Annual report pursuant to Section 13 and 15(d)

Investments, At Equity, And Advances To 50% Or Less Owned Companies

v3.8.0.1
Investments, At Equity, And Advances To 50% Or Less Owned Companies
12 Months Ended
Dec. 31, 2017
Equity Method Investment, Summarized Financial Information [Abstract]  
Investments, At Equity, And Advances To 50% Or Less Owned Companies
4.
INVESTMENTS, AT EQUITY, AND ADVANCES TO 50% OR LESS OWNED COMPANIES
Investments, at equity, and advances to 50% or less owned companies as of December 31 were as follows (in thousands):
 
Ownership
 
2017
 
2016
Ocean Services:
 
 
 
 
 
Trailer Bridge(1)
55.3%
 
47,324

 
43,050

RF Vessel Holdings
50.0%
 
2,378

 

Golfo de Mexico
50.0%
 
2,500

 

KSM
50.0%
 
(199
)
 

SeaJon
50.0%
 

 
8,570

 
 
 
52,003

 
51,620

Inland Services:
 
 
 
 
 
SCFCo
50.0%
 
42,126

 
46,028

Bunge-SCF Grain
50.0%
 
16,166

 
16,176

SCF Bunge Marine(1)
57.0%
 
5,404

 
4,233

Other
50.0%
 
2,783

 
2,744

 
 
 
66,479

 
69,181

Witt O’Brien’s:
 
 
 
 
 
O’Brien’s do Brazil
50.0%
 
777

 
566

Other:
 
 
 
 
 
Hawker Pacific
34.2%
 
21,681

 
20,418

VA&E
41.3%
 
13,596

 
11,133

Avion
39.1%
 
11,400

 
14,783

Cleancor
50.0%
 
5,134

 
5,373

Other
34.0%
47.5
%
 
2,371

 
2,387

 
 
 
54,182

 
54,094

 
 
 
173,441

 
175,461


______________________
(1)
The Company’s ownership percentage represents its economic interest in the joint venture.
Combined Condensed Financial Information. Summarized financial information for the Company’s investments, at equity, excluding Dorian, SCFCo and Trailer Bridge, as of and for the years ended December 31 was as follows (in thousands):
 
2017
 
2016
 
 
Current assets
523,343

 
573,035

 
 
Noncurrent assets
124,733

 
141,549

 
 
Current liabilities
407,812

 
526,830

 
 
Noncurrent liabilities
81,899

 
27,461

 
 
 
2017
 
2016
 
2015
Operating Revenues
$
1,068,190

 
1,019,658

 
869,973

Costs and Expenses:
 
 
 
 
 
Operating and administrative
1,035,952

 
951,019

 
794,120

Depreciation
11,810

 
24,936

 
37,511

 
1,047,762

 
975,955

 
831,631

Gains (Losses) on Asset Dispositions and Impairments, Net
16,115

 
(6,339
)
 
27

Operating Income
$
36,543

 
37,364

 
38,369

Net Income
$
23,383

 
4,961

 
19,831


As of December 31, 2017 and 2016, cumulative undistributed net losses of 50% or less owned companies accounted for by the equity method and included in the Company’s consolidated retained earnings were $40.1 million and $35.0 million, respectively.
Dorian. On December 21, 2015, Mr. Fabrikant, the Executive Chairman and Chief Executive Officer of SEACOR, resigned from Dorian’s board of directors. As a consequence, the Company determined it no longer exercised significant influence over Dorian and marked its investment, at equity, in Dorian to fair value resulting in a loss of $32.3 million, net of tax, which is included in equity in earnings (losses) of 50% or less owned companies in the accompanying consolidated statements of income (loss). The Company’s investment in Dorian is classified as marketable securities in the accompanying consolidated balance sheet (see Note 1).
Dorian files periodic reports on Form 10-Q and Form 10-K with the Securities and Exchange Commission (“SEC”). Summarized financial information for Dorian for the year ended December 31 was as follows (in thousands):
 
