Commission File No. 333-8878
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November, 2002
ULTRAPETROL (BAHAMAS) LIMITED
(Translation of registrant's name into English)
H & J Corporate Services Ltd.
Shirlaw House
87 Shirley Street
Nassau, The Bahamas
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F |X| Form 40-F |_|
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|
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Set forth herein is a copy of the Company's report for the nine months
ended September 30, 2002, containing certain unaudited financial information and
a Management's Discussion and Analysis of Financial Condition and Results of
Operations.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(Unaudited)
Contents Page
----------------------------------------------------------------- ------------
o Management's Discussion and Analysis of Financial Condition
and Results of Operations for the nine month periods ended
September 30, 2002 and 2001 -1-
o Financial Statements
- Condensed Consolidated Balance Sheets as of September
30, 2002 and 2001 -F-1-
- Condensed Consolidated Statements of Income for the
nine month periods ended September 30, 2002 and 2001 -F-2-
- Condensed Consolidated Statements of Changes in
Stockholders' Equity for the nine month periods ended -F-3-
September 30, 2002 and 2001
- Condensed Consolidated Statements of Cash Flows for the
nine month periods ended September 30, 2002 and 2001 -F-4-
- Notes To Condensed Consolidated Financial Statements as
of September 30, 2002 and 2001 -F-5-
ULTRAPETROL (BAHAMAS) LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
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 nine months ended
September 30, 2002 and 2001 included elsewhere in this report.
General
The Company was formed on December 23, 1997 to hold all the capital stock
of Princely International Finance Corporation (a Panamanian Company) and
Ultrapetrol S.A. (an Argentine Company). The following discussion covers the
unaudited financial results of the consolidated entity for the nine month period
ended September 30, 2002 with a comparison to the unaudited consolidated
financial results for the same nine month period in 2001.
The Company operates Suezmax, Aframax and Panamax tankers primarily in
South America with additional operations between the Caribbean, the United
States and West Africa. The Company also has one bulkcarrier, two oceangoing
Tug-Barge units, one of which operates as a transfer station and 69 barges and
three tugs that operate in barge river trafficking under time charter to an
affiliate, UABL Ltd. The Panamax tanker Princess Laura, the bulkcarrier Alianza
G1 and the two oceangoing Tug-Barge units are permitted to engage in cabotage
trading in Argentina. Cabotage trading in Argentina is the transportation of
passengers or goods by sea or river between ports and cargo transfer zones in
Argentina. This commerce is reserved for Argentinean flag vessels and
Argentinean shipowners who have bareboat chartered foreign flag vessels and
obtained authorization from the Argentinean Maritime Authority pursuant to
Decree 343. (Decree 343, which allowed the bareboat licensing of vessels was
revoked in December 1999 and, although some of our vessels will continue to be
licensed until the end of their current bareboat charters, the renewal of same
will depend upon the legislation which will be in place at the time).
During the first nine months of 2002, the Company employed a significant
part of its fleet on time charter for different clients.
During the first nine months of 2002, the international freight market
maintained rates significantly below those experienced in 2001.
From October 2000 the Company has employed under a long-term time charter
with UABL Ltd., an affiliated company, the Alianza G2, the 69 wet and dry river
and the push-boats Cavalier I, Cavalier II, Cavalier III and the tug Alianza
Rosario and the port tugs Jupiter, Mercurio and Marte.
Also, the Company had renewed during 2001 the time charter employment of
all of its Suezmax vessels and one of its Aframax vessels for approximately
eleven months duration, which cover their employment up to their scheduled
redeliveries between this past May and October 2002. Following the expiration of
these charters, the Company agreed to extend them for short periods with the
majority of the scheduled redeliveries to take place in November/December 2002
and, in one case, up to February 2003.
At the end of the first quarter (March 29, 2002) the Alianza G3 entered
into a 3 year time charter extendable for another 2 years in north Brazil.
Because this service must be provided without interruptions and required certain
modifications to be done to the vessel, the special survey and dry dock was
accelerated by 26 months and a general refurbishment was carried out which,
together with the positioning voyage to commence service, meant that this unit
did not have any income for the first quarter. During the second quarter it has
provided its service on a regular basis; however, we still incurred some
extraordinary expenses connected with adjusting operational details for the
performance of this long term charter. In the third quarter it has operated
satisfactorily without interruption.
The Princess Fatima and the Princess Pia were out of service conducting
their special survey and dry dockings during 57 days and 72 days, respectively,
in the first nine months of 2002. The Princess Marisol was out of service due to
an accident for 87 days during the first six months of 2002.
A generally low volume required by our regular COA customers in Argentina
has meant a low utilization rate for our Panamax fleet which, coupled with
alternative employment in the international market at low rates, has contributed
to reduced earnings by these vessels in the first nine months of 2002.
On April 18, 2002 the Company entered into agreements with AIG/GE Capital
Latin Infrastructure Fund LP, a Bermuda Limited partnership ("LAIF"), relating
to the creation of two new companies in which both Ultrapetrol and LAIF will be
shareholders.
