Sri Lanka’s Mercantile Shipping to sell ships for Rs1.8bn to repay debt

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ECONOMYNEXT-Sri Lanka’s Mercantile Shipping Company is to sell two cargo ships owned by a subsidiary, Mercantile Emerald Shipping (Private) Limited’s (MESL), for a total of 1.8 billion rupees.

The sale of the ships to a buyer has been agreed with the German bank to which Mercantile Emerald Shipping has been unable to repay loans amid mounting losses.

A stock exchange filing said auditors Ernst & Young had agreed that the going concern matter they had raised over Mercantile Emerald Shipping has now been resolved and the subsidiary is to be wound up.

Mercantile Shipping’s two ships, Mercs Uva and Mercs Uhana, had been mortgaged to Bremer Landesbank-Germany, now merged with Norddeutsche Landesbank, from which MESL had borrowed.

The two ships are to be sold for 4.5 million euro each – about 1.8 billion rupees in total – and proceeds to be used to settle the mortgage loan, overdraft and related interest owed to Bremers Landbank of 4.7 billion rupees

MESL would then be liquidated as the ship sale would leave it without enough resources to settle remaining debt.

Bremer Landesbank has now discharged Mercantile Shipping of its liabilities concerning MESL with the contract to sell the two ships signed and sale to be completed within a year.

 (COLOMBO, 20 September, 2019)

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