2015(1)
Operating Revenues
$
239,206

Operating Income
126,820

Net Income
118,356


______________________
(1)
Financial information provided is as of and for the year ended December 31, 2015 as it was not practical to obtain financial information through the period ended December 21, 2015 without undue difficulty or cost.
Trailer Bridge. Trailer Bridge, Inc. (“Trailer Bridge”), an operator of U.S.-flag RORO and deck barges, provides marine transportation services between Jacksonville, Florida, San Juan, Puerto Rico and Puerto Plata, Dominican Republic. In December 2016, the Company and other major investors recapitalized Trailer Bridge by agreeing to exchange outstanding subordinated debt for equity. As a consequence of the recapitalization, the Company’s noncontrolling interest in Trailer Bridge increased to 55.3% resulting in an equity loss of $2.2 million, net of tax. The Company provided secured financing to Trailer Bridge and during the years ended December 31, 2017 and 2016, the Company provided advances of $2.0 million and $1.7 million, respectively, on the secured financing. During the years ended December 31, 2017 and 2015, the Company received repayments of $6.0 million and $18.7 million, respectively, on the secured financing. As of December 31, 2017, there was no outstanding balance on the secured financing. During the years ended December 31, 2017, 2016 and 2015, the Company received $3.1 million, $3.0 million and $0.4 million, respectively, for the time charter of a U.S.-flag harbor tug to Trailer Bridge. Prior to July 1, 2016, the Company also provided Trailer Bridge with technical and commercial management services and during the years ended December 31, 2016 and 2015, received $0.3 million and $0.8 million, respectively, for these services.
RF Vessel Holdings. On July 3, 2017, ISH emerged from bankruptcy pursuant to its chapter 11 plan of reorganization and SEACOR Ocean Transport Inc., a wholly-owned subsidiary of SEACOR, acquired all of the equity of the reorganized ISH (see Note 2). As part of the ISH business acquisition, the Company acquired a 100% interest in Rail-Ferry Vessel Holdings LLC (“RF Vessel Holdings”), which owns two foreign-flag rail ferries. On September 1, 2017, the Company sold a 50% interest in RF Vessel Holdings to G&W Agave Holdings (MI) Inc. for $1.9 million and retained a 50% ownership interest in the newly-formed joint venture.
Golfo de Mexico. On July 3, 2017, ISH emerged from bankruptcy pursuant to its chapter 11 plan of reorganization and SEACOR Ocean Transport Inc., a wholly-owned subsidiary of SEACOR, acquired all of the equity of the reorganized ISH (see Note 2). As part of the ISH business acquisition, the Company acquired a 100% interest in Golfo de Mexico Rail-Ferry Holdings LLC (“Golfo de Mexico”), which operates the two foreign-flag rail ferries owned by RF Vessel Holdings. On September 1, 2017, the Company sold a 50% interest in Golfo de Mexico to G&W Agave Holdings (MI) Inc. for $3.1 million and retained a 50% ownership interest in the newly-formed joint venture. During the year ended December 31, 2017, the Company received dividends of $0.3 million. The Company also provides Golfo de Mexico with administrative management services and received $0.3 million for the year ended December 31, 2017, for these services.
KSM. On April 1, 2017, the Company and Kotug Caribbean Holdings LLC formed Kotug Seabulk Maritime LLC (“KSM”) to operate four foreign-flag harbor tugs and one foreign-flag ocean liquid tank barge in Freeport, Grand Bahama. The Company has a 50% ownership interest in KSM. During the year ended December 31, 2017, the Company and its partner each contributed capital of $0.3 million. The Company also provides KSM with technical, commercial and administrative management services and received $0.3 million for the year ended December 31, 2017, for these services.