The first company, "UP Offshore", intends to build/purchase and operate a
fleet of platform supply vessels (PSV) which shall be of a very high
specification using the latest technology, designed to operate in any area of
the world. UP Offshore will have the initial focus of its activities in Brazil
serving both Petroleos Brasileiro S.A. (Petrobras), the Brazilian state oil
company, and other international oil companies that have recently acquired
petroleum and development leases in Brazil. Ultrapetrol has committed to place
up to $12.5 million in equity for approximately a 23% share, although
Ultrapetrol expects to hold the voting power necessary to control the election
of a majority of UP Offshore's board of directors.
UP Offshore will have capital of $55 million depending upon the final
capital contributions of other investors. UP Offshore has obtained financing
with which it will commit to the initial building of 6 vessels with a firm
program of expanding the fleet to 10 ships.
Ultrapetrol's participation in UP Offshore may be increased through options
which may be exercised under certain conditions.
The second company, Ultracape, has the objective of purchasing second hand
modern capesize bulk carriers to operate in the international market. Ultracape
will have capital of up to $50 million, depending on the number of vessels to be
acquired, which will be complemented by credit from banking sources to allow for
the acquisition of vessels. We have committed to place up to $10 million in
equity in Ultracape.
At this time we hold a 60% stake in Ultracape. We will perform the full
commercial management for the vessels.
On April 19, 2002 Ultracape entered into a Memorandum of Agreement based on
the terms of the industry standard NSF 1993 to purchase the vessel mv Vasco Da
Gama (renamed Cape Pampas) of 151380 dwt for $16.55 million. On July 1, 2002 we
completed our purchase of the Cape Pampas. Thereafter, the vessel was delivered
under a time charter to Cargill International S.A. (Cargill) for a period of 18
months.
Pursuant to the Agreement reached on April 18th with LAIF, on June 24, 2002
the Company entered into a Contribution and Subscription Agreement with LAIF III
Ltd. Bermuda and Ultracape (Holdings) Ltd. of Bahamas whereby the Company
confirmed its commitment to purchase up to $10 million and LAIF III Ltd. agreed
to purchase up to the lesser of $20 million or 40% of the shares of Ultracape
(Holdings) Ltd. An initial amount to be contributed was set for both LAIF III
Ltd. and the Company at $3.3 million and $4.95 million, respectively.
Also on June 24, 2002 a Shareholders Agreement was signed with LAIF III
Ltd. and Ultracape (Holdings) Ltd. for the governance of Ultracape (Holdings)
Ltd.
On June 27, 2002 Ultracape (Holdings) Ltd entered into a Loan Agreement
with Credit Agricole Indosuez for a total amount of $27 million to finance the
acquisition of up to two capesize vessels. On July 1st, Braddock Shipping Inc,
an Ultracape subsidiary took delivery of the Cape Pampas and drew down $11.0
million of the loan agreed to with Credit Agricole Indosuez.
On July 28, 2002, the option to repurchase 25,212 shares by the Company for
a total price of $0.9 million which expired in July 2002 was extended until July
31, 2003.
On August 26, 2002, the Company entered into a Memorandum of Agreement
(MOA) through which it committed to sell its vessel Princess Fatima, to an
unrelated company for $1.9 million net of associated expenses. On September 19,
2002 the Company delivered the Princess Fatima pursuant to the MOA and received
the balance of the purchase price.
Revenue
The majority of the Company's vessels are employed on time charters to
affiliated and unaffiliated companies. The revenue from this operation is
derived from a daily rate that is paid to the Company for the use of its vessel.
Hire revenue accounted for 68% of the Company's total revenues for the nine
months ended September 30, 2002.
Also, the Company's vessels are employed on a contract of affreightment
("COA") basis either for single or repetitive voyages. For a COA, the vessel
owner or operator generally pays all voyage and vessel operating expenses and
has the right to substitute one vessel for another. The rate is generally
expressed in dollars per metric ton of cargo. Revenues earned under COA's are
referred to as "freight". COA revenue accounted for 32% of the Company's total
revenues for the nine months ended September 30, 2002
From the total revenues obtained from COA's during the first nine months of
2002, 78% were in respect of repetitive voyages for the Company's regular
customers and 22% were in respect of single voyages for occasional customers.
Expenses
When vessels are operated on a COA basis (as well as any time when they are
not operating under time or bareboat charter), all costs relating to a given
voyage, including port charges, canal dues and fuel costs, are paid by the
vessel owner and are recorded as voyage expenses.
The Company's operating expenses, or running expenses, are generally paid
through Ravenscroft Shipping Inc., a Miami based affiliate of the Company, which
provides ship management services for the Company's vessels ("Ravenscroft").
Operating expenses include the cost of all ship management, crewing, spares and
stores, insurance, lubricants, repairs and maintenance and docking expenses. The
most significant of these expenses are maintenance and repairs, wages paid to
marine personnel and marine insurance costs. In the case of our river barges
chartered to UABL Ltd., the Company has contracted the ship management
responsibilities to Lonehort Inc, an affiliate of UABL Ltd.
