Andrew Prossin, managing director of One Ocean Expeditions (OOE), has detailed the company’s challenges in a recent affidavit filing for the company’s bankruptcy with the Supreme Court of British Columbia.
- Each year, prior to the company’s difficulties it ran about 70 voyages.
- “We were considered one of the largest private Canadian vessel companies and had anticipated gross revenues in 2020 to exceed $75 million,” Prossin said.
Prior to the company’s financial difficulties, OOE had 30 to 40 full-time land based employees, 15 to 20 land based contractors, 300 full-time field contractors and 200 full-time independent crew contractors.
- Difficulties started in August 2018, according to the filing, with the grounding of the Akademik loffee (Al), which was on a charter deal with PP Shirshov Institute of Oceanology and its related company Terragelida Ship Management Limited.
- The PP Shirshov Charter was originally entered into in 2012 and granted One Ocean the option to renew each year indefinitely. The PP Shirshov Charter had been renewed most recently on June 1, 2018.
- One Ocean paid a flat rate for the vessels for a minimum of 195 revenue days per year.
- The grounding of the Akademik loffee led to nine cancelled voyages that were mostly sold out, according to the filing.
- One Ocean suffered costs and liabilities associated with the grounding of the ship, repairs, and subsequent delay in excess ofS$6.5 million, which primarily represents lost revenue from canceled trips, but includes other costs associated with last minute cancelations and handling of passengers, the company said.
- Following the running aground, from September 2018 to April 2019, One Ocean entered into negotiations with PP Shirshov to settle its claim for losses due to the grounding. Under the PP Shirshov Charter, according to One Ocean, the PP Shirshov was liable for the losses associated with the nine voyage cancelations and the repairs of Al. However, PP Shirshov contested its liability, Prossin said.
- In April 2019, after eight months of discussions, the PP Shirshov withdrew from all negotiations regarding the foregoing claim, and purported to terminate the PP Shirshov Charter, according to the filing.
- In May 2019, PP Shirshov repossessed both ships and sailed them back to Russia. The repossession was said to have happened suddenly and without notice to One Ocean.
- At the time of the repossession, there was approximately $400,000 in prepaid charter hire on one vessel and $200,000 in prepaid charter hire on the other, in addition to other One Ocean assets aboard the vessels such as food and drink inventory.
- One Ocean was forced to cancel all remaining scheduled voyages on the Russian ships, which resulted in costs and liabilities of approximately $12.5 million, which primarily represents lost revenue from canceled trips, but also includes other costs associated with last minute cancellations and handling of passengers.
- That, in turn, put enormous financial strain on One Ocean, according to the affadavit. One Ocean’s sales revenues dropped from excess of $1million a week to less than $100,000 a week.
- In the summer of 2019, recognizing the financial difficulties resulting from these events, One Ocean sought operation financing from various sources, and by September 2019 had been negotiating long- term financing commitment to cover short term capital costs associated with replacing the lost vessels, as well as to provide long-term financial stability.
- The financing deal fell through, and the company was forced to halt operations on the Resolute.
- One Ocean was not able to make the scheduled charter payments owing to Bunnys Adventure, the shipowner, due October 1,2019, and November 1, 2019, and as a result, on or about November 9, 2019, Bunnys Adventure terminated the Bunnys Charter and repossessed the Resolute.
- The company had chartered the Resolute in 2018 on a bareboat charter deal for three years with an option to renew for 10 more years.
- One Ocean has also initiated arbitration proceedings against PP Shirshov, looking for damages of $6.5 million from the results of the grounding, and an additional $12.5 million for wrongful termination of the charter. The company also is asking for the charter deal to be reinstated.
- The company said it still has goods aboard the Resolute with a book value of $1.5 million; and goods aboard the Russian vessels with a book value of $1.5 million.