the United Stated Internal Revenue Code of 1986, as amended, or
the Code, 50% of the gross shipping income of our vessel owning or
chartering subsidiaries attributable to transportation that begins or
ends, but that does not both begin and end, in the U.S. are
characterized as U.S. source shipping income. Such income is subject
to 4% U.S. federal income tax without allowance for deduction, unless
our subsidiaries qualify for exemption from tax under Section 883 of
the Code and the Treasury Regulations promulgated thereunder.
For the three-month periods ended March 31, 2007 and 2006 the Company
and its subsidiaries did not derive any U.S. source shipping income.
Therefore our subsidiaries are not subject to any U.S. federal income
taxes, except our ship management services provided by Ravenscroft.
h) United Kingdom
UP Offshore (UK) Limited is not subject to corporate income tax in
United Kingdom, however, the vessel-owning companies' are subject to
tonnage taxes.
8. RELATED PARTY TRANSACTIONS
At March 31, 2007 and December 31, 2006, the balances of receivables from
related parties, were as follows:
At March 31, At December 31,
2007 2006
---- ----
Current:
Receivable from related parties
- Ravenscroft Shipping Inc. $ 411 $ 421
- Maritima Sipsa S.A. 854 278
- Puertos del Sur S.A. and O.T.S. 2,566 2,584
- Other 53 39
--------- ---------
$ 3,884 $3,322
========= =========
At March 31, At December 31,
2007 2006
---- ----
Noncurrent:
Receivable from related parties -
Puertos del Sur S.A. (1) $ 2,280 $2,280
========= ========
(1) This loan accrues interest at a nominal interest rate of 7% per year,
payable semi-annually. The principal will be repaid in 8 equal annual
installments, beginning on June 30, 2008.
At March 31, 2007 and December 31, 2006 the balance of payable to related
parties, were as follows:
At March 31, At December 31,
2007 2006
---- ----
Payable to related parties
- Ravencroft Shipping Inc. $ - $ -
- Maritima Sipsa S.A. - 420
----------- ------------
$ - $ 420
============ ============
Revenues from related parties
For the three-month periods ended March 31, 2007 and 2006, the revenues
derived from related parties were as follows:
For the three-month periods
ended March 31,
----------------------------
2007 2006
---- ----
Maritima Sipsa S.A. (1) $ 1,006 $ 230
Maritima Sipsa S.A. (2) 63 -
---------------- -----------
$ 1,069 $ 230
================ ===========
(1) Sale and repurchase of vessel Princess Marina
In 2003, the Company entered into certain transactions to sell, and
repurchase in 2006, to and from Maritima Sipsa S.A., a 49% owned
company, the vessel Princess Marina. The combined effect of the sale
at $15,100, repurchase at $7,700 and a loan granted to Maritima Sipsa
S.A. for $7,400 resulted in no cash flow on a consolidated basis at
the time of execution. The loan is repaid to the Company on a
quarterly basis over a three-year period ended June 2006. In June
2006, the Company and Maritima Sipsa S.A. entered into an amended
agreement to modify the delivery date of the vessel to February 2007
or at a later date if the charter is further extended, at a purchase
price not exceeding $7,700. In March 2007, the delivered date was
postponed to September 2007 and the purchase price was reduced to
$3,645. The transaction was recognized in the Company's statements of
operations as a lease, reflecting quarterly payments as charter
revenues while the vessel remains presented in the accompanying
balance sheets as an asset.
(2) Management fee billed by Ravenscroft
Since the date of acquisition of Ravenscroft we included the
management fee billed by Ravenscroft to Maritima Sipsa S.A., a 49%
owned company, for the ship management services for the vessel
Princess Marina. The stipulated fee is $21 per month.
Management fee paid
For the three-month periods ended March 31, 2007 and 2006, management fees
were expensed with the following related parties:
For the three-month periods
ended March 31,
----------------------------
2007 2006
---- ----
Oceanmarine $ - $ 150
Ravenscroft Shipping Inc. - 361
--------------- -----------
Total $ - $ 511
=============== ===========
We purchased Ravenscroft and hired the administrative personnel and
purchased the administration related assets of Oceanmarine in March 2006;
accordingly, after those acquisitions, we did not pay fees to these
related parties, but directly incurred in-house all costs of ship
management and administration.