Vessels are depreciated to an estimated scrap value on a straight-line
basis over their estimated useful lives. The Company follows the deferral method
of accounting for survey and dry-dock costs, whereby actual survey and dry-dock
costs are capitalized and amortized over a period of two and one-half years
until the date of the next dry-dock or special survey.
The Company's other primary operating expenses include general and
administrative expenses as well as ship management and administration fees paid
to Ravenscroft and Oceanmarine S.A. ("Oceanmarine"), another affiliate of the
Company, which provides certain administrative services. The Company pays
Oceanmarine a monthly fee of $10,000 per vessel for administrative services
including general administration and accounting (financial reporting,
preparation of tax returns), use of office premises, a computer network,
secretarial assistance and other general duties. The Company pays Ravenscroft a
monthly ship management fee of $12,500 per vessel for services including
technical management, crewing, provisioning, superintendence and related
accounting functions. The Company does not expect to pay fees to any affiliated
entity other than those described here for management and administration
functions.
The Company does not own any buildings and does not pay any rental expense
other than as a portion of the administration fees paid to Oceanmarine.
Foreign Currency Transactions
Substantially all of the Company's revenues are denominated in U.S.
dollars. Twenty-one percent (21%) of the Company's total revenues are
denominated in US dollars but collected in Argentine pesos and twenty-six (26%)
of our total out of pocket operating expenses are paid in Argentine pesos. The
Company's operating results, which are reported in U.S. dollars, may be affected
by fluctuations in the exchange rate between the U.S. dollar and the Argentinean
peso. For accounting purposes, revenue and expense accounts are translated into
U.S. dollars at the exchange rate prevailing on the date of each transaction.
The Company does not hedge its exposure to foreign currency fluctuations.
During the first half of 2002, part of the above-referenced portion (21%)
of the company's revenues denominated in United States dollars but collected in
Argentine pesos, and consequent receivables, were exposed to the compulsory
conversion (by virtue of Argentine Law 25.561 and the Decree 214/2002) to
Argentine currency at a rate of exchange different from the one current at the
time of payment and thereafter subject to negotiations between the parties as to
the rate of exchange applicable to each transaction.
As a result of the above, the equivalent U.S. dollars at the time of
payment by the customers resulted in losses when compared with the amount
invoiced.
The net effect of this exchange differential (special exchange variance)
account for the first half and for the first nine months of 2002 is equivalent
to a loss of U.S.$2.7 million.
The Company believes that substantially all the impact of the exchange
variance (loss) incurred by our Argentine subsidiary as a result of Argentine
Decree 214/2002 has already been accounted for in the first nine months of 2002.
Inflation
The Company does not believe that inflation has had a material impact on
the Company's operations, although certain of the Company's operating expenses
(e.g., crewing, insurance and dry docking costs) are subject to fluctuations as
a result of market forces.
Inflationary pressures on bunker costs are not expected to have a material
effect on the Company's future operations since freight rates for voyage
charters are generally sensitive to the price of a ship's fuel. A sharp rise in
bunker prices may have a temporary negative effect on results since freights
generally adjust after prices settle at a higher level.
Results of Operations
Nine months ended September 30, 2002 compared to the nine months ended September
30, 2001.
The following table sets forth certain historical income statement data for the
periods indicated derived from the Company's statements of operations expressed
in thousands of dollars.
Nine months ended Nine months ended
3* Quarter'02 September 30, 2002 3* Quarter'01 September 30, 2001
------------- ------------------ ------------- ------------------
Freight revenues
Attributable to wholly owned vessel 6,834 16,914 12,881 55,607
Attributable to wholly chartered-in vessel 72 908 1,500 5,068
_______________________________________________________________________________________
Total 6,906 17,822 14,381 60,675
Hire revenues
Attributable to wholly owned vessel 12,285 37,120 10,396 25,368
Attributable to wholly chartered-in vessel 0 0 675 1,275
_______________________________________________________________________________________
Total 12,285 37,120 11,071 26,643
_______________________________________________________________________________________
Total Revenues 19,191 54,942 25,452 87,318
_______________________________________________________________________________________
Voyage expenses
Attributable to wholly owned vessel (2,617) (6,110) (3,901) (16,358)
Attributable to wholly chartered-in vessel (82) (889) (1,580) (5,775)
_______________________________________________________________________________________
Total (2,699) (6,999) (5,481) (22,133)
Running cost (6,803) (20,179) (8,349) (26,557)
Amortization of dry-dock expense (2,383) (6,734) (1,818) (5,314)
Depreciation of property and equipment (4,317) (12,494) (4,048) (12,102)
Management fees and administrative expenses (1,577) (4,912) (1,967) (5,581)
Special exchange difference (2,704)
_______________________________________________________________________________________
Operating profit (losses) 1,412 920 3,789 15,631
Financial expense (4,174) (12,430) (4,582) (13,760)
Revenues
Total revenues from freight, net of commissions, decreased from $60.7
million in the first nine months of 2001 to $17.8 million in 2002, or a decrease
of 71%. This decrease is primarily attributable to the time charter operation of
the Princess Katherine, Alianza G3, Princess Veronica and Princess Susana
instead of COA's employment. Another contributing factor was lower revenue
obtained by our Alianza G3-Alianza Campana which spent the entire first quarter
in preparation and positioning for a long term contract. Also, the lower
utilization rates of our Panamax vessels, coupled with the total of 129 days out
of service experienced by our Princess Pia and Princess Fatima due to dry dock
and special survey, as well as the Princess Marisol which was out of service due
to an accident for 87 days during the first nine months of 2002, negatively
affected our revenues in this period. Part of this off hire time is compensated
by our loss of hire insurance for which a total of $1.1 million has been
included as other income (outside our operational results).
