Annual report pursuant to Section 13 and 15(d)

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

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Investments, At Equity, And Advances To 50% Or Less Owned Companies
12 Months Ended
Dec. 31, 2019
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 2019 2018
Ocean Services:
Trailer Bridge(1)
55.3%    $ 56,770    $ 56,364   
RF Vessel Holdings 50.0%    15,878    10,826   
Golfo de Mexico 50.0%    3,485    5,272   
KSM 50.0%    1,916    1,478   
78,049    73,940   
Inland Services:
SCFCo 50.0%    33,705    37,219   
Bunge-SCF Grain 50.0%    15,112    14,738   
SCF Bunge Marine(1)
62.5%    3,990    3,144   
Other 50.0%    2,285    2,796   
55,092    57,897   
Witt O’Brien’s:
O’Brien’s do Brazil 50.0%    1,274    472   
Other:
VA&E 23.8%    10,448    13,073   
Avion 39.1%    10,706    10,290   
Other 40.0%    47.5%    1,539    1,214   
22,693    24,577   
$ 157,108    $ 156,886   
______________________
(1)The Company’s ownership percentage represents its economic interest in the 50% or less owned company.
Combined Condensed Financial Information. Summarized financial information for the Company’s investments, at equity, excluding SCFCo and Trailer Bridge, as of and for the years ended December 31, was as follows (in thousands):
2019 2018
Current assets $ 228,420    $ 184,704   
Noncurrent assets 101,292    77,929   
Current liabilities 160,688    113,784   
Noncurrent liabilities 58,413    46,503   