Voyage expenses paid to related parties
For the three-month periods ended March 31, 2007 and 2006, the voyage
expenses paid to related parties were as follows:
For the three-month periods
ended March 31,
----------------------------
2007 2006
---- ----
Bareboat charter paid (1) $ - $ 2,640
Brokerage commissions (2) - 319
Commercial commissions (3) 63 8
-------------- ----------
Total $ 63 $ 2,967
============== ==========
(1) Bareboat charter paid to related parties
Since the second quarter of 2005, through our subsidiary, Corporacion
de Navegacion Mundial S.A., the Company entered into a bareboat charter
with UP Offshore (Panama) S.A., a wholly owned subsidiary of UP
Offshore, for the rental of the two PSVs named UP Safira and UP
Esmeralda for a daily lease amount for each one. Since March 21, 2006,
the date of UP Offshore additional acquisition, our unaudited condensed
consolidated financial statements included the operations of UP
Offshore (Panama) S.A., a wholly owned subsidiary of UP Offshore, on a
consolidated basis. Therefore, these transactions have been eliminated
in the unaudited condensed consolidated financial statements since that
date. Prior to the additional acquisition, the equity method was used.
(2) Brokerage commissions
Ravenscroft from time to time acted as a broker in arranging charters
for the Company's oceangoing vessels for which Ravenscroft charged
brokerage commissions of 1.25% on the freight, hire and demurrage of
each such charter.
Since March 20, 2006, the date of Ravenscroft acquisition, our
unaudited condensed consolidated financial statements included the
operations of Ravenscroft, on a consolidated basis. Therefore, these
transactions have been eliminated in the unaudited condensed
consolidated financial statements since that date.
(3) Commercial agreement with Comintra
On June 25, 2003, UP Offshore (Bahamas) Ltd. signed a commercial
agreement with Comintra.
Under this agreement Comintra agrees to assist UP Offshore (Bahamas)
Ltd. regarding the commercial activities of UP Offshore (Bahamas)
Ltd.'s fleet of six PSVs with the Brazilian offshore oil industry.
Comintra's responsibilities, among others, include marketing the PSVs
in the Brazilian market and negotiating the time charters or other
revenues contracts with prospective charterers of the PSVs.
The parties agreed that Comintra's professional fees under this
agreement shall be 2% of the gross time charters revenues from
Brazilian charters collected by UP Offshore (Bahamas) Ltd. on a
monthly basis.
During 2005 UP Offshore (Bahamas) Ltd. paid in advance to Comintra fees
under this agreement in the amount of $1,500. At March 31, 2007 the
balance amounted to $1,304.
Operations in OTS S.A.'s terminal
UABL Paraguay, a subsidiary of the Company, operates the terminal that
pertains to Obras Terminales y Servicios S.A. (OTS S.A.), a related
party.
For the three-month periods ended March 31, 2007 and 2006, UABL
Paraguay paid to OTS S.A. $145 and $106, respectively, for this
operation.
9. SHARE CAPITAL
Common shares and shareholders
On September 21, 2006, Inversiones Los Avellanos S.A., Hazels (Bahamas)
Investments Inc. and Solimar Holdings Ltd. (collectively the "Original
Shareholders") signed a second amended and restated shareholders agreement.
Also, the shares held directly by our Original Shareholders expressly
entitle to seven votes per share and all other holders of our common stock
entitle to one vote per share. The special voting rights of the Original
Shareholders are not transferable.
At March 31, 2007 the issued and outstanding shares are 28,346,952 par
value $.01 per share.
At March 31, 2007 our shareholders Solimar Holdings Ltd., Inversiones Los
Avellanos S.A. and Hazels (Bahamas) Investments Inc. (a wholly owned
subsidiary of Inversiones Los Avellanos S.A.) hold 9,672,664, 4,982,465 and
702,159 shares which represent 34.12%, 17.26% and 2.48%, respectively. The
voting power for these shares which represent 89.10% of the total voting
power is combined pursuant to an agreement between the Original
Shareholders who have agreed to vote their respective shares together in
all matters where a vote of UPB's shareholders is required.
10. BUSINESS AND GEOGRAPHIC SEGMENT INFORMATION
The Company organizes its business and evaluates performance by its
operating segments, Ocean, River, Offshore Supply and Passenger Business.