Hire revenues, net of commissions, increased by 39% in 2002 from $26.7 to
$37.1 million. This increase is attributable to the time charter employment of
the Princess Katherine, Alianza G3, Princess Veronica, Princess Susana and the
addition of Cape Pampas purchased by Ultracape.
Operating profit for the first nine months of 2002 was $0.9 million, which
was a decrease of 94% or $14.7 million from the same period in 2001. The
decrease is primarily attributable to the same factors that affected our
revenues in this period detailed above and includes the full impact of the $2.7
million loss in the special exchange variance account.
The sale of the Princess Fatima resulted in a loss of $1.6 million which
has been accounted for under "other income".
Voyage expenses
Voyage expenses in the first nine months of 2002 were $7.0 million, as
compared to $22.2 million for the first nine months of 2001, a decrease of $15.2
million, or 68%. The decrease is primarily attributable to the combined effect
of a large portion of the fleet operating on time charter contract instead of
COA and the lower activity of our Panamax fleet.
Running costs
Running costs decreased by about 24% to $20.2 million in the first nine
months of 2002 as compared to $26.6 million in the equivalent 2001 period. This
decrease is mainly attributable to significant cost reductions achieved on some
of our vessels in operation, coupled with the general low level of activity for
the fleet, and extended periods of repairs for some of our vessels.
Amortization of dry-dock expense
Amortization of dry docking and special survey costs increased by $1.4
million, or 26%, to $6.7 million in the first nine months of 2002 as compared to
$5.3 million in 2001. The increase was due to the amortized portion of dry-docks
(i.e., repairs) carried out in 2001 on the Princess Katherine, Princess Susana
and Princess Nadia.
Depreciation of property and equipment
Depreciation and amortization increased by $0.4 million, or 3%, to $12.5
million in the first nine months of 2002 as compared to $12.1 million in 2001.
This increase is mainly attributable to the purchase of the Cape Pampas.
Management fees and administrative expenses
Management fees and administrative expenses were $5.6 million in the first
nine months of 2001 as compared to $4.9 million in 2002 which is mainly
attributable to a decrease in administrative expenses of $0.7 million.
Financial expense
Financial expense decreased by $1.4 million, or 10%, to $12.4 million in
the first nine months of 2002 as compared to $13.8 million in 2001. The decrease
is primarily attributable to the lower level of financial debt and associated
consequential interest costs.
Liquidity and Capital Resources
The Company is a holding company with no material assets other than those
of its subsidiaries. Consequently, it must fund its capital requirements through
other sources, including cash dividends from subsidiaries, borrowings and
shareholder contributions. The Company operates in a capital-intensive industry
requiring substantial ongoing investments in revenue producing assets. The
Company's subsidiaries have historically funded their vessel acquisitions
through a combination of bank indebtedness, shareholder loans, cash flow from
operations and equity contributions. As of September 30, 2002, the Company had
total indebtedness of $174.9 million, including $135 million from the proceeds
of the Note Issue, $2.0 million drawn under a revolving credit facility from
Allfirst Bank, the trustee of the Company's Notes, for Majestic Maritime Ltd., a
wholly owned subsidiary, $6.3 million in a senior loan facility with Nedship
Bank (America) N.V. for Kattegat Shipping Inc, a wholly owned subsidiary, for
the purchase of the vessel Princess Marina, $9.0 million in a senior loan
facility with Allfirst Bank for Majestic Maritime Ltd, a wholly owned
subsidiary, for the purchase of the vessel Princess Katherine, $11.0 million in
a senior loan facility with Credit Agricole Indosuez for Braddock Shipping Inc,
a 60% owned subsidiary, for the purchase of the vessel Cape Pampas and $2.8
million of indebtedness owed by the Company in respect of Avemar Holding
(Bahamas) Limited's purchase from SII of all of the shares of the Company
previously owned by SII. We have a short term credit line of $0.5 million in its
subsidiary, Parkwood Commercial Corp, $1.0 million drawn under a revolving
credit facility from Allfirst Bank for Stanmore Shipping Inc., a wholly owned
subsidiary and accrued interest expenses for these loans in the amount of $7.3
million.
