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Gulf Navigation Holding PJSC has signed an MoU, which could see an unnamed investor acquire shares and provide a cash injection of AED 120 million ($32.7 million) to the company as well as paying off part of its debts.
The company said the investor, referred to as a "potential strategic partner" is an unrelated entity, and the deal could take between three and four months to complete.
A consulting firm will be appointed to carry out a feasibility study to evaluate the company’s assets, the Dubai-based firm said in a statement to Dubai Financial Market (DFM), and if the deal goes ahead, the AED 120 million will be used to support expansion plans.
The shipping operator revealed accumulated losses of AED 667 million ($181.6 million) earlier this month, equivalent to 52.3% of capital ratio.
Auditors EY said in the firm’s Q3 2022 financial results that the group’s liabilities exceed its assets by AED 90.3 million as of September 30 2022, down from AED 127.9 million at December 31 2021.
That and other matters indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern, the financial report said.
The group announced a profit of AED 4.2 million in Q3 2022, after a AED 14.6 million loss in Q3 2021. Operating revenue for the quarter was AED 31.7 million, up from AED 27 million in 2021.
Analysis of accumulated losses cited lower revenue due to COVID-19 impact, high net finance cost, the write-off of Gulf Navigation 1, which sank in September 2020, and the impact of the impairment of vessels on goodwill.
(Writing by Imogen Lillywhite; editing by Seban Scaria)