The accounting policies of the reportable segments are the same as those
for the unaudited condensed consolidated financial statements. The Company
does not have significant intersegment transactions. These segments and
their respective operations are as follows:
Ocean Business: In our Ocean Business, we own and operate eight oceangoing
vessels and semi-integrated oceangoing tug barge units under the trade name
Ultrapetrol. Our Suezmax and Aframax vessels transport dry and liquid bulk
goods on major trade routes around the globe. Major products carried
include liquid cargo such as petroleum and petroleum derivatives, as well
as dry cargo such as iron ore, coal and other bulk cargoes.
River Business: In our River Business, we own and operate several dry and
tanker barges, and push boats. In addition, we use one barge from our ocean
fleet, the Alianza G2, as a transfer station. The dry barges transport
basically agricultural and forestry products, iron ore and other cargoes,
while the tanker barges carry petroleum products, vegetable oils and other
liquids. We operate our pushboats and barges on the navigable waters of
Parana, Paraguay and Uruguay Rivers and part of the River Plate in South
America, also known as the Hidrovia region.
Offshore Supply Business: We operate our Offshore Supply Business, using
PSVs of UP Offshore (Bahamas), two are employed in the spot market in the
North Sea and two in the Brazilian market. PSVs are designed to transport
supplies such as containerized equipment, drill casing, pipes and heavy
loads on deck, along with fuel, water, drilling fluids and bulk cement in
under deck tanks and a variety of other supplies to drilling rigs and
platforms.
Passenger Business: We own two vessels purchased in 2005. Operations were
concentrated in the Mediterranean and Black Sea.
Ultrapetrol's vessels operate on a worldwide basis and are not restricted
to specific locations. Accordingly, it is not possible to allocate the
assets of these operations to specific countries. In addition, the Company
does not manage its operating profit on a geographic basis.
For the three-month periods
ended March 31,
----------------------------
2007 2006
---- ----
Revenues (1)
- South America $ 24,970 $ 15,841
- Europe 16,845 14,222
- Asia 3,219 49
- Other 392 169
------------- ----------
------------- ----------
$ 45,426 $ 30,281
================ ==========
(1) Classified by country of domicile of charterers.
Revenue by segment consists only of services provided to external
customers, as reported in the unaudited condensed consolidated statement of
operations. Resources are allocated based on segment profit or loss from
operation, before interest and taxes. Identifiable assets represent those
assets used in the operations of each segment.
The following schedule presents segment information about the Company's
operations for the three-month period ended March 31, 2007:
Offshore
Ocean River Passenger Supply
Business Business Business Business Total
-------- -------- -------- -------- -----
Revenues $ 12,753 $ 21,528 $ 2,750 $ 8,395 $ 45,426
Running and voyage expenses 4,184 14,181 3,388 2,821 24,574
Depreciation and amortization 3,738 2,285 1,127 904 8,054
Segment operating profit (loss) 3,258 3,480 (1,979) 3,609 8,368
Segment assets 154,440 146,076 40,164 143,280 483,960
Investments in affiliates 514 1,940 - - 2,454
Income from investment in affiliates 165 4 - - 169
Additions to long-lived assets $ 18,093 $(1) 3,941 $ 1,118 $ 13,027 $ 36,179
(1) Not includes the 12 river barges and 1 pushboat acquired in the Otto
Candies acquisition valued at $13,679.
The following schedule presents segment information about the Company's
operations for the three-month period ended March 31, 2006:
Offshore
Ocean River Passenger Supply
Business Business Business Business Total
-------- -------- -------- -------- -----
Revenues $ 9,426 $ 15,590 $ 1,824 $ 3,441 $ 30,281
Running and voyage expenses 3,494 11,427 1,637 3,400 19,958
Depreciation and amortization 3,489 1,929 62 - 5,480
Segment operating profit (loss) 1,137 1,436 (48) 41 2,566
Income (loss) from investment
in affiliates 242 (43) - 329 528
Additions to long-lived assets $ - $ 1,703 $ 6,382 $ - $ 8,085
11. SUPPLEMENTAL GUARANTOR INFORMATION
On November 24, 2004, the Company issued $180,000 9% First Preferred Ship
Mortagage Notes due 2014.
The 2014 Senior Notes are fully and unconditionally guaranteed on a joint
and several senior basis by the majority of the Company's subsidiaries
directly involved in our Ocean and Passenger Business.
The Indenture provides that the 2014 Senior Notes and each of the
guarantees granted by Subsidiaries, other than the Mortgage, are governed
by, and construed in accordance with, the laws of the state of New York.