At September 30, 2002, the Company had total cash and cash equivalents of
$9.7 million.
The Company believes, based upon current levels of operation, cash flow
from operations, together with other sources of funds, that it will have
adequate liquidity to make required payments of principal and interest on the
Company's debt, including obligations under the Notes, complete anticipated
capital expenditures and fund working capital requirements.
Operating Activities
In the first nine months of 2002, the Company generated a positive $17.5
million in cash flow from operations compared to $16.9 million for the same
period in 2001. Net earnings for the first nine months of 2001 were $4.0 million
compared with a net loss of $9.8 million in the first nine months of 2002.
Net cash provided by operating activities consists of our net income
increased by non-cash expenses, such as depreciation and amortization of
deferred expenses, and adjusted by changes in working capital.
Investing Activities
During the first nine months of 2002, the 60% owned subsidiary, Braddock
Shipping Inc., disbursed $16.7 million in the purchase of the Cape Pampas
compared to $4.1 millon in the same period of 2001 and $5.8 million in dry dock
expenses (Princess Pia, Princess Laura, Princess Marisol, Alianza G3 and Alianza
G1) compared to $7.3 millon in the same period of 2001.
Financing Activities
Net cash provided by financing activities increased by $7.6 million during
the first nine months of 2002. The increase in cash provided by financing
activities in the first nine months of 2002 is mainly attributable to the draw
down of $11.0 million of the Ultracape loan facility agreed to with Credit
Agricole Indosuez, partially compensated by repayments of principal and interest
installments which became due during the first nine months of 2002.
Recent Developments
On October 18, 2002, the Company entered into an agreement to purchase the
tanker "Rio Grande" for a purchase price of $1.0 million from ESSO S.R.L., a
non-related company. The purchase will be funded from the proceeds of the sale
of the "Princess Fatima."
On November 15, 2002, pursuant to the agreement signed with AIG-GE Capital
Latin American Infrastructure Fund (LAIF) on April 18, 2002, the Company entered
into a Common Shareholders Agreement and a Subscription Agreement with LAIF and
Comintra Enterprice Ltd. These agreements regulate the formation, governance of
and capital contributions to UP Offshore Ltd. Bahamas.
The Company has committed to contribute up to $12.5 million for an initial
equity stake of 22.7% in UP Offshore Ltd. Bahamas, however, the Company will
control 50.1% of the voting power of UP Offshore Ltd.
UP Offshore (Bahamas) Ltd. and its fully owned subsidiary UP Offshore
(Panama) S.A. has entered into a Loan Agreement with the International Finance
Corporation (IFC) which, together with a similar loan between UP Offshore Apoio
Maritimo Ltda. (another wholly owned subsidiary of UP Offshore (Bahamas) Ltd.)
and IFC, will provide the financing for the construction of a total of 6 PSV
Platform supply vessels. The maximum total available under both loan facilities
will be $60 million.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
Condensed Consolidated Financial Statements
for the nine month periods ended September 30, 2002 and 2001
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2002 AND 2001
(Unaudited)
(stated in thousands of U.S. dollars)
2002 2001
--------- ---------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 9,703 $ 13,971
Restricted cash 2,036 --
Investments 840 --
Accounts receivable, net 6,756 10,581
Due from affiliates 12,102 8,351
Inventories 1,558 2,293
Prepaid expenses 4,485 5,431
Other receivables 7,427 8,284
--------- ---------
Total current assets 44,907 48,911
--------- ---------
NONCURRENT ASSETS
Dry Dock 10,762 12,075
Other receivables 2,964 3,509
Property and equipment, net 137,275 138,691
Investment in affiliates 23,233 24,013
Other assets 3,222 3,827
--------- ---------
Total noncurrent assets 177,456 182,115
--------- ---------
Total assets $ 222,363 $ 231,026
========= =========
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 4,675 $ 8,440
Due to affiliates 521 --
Other financial payables (note 4) 17,591 19,759
Other payables 311 756
--------- ---------
Total current liabilities 23,098 28,955
--------- ---------
NONCURRENT LIABILITIES
Long-term debt, net of current portion (note 4) 135,000 135,000
Other financial payable, net of current portion (note 4) 22,305 18,080
--------- ---------
Total noncurrent liabilities 157,305 153,080
--------- ---------
Total liabilities $ 180,403 $ 182,035
--------- ---------
MINORITY INTERESTS 3,328 --
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 2,134,451 shares authorized 20 21
and issued (note 5)
Paid-in capital 68,346 67,194
Treasury stock (note 5) (20,332) (20,223)
Retained earnings (9,402) 1,999
--------- ---------
Total stockholders' equity $ 38,632 $ 48,991
--------- ---------
Total liabilities, minority interest and stockholders' equity $ 222,363 $ 231,026
========= =========
The accompanying notes to the condensed consolidated financial statements
are an integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(Unaudited)
(stated in thousands of U.S. dollars)
2002 2001
-------- --------
REVENUES
Freight revenues $ 16,831 $ 57,981
