US Shipping to seek to amend credit facility

Petroleum and chemical shipper U.S. Shipping Partners LP said Wednesday that challenging business conditions are forcing it to enter into negotiations with its lenders to amend its senior credit facility.

Shares lost nearly half their value, plunging $3.06, or 41.6 percent, to $4.29 in afternoon trading. Shares bottomed out at $4.01 earlier in the session. In the past 12 months, the stock has traded between $6.91 and $22.45.

U.S. Shipping expects that any amendment to its financial covenants will require fees and a higher interest rate, which would negatively impact its operating results, and will likely lead to the suspension of the company's common unit distribution.

Despite increased demand for its integrated tug barges and increased use of its chemical fleet, business conditions remain tough because of high crude oil prices, the company said.

As previously announced, U.S. Shipping Partners has retained Greenhill & Co. LLC and Jefferies & Co. to assist it in exploring strategic alternatives, including a possible sale or recapitalization of the partnership.

The company has also said it may fail to comply with the current covenants of the credit facility by the end of the second or third quarter. If this happens, the lenders may prevent the company from borrowing more, U.S. Shipping said.