Each of the mortgaged vessels is registered under either the Panamanian
flag, or another jurisdiction with similar procedures. All of the
Subsidiary Guarantors are outside of the United States.
Supplemental condensed combining financial information for the Guarantor
Subsidiaries for the 2014 Senior Notes is presented below. This information
is prepared in accordance with the Company's accounting policies. This
supplemental financial disclosure should be read in conjunction with the
consolidated financial statements.
SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEET
AT MARCH 31, 2007 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary subsidiary non Consolidating consolidated
Parent guarantors guarantors adjustments amounts
------ ---------- ---------- ----------- -------
Current assets
Receivables from related parties $ 194,407 $ 30,742 $ 19,255 $ (240,520) $ 3,884
Other current assets 20,777 11,225 30,519 - 62,521
------------ ------------- ------------ ------------- -----------
Total current assets 215,184 41,967 49,774 (240,520) 66,405
------------ ------------- ------------ ------------- -----------
Noncurrent assets
Vessels and equipment, net - 130,548 248,350 (1,221) 377,677
Investment in affiliates 148,305 - 2,454 (148,305) 2,454
Other noncurrent assets 5,982 12,028 19,414 - 37,424
------------ ------------- ------------ ------------- -----------
Total noncurrent assets 154,287 142,576 270,218 (149,526) 417,555
------------ ------------- ------------ ------------- -----------
Total assets $ 369,471 $ 184,543 $319,992 $ (390,046) $ 483,960
============ ============= ============ ============= ===========
Current liabilities
Payables to related parties $ 1,097 $ 150,292 $ 89,131 $ (240,520) $ -
Other financial debt - - 7,108 - 7,108
Other current liabilities 6,318 3,755 13,669 - 23,742
------------ ------------- ------------ ------------- -----------
Total current liabilities 7,415 154,047 109,908 (240,520) 30,850
------------ ------------- ------------ ------------- -----------
Noncurrent liabilities
Long-term debt 180,000 - - - 180,000
Financial debt, net of current portion - - 79,958 - 79,958
Other payables - 351 7,515 - 7,866
------------ ------------- ------------ ------------- -----------
Total noncurrent liabilities 180,000 351 87,473 - 267,824
------------ ------------- ------------ ------------- -----------
Total liabilities 187,415 154,398 197,381 (240,520) 298,674
Minority interests - - - 3,230 3,230
Shareholders' equity 182,056 30,145 122,611 (152,756) 182,056
------------ ------------- ------------ ------------- -----------
Total liabilities, minority interests
and shareholders' equity $ 369,471 $ 184,543 $319,992 $ (390,046) $ 483,960
============ ============= ============ ============= ===========
SUPPLEMENTAL CONDENSED COMBINING BALANCE SHEET
AT DECEMBER 31, 2006
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary subsidiary non Consolidating consolidated
Parent guarantors guarantors adjustments amounts
------ ---------- ---------- ----------- -------
Current assets
Receivables from related parties $ 198,033 $ 26,615 $ 13,158 $ (234,484) $ 3,322
Other current assets 16,191 13,351 21,906 - 51,448
------------ ------------- ------------ ------------- -----------
Total current assets 214,224 39,966 35,064 (234,484) 54,770
------------ ------------- ------------ ------------- -----------
Noncurrent assets
Vessels and equipment, net - 130,666 205,990 (3,465) 333,191
Investment in affiliates 142,759 - 2,285 (142,759) 2,285
Other noncurrent assets 6,233 10,732 19,168 - 36,133
Total noncurrent assets 148,992 141,398 227,443 (146,224) 371,609
------------ ------------- ------------ ------------- -----------
Total assets $ 363,216 $ 181,364 $ 262,507 $ (380,708) $ 426,379
------------ ------------- ------------ ------------- -----------
Current liabilities
Payables to related parties $ 1,097 $ 144,779 $ 89,028 $ (234,484) $ 420
Other financial debt - - 4,700 - 4,700
Other current liabilities 2,690 4,289 10,672 - 17,651
------------ ------------- ------------ ------------- -----------
Total current liabilities 3,787 149,068 104,400 (234,484) 22,771
------------ ------------- ------------ ------------- -----------
Noncurrent liabilities
Long-term debt 180,000 - - - 180,000
Other financial debt, net of current portion - - 34,294 - 34,294
Other noncurrent liabilities - 346 6,448 - 6,794
------------ ------------- ------------ ------------- -----------
Total noncurrent liabilities 180,000 346 40,742 - 221,088