Freight revenues from related parties 991 2,694
Hire revenues 29,714 18,377
Hire revenues from related parties 7,406 8,266
-------- --------
Total revenues 54,942 87,318
-------- --------
OPERATING EXPENSES
Voyage expenses (6,999) (22,133)
Running costs (20,179) (26,557)
Amortization of Dry dock expenses (6,734) (5,314)
Depreciation of property and equipment (12,494) (12,102)
Management fees to related parties (2,522) (2,440)
Administrative expenses (2,390) (3,141)
Special exchange differences (2,704) --
-------- --------
Total operating expenses (54,022) (71,687)
-------- --------
Operating profit 920 15,631
======== ========
OTHER INCOME (EXPENSES)
Financial expense (12,430) (13,760)
Financial income 257 188
Investment in subsidiaries 722 837
Other income, net 971 1,524
-------- --------
Total other expenses (10,480) (11,211)
-------- --------
(Loss) income before tax on minimum presumed income (9,560) 4,420
and minority interest
Tax on minimum presumed income (183) (375)
Minority interest (28) --
-------- --------
Net (loss) income for the period $ (9,771) $ 4,045
======== ========
The accompanying notes to the condensed consolidated financial statements
are an integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(Unaudited)
(stated in thousands of U.S. dollars)
Common Paid-in Treasury Retained Total Total
Balances stock capital stock earnings 2002 2001
-------- -------- -------- -------- -------- -------- --------
At beginning of year 20 67,781 (20,332) 369 47,838 42,235
- Increase capital -- 565 -- -- 565 2,711
- Net (loss) income for
the period -- -- -- (9,771) (9,771) 4,045
-------- -------- -------- -------- -------- --------
At end of period 2002 $ 20 $ 68,346 $(20,332) $(9,402) $ 38,632
======== ======== ======== ======== ========
At end of period 2001 $ 21 $ 67,194 $(20,223) $ 1,999 $48,991
======== ======== ======== ======== ========
The accompanying notes to the condensed consolidated financial statements
are an integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(Unaudited)
(stated in thousands of U.S. dollars)
2002 2001
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income for the period (9,771) 4,045
Adjustments to reconcile net (loss) income to
cash provided by (used in) operating activities:
Depreciation of property and equipment 12,494 12,102
Amortization of dry dock expenses 6,734 5,314
Note issuance expenses amortization 438 438
Accrued interest 3,709 --
Net income from investment in affiliate (722) (837)
Loss (income) from property and equipment sale 1,576 (1,036)
Changes in assets and liabilities, net:
(Increase) decrease in assets:
Accounts receivable 4,208 7,847
Due from affiliates 6,188 (4,015)
Receivable from shareholders -- (2,585)
Inventories (45) 139
Prepaid expenses (691) 44
Other receivables 173 (942)
Other assets 8 38
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 824 (4,142)
Due to affiliates (7,745) --
Other payables 135 448
-------- --------
Net cash provided by operating activities 17,513 16,858
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property and equipment purchase (16,695) (4,058)
Other receivables from sales in leasing -- 350
Increase in current investments (648) --
Dry dock expenses (5,805) (7,321)
Sales of property and equipment 1,867 3,550
-------- --------
Net cash used in investing activities (21,281) (7,479)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (repayment of) Short-term financial payables (3,543) (4,929)
Increase in Long-term financial payables 9,285 --
Minority interest in equity of subsidiary 3,328 --
Increase in paid in capital 565 5,296
Increase restricted cash - time deposits (2,036) --
-------- --------
Net cash used in financing activities 7,599 367
-------- --------
Net increase in cash and cash equivalents 3,831 9,746
Cash and cash equivalents at the beginning of year 5,872 4,225
-------- --------
Cash and cash equivalents at the end of period $ 9,703 $ 13,971
======== ========
The accompanying notes to the condensed consolidated financial statements
are an integral part of these statements.
ULTRAPETROL (BAHAMAS) LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2002 AND 2001
(Unaudited)
(stated in thousands of U.S. dollars)
1. BASIS OF PRESENTATION
The condensed consolidated financial statements for the nine month periods
ended September 30, 2002 and 2001, were prepared by the Company without
audit. In the opinion of management, all adjustments of a normally
recurring nature necessary to present fairly the financial position,
results of operations, and cash flows for the interim periods were made.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, were condensed or omitted. Accordingly, these
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in
the consolidated financial statements for the years ended December 31,
2001, 2000 and 1999.
2. FOREIGN CURRENCY
Foreign currency transactions and financial statements are translated in
accordance with Statement of Financial Accounting Standards No. 52, Foreign
Currency Translation. All of the Company's subsidiaries use the U.S. dollar
as their functional currency. Transaction gains and losses that arise from
exchange rate fluctuations applicable to transactions denominated in a
currency other than the Company's or its subsidiaries' functional currency
are included in the results of operations as incurred.
