Wednesday, March 24, 2010

Going concern concept and Rickmers Maritime Trust

In accounting, going concern concept simply implies that the business will continue to operate for the foreseeable future. In essence, this concept assumes the business remains in existence.

I was reading an article published on 23 March's The Business Times which mentioned Rickmers Maritime Trust (B1ZU.SI) is warned by its auditors PricewaterhouseCoopers (PwC) of its ability to continue as a going concern. PwC said the ability of the group and the trust to continue as going concerns depended on the outcome of the refinancing of the trust’s outstanding US$130 million ($182 million) facility of which the entire outstanding amount of US$128.70 million falls due on 30 April 2010. We are now into April 2010 very soon.

With that news, Rickmers' share price plunged 25.609% today to close at S$0.305 per share. I used to own Rickmers' share when they used to give out almost 10% dividend yield in just one quarter. It is lucky I have none of them now but then, I thought there were preamble warnings since mid last year?

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