------------ ------------- ------------ ------------- -----------
Total liabilities 183,787 149,414 145,142 (234,484) 243,859
Minority interests - - - 3,091 3,091
Shareholders' equity 179,429 31,950 117,365 (149,315) 179,429
------------ ------------- ------------ ------------- -----------
Total liabilities, minority interests and
shareholders' equity $ 363,216 $ 181,364 $ 262,507 $ (380,708) $ 426,379
============ ============= ============ ============= ===========
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2007 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary subsidiary non Consolidating consolidated
Parent guarantors guarantors adjustments amounts
------ ---------- ---------- ----------- -------
Revenues $ - $ 17,454 $ 30,205 $ (2,233) $ 45,426
Operating expenses (1,553) 14,493) (23,230) 2,218 (37,058)
------------ ------------- ------------ ------------- -----------
Operating profit (loss) (1,553) 2,961 6,975 (15) 8,368
Investment in affiliates 3,149 - 169 (3,149) 169
Other income (expenses) 368 (4,638) (766) - (5,036)
------------ ------------- ------------ ------------- -----------
Income (loss) before income tax and minority 1,964 (1,677) 6,378 (3,164) 3,501
interest
Income taxes - (128) (1,270) - (1,398)
Minority interest - - - (139) (139)
------------ ------------- ------------ ------------- -----------
Net income (loss) $ 1,964 $ (1,805) $ 5,108 $ (3,303) $ 1,964
============ ============= ============ ============= ===========
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF INCOME
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2006 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary subsidiary non Consolidating consolidated
Parent guarantors guarantors adjustments amounts
------ ---------- ---------- ----------- -------
Revenues $ - $ 16,373 $ 15,615 $ (1,707) $ 30,281
Operating expenses (54) (14,412) (14,942) 1,693 (27,715)
------------ ------------- ------------ ------------- -----------
Operating profit (loss) (54) 1,961 673 (14) 2,566
Investment in affiliates (1,571) - 528 1,571 528
Other income (expenses) 12 (3,759) (824) - (4,571)
------------ ------------- ------------ ------------- -----------
Income (loss) before income tax and minority (1,613) (1,798) 377 1,557 (1,477)
interest
Income taxes - (12) (38) - (50)
Minority interest - - - (86) (86)
------------ ------------- ------------ ------------- -----------
Net income (loss) $ (1,613) $ (1,810) $ 339 $ 1,471 $ (1,613)
============ ============= ============ ============= ===========
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOW
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2007 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary subsidiary non Consolidating consolidated
Parent guarantors guarantors adjustments amounts
------ ---------- ---------- ----------- -------
Net income (loss) $ 1,964 $ (1,805) $ 5,108 $ (3,303) $ 1,964
Adjustments to reconcile net income (loss)
to net cash (used in) provided by
operating activities (1,073) 1,961 9,649 3,303 13,840
------------ ------------- ------------ ------------- -----------
Net cash provided by operating activities 891 156 14,757 - 15,804
------------ ------------- ------------ ------------- -----------
Intercompany sources 3,626 - - (3,626) -
Non-subsidiary sources - (3,310) (46,659) - (49,969)
------------ ------------- ------------ ------------- -----------
Net cash provided by (used in) investing 3,626 (3,310) (46,659) (3,626) (49,969)
activities ------------ ------------- ------------ ------------- -----------
Intercompany sources - 5,451 (9,077) 3,626 -
Non-subsidiary sources (86) - 47,726 - 47,640
------------ ------------- ------------ ------------- -----------
Net cash provided by (used in) financing (86) 5,451 38,649 3,626 47,640
activities ------------ ------------- ------------ ------------- -----------
Net increase (decrease) in cash and cash $ 4,431 $ 2,297 $ 6,747 $ - $ 13,475
equivalents ============ ============= ============ ============= ===========
SUPPLEMENTAL CONDENSED COMBINING STATEMENTS OF CASH FLOW
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2006 (UNAUDITED)
(stated in thousands of U.S. dollars)
Combined Combined Total
subsidiary subsidiary non Consolidating consolidated
Parent guarantors guarantors adjustments amounts
------ ---------- ---------- ----------- -------
Net income (loss) $ (1,613) $ (1,810) $ 339 $ 1,471 $ (1,613)
Adjustments to reconcile net income (loss)
