After struggling shipping company NewLead Holdings Ltd. received a deslisting notice from the Nasdaq exchange, it says it plans to request a hearing before the Nasdaq Hearings Panel to present a plan to regain listing compliance.
Nasdaq sent the company a delisting notice on June 25 after determining that the company hadn't been able to maintain the $1 minimum price requirement and that it had made false and misleading public disclosures. The exchange told NewLead that company's stock would be deslisted unless NewLead requested a hearing before the panel by July 7.
NewLead, headquartered in Piraeus, Greece, is a shipping, logistics and commodity company that owns three dry bulk vessels, one Handysize vessel and two Panamax vessels. The company also manages three third-party tanker vessels, two small bitumen tanker vessels and one Handysize MR product tanker. Additionally, the company owns a wash plant and a mine in Kentucky, and plans to develop another mine.
The company filed a notice with the U.S. Securities and Exchange Commission on June 26 to amend a previously filed document on which it had misstated the amount of shares that were issued to MG Partners Ltd. (MGP) as more than 8.5 million, when it should have been 776,104. The shares were related to a settlement between NewLead, MGP, and Hanover Holdings I LLC.
Hanover filed a lawsuit against NewLead in November 2013 to recover more than $44.8 million in overdue debt, which Hanover eventually assigned to MGP. The group settled in December, and the shares were part of that agreement.
The company also filed an amendment on June 20 to update a statement from the company's annual report, which said that that NewLead rented office space in New York from Aurora Properties Inc., which it did not. NewLead says that Aurora, which is owned by Michail Zolotas, NewLead's CEO, received reimbursement payments in the form of common stock on Zolatas' behalf for expenses he incurred related to travel, business and other things at Zolatas' request.
The company has already made significant restructuring efforts.
In 2011, NewLead restructured debt in order to increase liquidity, normalize trade vendor payments and deleverage the company. As part of the restructuring, the company sold about 20 vessels between 2011 and 2012.
The company is still in restructuring negotiations with Piraeus Bank.
But since that restructuring, NewLead has defaulted under each financing document for failing to make amortization and interest payments, as well as satisfy financial covenants and triggering cross-default provisions, the company says in an SEC filing. As of May 9, NewLead was in default under credit agreements with Pireaus Bank, Portigon AG, Mojave Finance Inc., a 4.5 percent senior convertible note due in 2022 and 7 percent notes.
The company concluded that because of losses, working capital deficiencies, negative operating cash flow and shareholders' deficiency, there is substantial doubt about continuing as a going concern, or without the threat of liquidation.
In the May 9 filing, the company said it has been unable to generate sustainable positive cash flows from operating activities, partially because of the volatility surrounding charter rates for bulk shipping vessels.
The company said the company's future depends on the ability to receive financing, which it is trying to secure. NewLead says it plans to explore strategic alternatives, including the sale of debt or equity, to raise additional capital.
The company had a deficit of more than $973 million as of December 31. In 2013, the company's net loss decreased from 2012, from about $404 million to about $158 million.
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