U.S. Shipping Partners L.P. (NYSE: USS) todayannounced that while it experienced increased demand for its Integrated TugBarges ("ITBs") and increased utilization of its chemical fleet since thefiling last month of its Quarterly Report on Form 10-Q for the firstquarter of 2008, business conditions remain challenging due to high crudeoil prices and reduced demand in the Jones Act market. There can be noassurance that this improved performance will continue in future months. Inaddition, despite improved market conditions since the filing of the Form10-Q, utilization and spot market rates remain lower than in the comparableperiod in 2007.
As previously announced, the Partnership has retained Greenhill & Co. LLCand Jefferies & Company to assist it in exploring strategic alternatives,which could include, among other things, a sale or recapitalization of thePartnership, the sale of new equity or other methods of enhancing thecapitalization and liquidity of the Partnership. In order to give thePartnership adequate time to pursue strategic alternatives, the Partnershiphas, based on discussions with the agent bank for its lenders, determinedto enter into negotiations with its lenders to amend certain financialratio covenants under its senior credit facility.
As previously announced, due to market conditions, the Partnership may fallout of compliance with these covenants as measured at the end of the secondor third quarter. There can be no assurance that the negotiations to amendthese covenants will be successful. If the Partnership is not incompliance with its financial covenants, the lenders will have a number ofremedies, including preventing the Partnership from making additionalborrowings under its revolving credit facility and not permitting thePartnership to make distributions on its common units until the Partnershipis again in compliance. The Partnership expects that any amendment to itsfinancial covenants will require the payment of fees and a higher rate ofinterest, which would negatively impact the Partnership's results ofoperations, and will likely require the suspension of the Partnership'scommon unit distribution.
About U.S. Shipping Partners L.P.
U.S. Shipping Partners L.P. is a leading provider of long-haul marinetransportation services, principally for refined petroleum products,petrochemical and commodity chemical products, in the U.S. domestic"coastwise" trade. The Partnership's existing fleet consists of eleven tankvessels: six integrated tug barge units; one product tanker; three chemicalparcel tankers and one ATB that was delivered in June 2007 and enteredservice in July 2007. The Partnership has embarked on a capitalconstruction program to build additional ATBs and, through a joint venture,additional tank vessels that upon completion will result in the Partnershiphaving one of the most modern fleets in service. For additional informationabout U.S. Shipping Partners L.P., please visit www.usslp.com.
This press release may include "forward-looking statements" as defined bythe Securities and Exchange Commission. All statements, other thanstatements of historical facts, included in this press release that addressactivities, events or developments that the Partnership expects, believesor anticipates will or may occur in the future are forward-lookingstatements. These statements are based on certain assumptions made by thePartnership based on its experience and perception of historical trends,current conditions, expected future developments and other factors itbelieves are appropriate in the circumstances. Such statements are subjectto a number of assumptions, risks and uncertainties, many of which arebeyond the control of the Partnership, which may cause our actual resultsto differ materially from those implied or expressed by the forward-lookingstatements. Such assumptions, risks and uncertainties are discussed indetail in the Partnership's filings with the SEC and include, among otherthings, the willingness of our lenders to amend our credit agreement oncommercially acceptable terms, increased financing costs, future charterrates, demand in the spot market for vessels and timely and on-budgetdelivery in the second half of 2008 of two ATBs currently underconstruction.
Contact Information:
Albert Bergeron
Chief Financial Officer
U.S. Shipping Partners L.P.
1-866-467-2400