to net cash (used in) provided by
operating activities 2,712 2,404 596 (1,471) 4,241
------------ ------------- ------------ ------------- -----------
Net cash (used in) provided by operating 1,099 594 935 - 2,628
activities ------------ ------------- ------------ ------------- -----------
Intercompany sources (7,160) - - 7,160 -
Non-subsidiary sources 11,391 (8,042) 303 - 3,652
------------ ------------- ------------ ------------- -----------
Net cash provided by (used in) investing 4,231 (8,042) 303 7,160 3,652
activities ------------ ------------- ------------ ------------- -----------
Intercompany sources - 5,160 2,000 (7,160) -
Non-subsidiary sources 2 (247) (682) - (927)
------------ ------------- ------------ ------------- -----------
Net cash provided by (used in) financing 2 4,913 1,318 (7,160) (927)
activities ------------ ------------- ------------ ------------- -----------
Net increase (decrease) in cash and cash $ 5,332 $ (2,535) $ 2,556 $ - $ 5,353
equivalents ============ ============= ============ ============= ===========
12. SUBSEQUENT EVENTS
- Follow-on offering of 12,650,000 shares
On April 19, 2006 the Company closed on the sale of 5,096,078 new
shares of our common stock at $19.00 per share through a public
offering. The proceeds of $96,825 were used:
o to replace cash on hand of $13,800 used to fund the Otto Candies
Acquisition, and $8,660 used to fund the first advance of the
construction costs of the two PSVs being built in India.
o to cancel underwriters fees and additional fees and incremental
expenses amounted to $5,388, with the remaining $68,977 set aside
$34,640 for funding the balance of the construction costs of the
two PSVs being built in India, $12,000 to fund the expansion of
the capacity of our shipyard in the Hidrovia Region for
construction of new barges and $22,337 for general corporate
purpose.
On the same date, the Original Shareholders sold 7,553,922 (include
1,650,000 shares for the exercise of the over-allotment option from
the underwriters) shares of our common stock at $19.00 per share. The
Company did not receive any proceeds from the sale of any shares sold
by the Original Shareholders.
After this transaction our shareholders Solimar Holdings Ltd.,
Inversiones Los Avellanos S.A. and Hazels (Bahamas) Investments Inc.
(a wholly, owned subsidiary of Inversiones Los Avellanos S.A.) hold
3,124,073, 4,735,518 and 159 shares which represent 9.30%, 14.10% and
0.0005%, respectively. The jointly voting power for these shares
represent approximately 68% of the total voting power.
- Delivery of UP Diamante
On May 15, 2007 we took delivery of the PSV UP Diamante in Brazil.
- Forward Freight Agreement
On May 9, 2007 we entered into a Forward Freight Agreement ("FFA")
whereby a subsidiary of ours sold via BNP Paribas Commodity Futures
Limited ("BNP Paribas") to LCH.Clearnet ("LCH") the average of the 4
Capesize Time Charter Routes (C4TC) for a total of 180 days (15 days
per month from January 2008 up to December 2008 both inclusive) at a
price of $80,000 (eighty thousand U.S. Dollars) per day.
On May 10, 2007 we entered into a second FFA whereby a subsidiary of
ours sold via BNP Paribas to LCH the average of the 4 Capesize Time
Charter Routes (C4TC) for a total of 180 days (15 days per month from
January 2008 up to December 2008 both inclusive) at a price of $79,500
(seventynine thousand and five hundred U.S. Dollars) per day.
On May 15, 2007, we entered into a third FFA whereby a subsidiary of
ours sold via BNP Paribas to LCH the average of the 4 Capesize Time
Charter Routes (C4TC) for a total of 366 days (every calendar month
from January 2008 up to December 2008 both inclusive) at a price of
$77,250 (seventyseven thousand and two hundred and fifty U.S. Dollars)
per day.
In connection with these transactions, we transferred $2,000 to cover
a large part of the initial margin required for this transaction. As
of close of business May 14, 2007, we had utilized approximately $230
under a credit facility of $1,500 we have with BNP Paribas to cover
margin requirements in connection with these and other FFA
transactions we might enter into in the future. We pay interest of
LIBOR plus 0.75% p.a. on the amounts withdrawn under the BNP Paribas
facility.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ULTRAPETROL (BAHAMAS) LIMITED
(registrant)
Dated: May 15, 2007 By: /s/ Felipe Menendez R.
----------------------
Felipe Menendez R.
President & Chief Executive Officer
SK 02351 0010 774289