2019 2018 2017
Operating Revenues $ 1,015,627    $ 786,717    $ 1,068,190   
Costs and Expenses:
Operating and administrative 1,005,757    771,324    1,035,952   
Depreciation 4,968    7,216    11,810   
1,010,725    778,540    1,047,762   
Gains on Asset Dispositions and Impairments, Net —    38    16,115   
Operating Income $ 4,902    $ 8,215    $ 36,543   
Net Income $ 2,922    $ 3,967    $ 23,383   
As of December 31, 2019 and 2018, 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 $69.8 million and $65.0 million, respectively.
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. The Company provided secured financing to Trailer Bridge and during the year ended December 31, 2017, the Company provided advances of $2.0 million and received repayments of $6.0 million on the secured financing. As of December 31,
2017, there was no outstanding balance on the secured financing. During the years ended December 31, 2019, 2018 and 2017, the Company earned revenues of $4.0 million, $3.5 million and $3.1 million, respectively, from the time charter of one U.S.-flag offshore tug to Trailer Bridge.
RF Vessel Holdings. On July 3, 2017, as part of the ISH Acquisition (see Note 2), 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. During the years ended December 31, 2019 and 2018, the Company and its partner each contributed capital of $4.7 million and $9.1 million, respectively, to RF Vessel Holdings primarily related to the construction of two new foreign-flag rail ferries with scheduled deliveries during 2021.
Golfo de Mexico. On July 3, 2017, as part of the ISH Acquisition (see Note 2), 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 years ended December 31, 2019 and 2018, the Company and its partner each contributed capital of $0.5 million and $4.6 million, respectively, to Golfo de Mexico. During the year ended December 31, 2017, the Company received dividends of $0.3 million from Golfo de Mexico. The Company provides Golfo de Mexico with technical, commercial, administrative and construction management services, and during the years ended December 31, 2019, 2018 and 2017, the Company received $1.8 million, $1.1 million and $0.3 million, respectively, for these services.
KSM. On April 1, 2017, the Company and Kotug Caribbean Holdings LLC formed Kotug Seabulk Maritime LLC (“KSM”). KSM operates four foreign-flag harbor tugs, two foreign-flag specialty vessels and one foreign-flag ocean liquid tank barge in Freeport, Grand Bahama, supporting terminal operations. During the years ended December 31, 2018 and 2017, the Company and its partner each contributed capital of $1.0 million and $0.3 million, respectively, to KSM. The Company provides KSM with technical, commercial and administrative management services and during the years ended December 31, 2019, 2018 and 2017, received $0.4 million, $0.4 million and $0.3 million, respectively, for these services. During the years ended December 31, 2019, 2018 and 2017, the Company earned revenues of $1.4 million, $1.3 million and $1.1 million, respectively, from the bareboat charter of two foreign-flag harbor tugs to KSM.
SeaJon. SeaJon LLC (“SeaJon”) owned an articulated tug-barge operating in the Great Lakes trade that was sold to a third party in June 2017 and, as of December 31, 2017, SeaJon had been liquidated. During the year ended December 31, 2017, the Company received capital distributions of $3.5 million and dividends of $12.5 million from SeaJon.
SCFCo. SCFCo Holdings LLC (“SCFCo”) was established to operate inland river dry-cargo barges and inland river towboats on the Parana-Paraguay Waterway and a terminal facility at Port Ibicuy, Argentina. During the year ended December 31, 2017, the Company contributed capital of $0.4 million to SCFCo. During the year ended December 31, 2017, the Company provided working capital advances and loans of $2.5 million to SCFCo and received repayments on working capital advances and loans of $1.7 million from SCFCo. During the year ended December 31, 2018, the Company received repayments on working capital advances and loans of $2.6 million from SCFCo. As of December 31, 2019, $34.3 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 $0.1 million, respectively, for these services during the years ended December 31, 2019, 2018 and 2017. As of December 31, 2019, the Company’s carrying value of its investment in SCFCo was $20.2 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):
2019 2018
Current assets $ 5,878    $ 8,322   
Noncurrent assets 113,638    121,001   
Current liabilities 11,077    12,958   
Noncurrent liabilities 59,717    56,078   
2019 2018 2017
Operating Revenues $ 45,049    $ 54,486    $ 44,177   
Costs and Expenses:
Operating and administrative 39,375    45,911    40,106   
Depreciation 10,027    17,901    17,803   
49,402    63,812    57,909   
Operating Loss (4,353)   (9,326)   (13,732)  
Interest expense (6,971)   (6,573)   (6,120)  
Other expense, net (241)   (2,229)   (961)  
Net Loss $ (11,565)   $ (18,128)   $ (20,813)  
Bunge-SCF Grain. Bunge-SCF Grain LLC (“Bunge-SCF Grain”) operates terminal grain elevators in Illinois. The Company has provided Bunge-SCF Grain with working capital advances. As of December 31, 2019, the total outstanding balance of working capital advances was $7.0 million. Bunge-SCF Grain also operates and manages the Company’s grain storage and handling facility in McLeansboro, Illinois. During the years ended December 31, 2019, 2018 and 2017, the Company earned revenues of $0.7 million, $0.9 million and $1.1 million, respectively, from the lease of this terminal facility to Bunge-SCF Grain. Certain dry-cargo barge pools managed by the Company provide freight transportation to Bunge-SCF Grain and those pools received $24.9 million, $10.7 million and $7.2 million for these services during the years ended December 31, 2019, 2018 and 2017, 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 eight inland river towboats to SCF Bunge Marine, of which four are bareboat chartered-in by the Company from a third-party leasing entity. 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. During the years ended December 31, 2019, 2018 and 2017, the Company earned revenues of $6.8 million, $3.3 million, and $2.1 million, respectively, from the time charter of these inland river towboats to SCF Bunge Marine. During the years ended December 31, 2019 and 2018, the Company contributed capital of $0.3 million and $0.5 million, respectively, to SCF Bunge Marine. During the years ended December 31, 2018 and 2017, the Company received dividends of $4.6 million and $0.1 million, respectively, from SCF Bunge Marine. Certain dry-cargo barge pools managed by the Company obtain towing services from SCF Bunge Marine and those pools paid $53.3 million, $54.5 million and $41.4 million to SCF Bunge Marine for these services during the years ended December 31, 2019, 2018 and 2017, respectively.
Other Inland Services. The Company’s other Inland Services 50% or less owned company operates a fabrication facility. During the year ended December 31, 2019, the Company and its partner each received a noncash dividend of one specialty barge valued at $0.6 million.
O’Brien’s do Brazil. O’Brien’s do Brasil Consultoria em Emergencias e Meio Ambiente A/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, 2019, 2018 and 2017, the Company received dividends of $0.1 million $0.2 million and $0.1 million, respectively from O’Brien’s do Brazil.
Hawker Pacific. Hawker Pacific Airservices Limited (“Hawker Pacific”) is an aviation sales and support organization and a distributor of aviation components from leading manufacturers. On April 30, 2018, the Company sold its 34.2% interest in Hawker Pacific for $78.0 million in cash and recognized a gain of $53.9 million, which is included in other, net in the accompanying consolidated statements of income. During the years ended December 31, 2018 and 2017, the Company received management fees of $0.1 million and $0.3 million respectively, from Hawker Pacific.
VA&E. VA&E Trading LLP (“VA&E”), was formed to focus on the global origination, trading and merchandising of sugar and other commodities, pairing producers and buyers and arranging for the transportation and logistics of the product. During the year ended December 31, 2019, the Company received capital distributions of $3.7 million from VA&E, which reduced the Company’s noncontrolling interest in VA&E to 23.8%. The Company provides VA&E an uncommitted credit facility of up to $3.5 million and a subordinated loan of $4.4 million. During the year ended December 31, 2017, the Company advanced $3.5 million on the uncommitted credit facility. During the year ended December 31, 2018, the Company received repayments of $5.4 million and advanced $5.4 million on the uncommitted credit facility. During the year ended December 31, 2019, the Company advanced $0.5 million to VA&E on the subordinated loan. As of December 31, 2019, outstanding advances to VA&E were $8.3 million, inclusive of accrued and unpaid interest. During the year ended December 31, 2018, the Company received dividends of $0.4 million from VA&E.
Avion. Avion Pacific Limited (“Avion”) is a distributor of aircraft and aircraft related parts. During the year ended December 31, 2017, the Company made advances of $1.0 million and received repayments on advances of $4.0 million from
Avion. As of December 31, 2019 and 2018, the Company had no outstanding advances to Avion. During the year ended December 31, 2018, the Company received dividends of $0.8 million from Avion.
Other. The Company’s other 50% or less owned companies are primarily industrial aviation businesses in Asia. During the year ended December 31, 2018, the Company received repayments on working capital advances of $0.4 million and received capital distributions of $0.6 million from these 50% or less owned companies. During the year ended December 31, 2017, the Company received repayments on working capital advances of $0.4 million from these 50% or less owned companies. As of December 31, 2019, total advances outstanding to these 50% or less owned companies were $2.0 million.