SINGAPORE (April 19): Marco Polo Marine has issued a profit warning ahead of its second quarter results, according to a report by Lim & Tan Securities.

The group says it expects to report a net loss in 2Q17 amid the challenging market environment, and intends to undertake a refinancing and debt restructuring exercise of all its current secured and unsecured debts to strengthen its cash flow and working capital position.

“Even though the global oil price may have recently stabilised, the offshore marine industry continues to remain in a sustained depression, affecting all the companies in this sector,” says Lim & Tan’s Singapore research team.

Various payments due under Marco Polo Marine’s bank loans, invoices and contracts remain outstanding.

The group is in discussions with its bank lenders and other key creditors on restructuring these payments under the proposed debt restructuring plan that is within an acceptable level of gearing for the offshore marine industry.

At the same time, it is exploring avenues for fresh funding.

“Most of the group’s vessels are not chartered out, with a good number of the customers of the group not paying on time or at all, leading to an accumulation of substantial aged accounts receivables which, in turn, affected the group’s working capital,” says Lim & Tan.

Marco Polo Marine’s Loans Restructuring exercise has also been delayed as it is unable to secure a formal standstill agreement from its bank lenders or secure additional bank facilities that were initially anticipated from the bank lenders.

“The combination of these factors has led to cash flow challenges for the group,” says Lim & Tan.

However, brokerage adds that Marco Polo Marine is in active discussions with several potential investors in its continued bid to raise fresh capital.

Shares of Marco Polo Marine are trading flat at 5 Singapore cents as at 11.48am.