Beginning in 1991, the Argentine peso ("peso") was tied to the U.S. dollar
at a rate of one peso to one U.S. dollar. As a result of economic
instability and substancial withdrawals from the banking system, in early
December 2001, the Argentine government instituted restrictions that
prohibit foreign money transfers without Central Bank approval and only
allow cash withdrawals from bank accounts for personal transactions in
small amounts with certain limited exceptions. While the legal exchange
rate remained at one peso to one U.S. dollar, financial institutions were
allowed to conduct only limited activity due to these controls, and
currency exchange activity was effectively halted except for personal
transactions in small amounts. These actions by the government in effect
caused a devaluation of the peso in December 2001.
On January 6, 2002, the Argentine government abolished the one peso to one
U.S. dollar legal exchange rate. On January 9, 2002, Decree 71 created a
dual exchange market whereby foreign trade transactions were conducted at
an official exchange rate of 1.4 peso to one U.S. dollar and other
transactions were conducted in a free floating exchange market. On February
8, 2002, Decree 260 unified the dual exchange market and allowed the peso
to float freely with the U.S. dollar. The exchange rate at September 30,
2002, was 3.75 pesos to one U.S. dollar.
On February 3, 2002, Decree 214 required all contracts that were previously
payable in U.S. dollars to be payable in pesos. Pursuant to an emergency
law passed on January 10, 2002, U.S. dollar obligations between private
parties due after January 6, 2002, were to be liquidated in pesos at a
negotiated rate of exchange which reflects a sharing of the impact of the
devaluation. The Company's settlements in pesos of the existing U.S.
dollar-denominated agreements were completed by June 30, 2002, thus, future
periods should not be impacted by this mandate.
Absent the emergency law that was enacted on January 10, 2002, the
devaluation of the peso would have had no effect on the Company's U.S.
dollar-denominated receivables at December 31, 2001. A $2.7 million loss
resulting from the involuntary conversion was recorded as of September 30,
2002 and is reflected in "Special exchange differences" in the accompanying
statement of income (loss).
3. SHARE SALE AGREEMENTS SIGNED BY THE COMPANY
On October 12, 2000 the Company, through its wholly-owned subsidiary,
Avemar Holdings (Bahamas) Limited ("Avemar"), purchased 537,144 shares of
the Company previously owned by SII, one of the Company's two original
shareholders. SII had previously granted a proxy in favor of Los Avellanos,
the remaining original shareholders of the Company, thereby granting Los
Avellanos voting control of the majority of the voting stock of the
Company. The nominal purchase price of said shares was $20,000. The
purchase price also included a contingent element based upon the aggregate
statement for EBITDA for the fiscal years ending December 31, 2000, 2001
and 2002.
On June 28, 2001, the Company issued 138.443 new shares for a total value
of $5,296 which were totally subscribed by Inversiones Los Avellanos, one
of the Company's original shareholders and was paid with $2,711, $532 and
$54 on July, November and December 2001, respectively, and $565 on June
2002, with the balance to be paid in several installments through December
2002.
The Company has an option to repurchase 25,212 shares for a total price of
$0.9 million. This option can be exercised up to July 2003.
4. LONG-TERM DEBT AND OTHER FINANCIAL PAYABLES
On March 30, 1998, the Company successfully completed its offering of
$135,000 principal amount of its 10.5% First Preferred Ship Mortgage Notes
due 2008 ("the Notes"). In accordance with the terms provided in such
Offering, the Notes to be issued are fully and unconditionally guaranteed
on a joint and several basis by certain subsidiaries of the Company, and
are secured by first ship mortgage on vessels already owned by the
guarantors and on additional vessels that the Company purchased with the
proceeds obtained from the Offering.
As of September 30, 2002, the Company's noncurrent portion of long-term
debt amounts to $135,000. It exclusively comprises the debt principal
amount of the Notes. The related interest expense, totaling $7,088 is
accrued in other financial payables.
On June 27, Ultracape (Holdings) Ltd, a Panamanian corporation of which the
Company is one of the shareholders (see Note 6), entered into a term-loan
facility from Credit Agricole Indosuez to Braddock Shipping Inc. and
Invermay Shipping Inc., wholly-owned subsidiaries of Ultracape, of up to
$27 million to finance the acquisition of up to two capesize vessels. The
loan facility has been provided in two tranches. The amount of the first
tranche of $11 million has been used for the purpose of financing the
purchase price of mv Cape Pampas. The amount of the second tranche is to be
agreed in respect of the purchase price of the second vessel, not yet
identified. Each of the vessels are to be secured by a first preferred
Panamanian ship mortgage.