SeaJon. SeaJon LLC (“SeaJon”) owned an articulated tug-barge operating in the Great Lakes trade that was sold to a thrid party in June 2017. During the year ended December 31, 2017, the Company received capital distributions of $3.5 million and dividends of $12.5 million from SeaJon. During the years ended December 31, 2016 and 2015, the Company received dividends of $0.6 million and $0.6 million, respectively, from SeaJon.
SEA-Access. On November 7, 2014, the Company and Access Shipping Limited Partnership formed SEA-Access LLC (“SEA-Access”) to acquire and operate the M/V Eagle Ford, a U.S.-flag 124,000 dwt crude oil tanker. In June 2016, the M/V Eagle Ford was scrapped and, as of December 31, 2016, SEA-Access had been liquidated. During the year ended December 31, 2016, the Company received capital distributions of $8.4 million and dividends of $2.0 million from SEA-Access. During the year ended December 31, 2015, the Company received capital distributions of $8.3 million and dividends of $4.4 million from SEA-Access. The Company also provided SEA-Access with technical and commercial management services and received $0.5 million and $1.0 million for the years ended December 31, 2016 and 2015, respectively, for these services.
SeaJon II. SeaJon II LLC (“SeaJon II”) was formed to own a U.S.-flag offshore tug on time charter to Trailer Bridge. During the year ended December 31, 2015, the Company and its partner each contributed capital of $1.0 million in cash. During the year ended December 31, 2015, the Company received capital distributions of $0.3 million from SeaJon II. The Company also provides SeaJon II with technical and commercial management services and received $0.1 million and $0.1 million, during the years ended December 31, 2016 and 2015, respectively, for these services. On December 2, 2016, the Company acquired a controlling interest in SeaJon II through the acquisition of its partner’s 50% equity interest for $3.4 million in cash (see Note 2). Upon the change in control, the Company marked its investment in SeaJon II to fair value resulting in a loss of $1.9 million, net of tax, which is included in equity in earnings (losses) of 50% or less owned companies in the accompanying consolidated statements of income (loss) (see Note 10).
SCFCo. SCFCo Holdings LLC (“SCFCo”) was established to operate dry-cargo barges and towboats on the Parana-Paraguay Rivers and a terminal facility at Port Ibicuy, Argentina. During the years ended December 31, 2017, 2016 and 2015, the Company contributed capital of $0.4 million, $0.8 million and $18.0 million, respectively, to SCFCo. During the years ended December 31, 2017 and 2016, the Company provided SCFCo with working capital advances and loans of $2.5 million and $1.8 million, respectively. During the years ended December 31, 2017 and 2015, the Company received repayments on these working capital advances, loans and financings of $1.7 million and $14.0 million, respectively. As of December 31, 2017, $30.3 million of working capital advances and loans remained outstanding. The Company also provides SCFCo with certain information technology services and received $0.1 million, $0.1 million and $0.2 million, respectively, for these services during the years ended December 31, 2017, 2016 and 2015. During the years ended December 31, 2016 and 2015, the Company identified indicators of impairment in its investment in SCFCo as a result of continuing losses and recognized impairment charges of $7.7 million and $21.5 million, respectively, for an other-than-temporary decline in the fair value of its investment (see Note 10). As of December 31, 2017, the Company’s carrying value of its investment in SCFCo was $26.5 million lower than its proportionate share of the underlying equity in SCFCo.
Summarized financial information for SCFCo as of and for the years ended December 31 was as follows (in thousands):
 
2017
 
2016
 
 
Current assets
$
7,924

 
$
8,549

 
 
Property and equipment, net
137,224

 
154,186

 
 
Current liabilities
14,263

 
14,825

 
 
Noncurrent liabilities
54,179

 
59,601

 
 
 
2017
 
2016
 
2015
Operating Revenues
$
44,177

 
$
43,711

 
$
82,835

Costs and Expenses:
 
 
 
 
 
Operating and administrative
40,106

 
38,980

 
73,587

Depreciation
17,803

 
17,560

 
17,751

 
57,909

 
56,540

 
91,338

Operating Loss
(13,732
)
 
(12,829
)
 
(8,503
)
Interest expense
(6,120
)
 
(6,565
)
 
(10,514
)
Other expense, net
(961
)
 
(657
)
 
(2,141
)
Net Loss
$
(20,813
)
 
$
(20,051
)
 
$
(21,158
)

Bunge-SCF Grain. Bunge-SCF Grain LLC (“Bunge-SCF Grain”) operates terminal grain elevators in Illinois. During the year ended December 31, 2015, the Company received $2.0 million of repayments of working capital advances. As of December 31, 2017, the total outstanding balance of working capital advances was $7.0 million. In addition, Bunge-SCF Grain operates and manages the Company’s grain storage and handling facility in McLeansboro, Illinois, and the Company received $1.1 million, $1.0 million and $1.0 million in rental income for the years ended December 31, 2017, 2016 and 2015, respectively. Certain dry-cargo barge pools managed by the Company provide freight transportation to Bunge-SCF Grain and those pools received $7.2 million, $7.2 million and $10.8 million for these services during the years ended December 31, 2017, 2016 and 2015, respectively.
SCF Bunge Marine. SCF Bunge Marine LLC (“SCF Bunge Marine”) provides towing services on the U.S. Inland Waterways, primarily the Mississippi River, Illinois River, Tennessee River and Ohio River. The Company time charters seven inland river towboats to SCF Bunge Marine, of which four are bareboat chartered-in by the Company from a third-party leasing company. The Company and its partner are required to fund SCF Bunge Marine, if necessary, to support the payment of its time charter obligations to the Company. Pursuant to the time charter, the Company received charter fees of $38.7 million, $35.0 million and $41.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. During the years ended December 31, 2017, 2016 and 2015, the Company received dividends of $0.1 million, $2.5 million and $4.0 million, respectively, from SCF Bunge Marine. In addition, during the years ended December 31, 2017, 2016 and 2015, SCF Bunge Marine received $41.4 million, $40.2 million and $47.9 million, respectively, for towing services provided to barge pools managed by the Company.
Other Inland Services. The Company’s other Inland Services 50% or less owned company operates a fabrication facility.
O’Brien’s do Brazil. O’Brien’s do Brazil Consultoria em Emergencias e Meio Ambiente S/A (“O’Brien’s do Brazil”) is an emergency consulting organization providing preparedness, response and recovery services in Brazil. During the years ended December 31, 2017, 2016 and 2015, the Company received dividends of $0.1 million, $0.1 million and $0.1 million, respectively.
Hawker Pacific. Hawker Pacific Airservices, Limited (“Hawker Pacific”) is an aviation sales and support organization and a distributor of aviation components from leading manufacturers. As of December 31, 2017, the Company had a $6.5 million letter of credit outstanding in support of certain Hawker Pacific performance guarantees. During the years ended December 31, 2017, 2016 and 2015, the Company received management fees of $0.3 million, $0.3 million and $0.3 million, respectively, from Hawker Pacific.
VA&E. On June 1, 2015, the Company contributed its 81.1% interest in the assets and liabilities of a previously controlled and consolidated subsidiary that operated its agricultural commodity trading and logistics business (including $3.5 million of cash on hand) in exchange for a 41.3% ownership interest in each of VA&E Trading USA LLC and VA&E Trading LLP (collectively “VA&E”), two newly formed 50% or less owned companies with certain subsidiaries of ECOM Agroindustrial Corp. Ltd. and certain managers of VA&E. VA&E primarily focuses on the global origination, trading and merchandising of sugar, pairing producers and buyers and arranging for the transportation and logistics of the product. Through November 2016, the Company provided VA&E an unsecured revolving credit facility of up to $6.0 million, a term loan of $1.1 million and a subordinated loan of $3.5 million. In December 2016, the Company maintained its subordinated loan of $3.5 million, provided an uncommitted credit facility of up to $3.5 million and terminated the revolving credit facility and term loan. During the year ended December 31, 2017, VA&E borrowed $3.5 million on the credit facility. During the years ended December 31, 2016 and 2015, VA&E borrowed $10.0 million and $15.0 million, respectively, and repaid $12.4 million and $11.5 million, respectively, on the revolving credit facility. During the year ended December 31, 2016, the Company received repayments of $1.1 million on its term loan. During the year ended December 31, 2015, the Company and its partner each funded $1.0 million under the subordinated note executed upon formation of VA&E. As of December 31, 2017, the Company had outstanding advances of $7.6 million to VA&E inclusive of accrued and unpaid interest.
Avion. Avion Pacific Limited (“Avion”) is a distributor of aircraft and aircraft related parts. During the years ended December 31, 2017 and 2016, the Company made advances of $1.0 million and $3.0 million, respectively, to Avion. During the years ended December 31, 2017 and 2015, the Company received repayments on advances of $4.0 million and $3.0 million, respectively, from Avion. As of December 31, 2017, the Company had no outstanding advances to Avion.
Cleancor. CLEANCOR Energy Solutions LLC (“Cleancor”) is a full service solution provider delivering clean fuel to end users. During the year ended December 31, 2015, the Company provided Cleancor financing of $2.0 million for certain equipment, of which $1.9 million was outstanding as of December 31, 2017.
Other. The Company’s other 50% or less owned companies are primarily industrial aviation businesses in Asia. During the years ended December 31, 2016 and 2015, the Company contributed capital and made advances of $0.8 million and $0.2 million, respectively, to these 50% or less owned companies. During the year ended December 31, 2017, the Company received repayments on these advances of $0.4 million. As of December 31, 2017, total advances outstanding were $2.4 million.