The balances of financial payables as of September 30, 2002 and 2001 are as
follows:
Nominal value
Financial institution Agreement ----------------------- Accrued
/ other year Current Noncurrent expenses Total Average rate
------------------------- --------- -------- ---------- -------- -------- ------------
Total 2001 $ 12,671 $153,080 $ 7,088 $172,839
======== ======== ======== ========
Ultrapetrol Bahamas Private Investors (Notes) 1998 -- 135,000 7,088 142,088 10.5%
Ultrapetrol Bahamas S.I.I. 2000 2,800 -- 75 2,875 10.5%
Majestic Allfirst Bank 2001 2,000 -- -- 2,000 Libor + 1.5%
Kattegat Nedship Bank 2000 1,000 5,250 18 6,268 Libor + 1.25%
Majestic Allfirst Bank 2000 1,260 7,770 3 9,033 Libor + 1.75%
Stanmore Allfirst Bank 2000 1,000 -- -- 1,000 Libor + 2%
Parwood Commercial Allfirst Bank 2001 500 -- -- 500 Libor + 2%
Braddock Shipping Credit Agricole Indosuez 2002 1,747 9,285 100 11,132 Libor + 1.5%
-------- -------- -------- --------
Total 2002 $ 10,307 $157,305 $ 7,284 $174,896
======== ======== ======== ========
5. COMMON AND TREASURY STOCK
Ultrapetrol Bahamas has an authorized capital of $21, and one class of
shares of one series comprising 2,134,451 (2,065,760 paid-in and 68,691 not
yet paid-in) as of September 30, 2002 and 2001 respectively, common shares
with a par value of $0.01 each.
In addition, as of September 30, 2002, the Company registered $20,332, in
the Treasury Stock account, $20,000 of which corresponding to the amount
payable to SII mentioned in note 3, and $332 to direct cost of acquisition.
6. NEW OPERATION AND ORGANIZATION OF ULTRACAPE (HOLDINGS) LTD.
On April 18, 2002 the Company entered into an agreement with AIG/GE Capital
Latin Infrastructure Fund LP, a Bermuda Limited partnership of LAIF,
relating to the creation of Ultracape (Holdings) Ltd. ("Ultracape") in
which both Ultrapetrol and LAIF are shareholders. Ultracape will purchase
second hand modern capesize bulkcarriers to operate in the international
market.
7. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Nine month periods
ended, September 30
---------------------
2002 2001
------ ------
- Interest $8,291 $8,908
- Income taxes 85 266
------ ------
Interest and income taxes paid $8,376 $9,174
====== ======
8. SUPPLEMENTAL GUARANTOR INFORMATION
The First Preferred Ship Mortgage Notes issued on March 30, 1998, described
in note 4, are fully and unconditionally guaranteed by certain subsidiaries
of the Company.
The subsidiaries which offered its assets in collateral of the above -
mentioned indebtedness are: Ultrapetrol Argentina, Imperial, Cavalier,
Regal, Baldwin, Tipton, Kingsway, Plate Princess, Panpetrol, Oceanview,
Kingly, Sovereign, Monarch, Noble, Oceanpar and Parfina ("Subsidiary
Guarantors").
Supplemental combining financial information for the Guarantors
Subsidiaries 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 these condensed consolidated
financial statements.
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
BALANCE SHEETS
AS OF SEPTEMBER 30, 2002 AND 2001
(Unaudited)
(stated in thousands of U.S. dollars)
2002 2001
-------- --------
ASSETS
Current assets $ 27,000 $ 32,989
Noncurrent assets 102,692 116,167
-------- --------
Total assets $129,692 $149,156
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $114,988 $121,150
Stockholders' equity 14,704 28,006
-------- --------
Total liabilities and stockholders' equity $129,692 $149,156
======== ========
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
STATEMENTS OF INCOME (LOSS)
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(Unaudited)
(stated in thousands of U.S. dollars)
2002 2001
-------- --------
Freight revenues $ 17,419 $ 53,816
Hire revenues 24,810 18,611
-------- --------
Total revenues 42,229 72,427
Operating expenses (44,357) (60,906)
-------- --------
Operating (loss) profit (2,128) 11,521
Other expenses (9,719) (10,411)
-------- --------
(Loss) income before tax on minimum presumed
income (11,847) 1,110
Tax on minimum presumed income (176) (279)
-------- --------
Net (loss) income for the period $(12,023) $ 831
======== ========
SUPPLEMENTAL CONDENSED COMBINED SUBSIDIARY GUARANTORS
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
(Unaudited)
(stated in thousands of U.S. dollars)
2002 2001
-------- --------
Net (loss) income for the period $(12,023) $ 831
Adjustments to reconcile net (loss) income to cash
provided by (used in) operating activities: 16,516 6,269
-------- --------
Net cash provided by operating activities 4,493 7,100
Net cash used in investing activities (3,874) (5,890)
Net cash provided by (used in) financing activities 40 (2,752)
-------- --------
Net increase (decrease) in cash and cash equivalents 659 (1,542)
Cash and cash equivalents at the beginning of the year 247 3,209
-------- --------
Cash and cash equivalents at the end of the period $ 906 $ 1,667
======== ========
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: November 15, 2002 By: /s/ Felipe Menendez
-------------------
Felipe Menendez
President
02351.0001 #364493