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Pioneer Marine Inc. Announces Second Quarter 2014 Results

MAJURO, MARSHALL ISLANDS -- (Marketwired) -- 08/29/14 -- Pioneer Marine Inc. (OSLO-OTC: PNRM) ("Pioneer Marine," or the "Company"), a leading shipowner and global drybulk handysize transportation service provider, announced its unaudited financial and operating results for the second quarter ended June 30, 2014.

Second Quarter 2014 Financial Highlights:

  • For the second quarter 2014, the Company reported a net loss of $2.5 million, or $0.11 basic and diluted loss per share, as compared to a loss of $1.7 million or $0.09 basic and diluted loss per share for the first quarter of 2014.

Recent Events

  • $72 Million Loan Facility: On June 16, 2014, the Company signed a loan agreement with DVB Group Merchant Bank (Asia) Ltd. and ABN AMRO Bank BV for $72 million secured by eight Handysize vessels. The loan bears interest at LIBOR plus a margin with 5 year tenor. The facility was fully drawn down on July 2, 2014.

  • $47 Million Loan Facility: On August 11, 2014, the Company signed a loan agreement with CIT Finance LLC for $47.4 million secured by four Handysize vessels and one Handymax vessel. The loan bears interest at LIBOR plus a margin with 5 year tenor. The facility was fully drawn down on August 18, 2014.

Pankaj Khanna, Chief Executive Officer, commented, "We are pleased with the competitive financing concluded for the on-water fleet with strong support from the banking relationships we have built over the years. Pioneer has now a modern fleet of thirteen ships on the water with an average age of 6.5 years and fourteen newbuildings for delivery in 2015 and Q1 2016.

"The drybulk freight market in the second quarter was quite challenging due to certain one off factors. The ban on Indonesian exports of unprocessed minerals, the slower pace of Argentinian grain exports and the turmoil in Ukraine have adversely impacted demand for shipping minor bulk cargoes in the first half of 2014. This situation continued into the third quarter but in August we have started to see a recovery in the market with demand improving in all regions. Given our strategy to focus on spot fixtures, we believe Pioneer is well positioned to benefit from the expected increase in freight rates."

Financial Review: Second quarter of 2014

Net revenue increased by $6.0 million or 98.4% in the three month period ended June 30, 2014 to $12.1 million as compared to $6.1 million in the three month period ended March 31, 2014. The increase is mainly attributable to delivery of additional Handysize vessels which occurred at the end of the first quarter of 2014. As a result the number of operating days in the second quarter of 2014 increased to 1,138.8 days as compared to 573.5 days in the first quarter of 2014.

Time Charter Equivalent ("TCE") revenue (Net Revenue less Voyage Expenses) increased to $7.5 million in the three month period ended June 30, 2014 as compared to $4.8 million in the three month period ended March 31, 2014. TCE per day decreased to $6,551 for the three month period ended June 30, 2014 as compared to $8,403 in the three month period ended March 31, 2014.

Vessel Operating Expenses ("OPEX") increased by $2.5 million for the three month period ended June 30, 2014 to $6.4 million as compared to $3.9 million in the three month period ended March 31, 2014. The increase is attributable to the vessels acquired within the second quarter of 2014 since the average number of vessels on the water increased to 12.7 vessels as compared to 7.0 vessels for the first quarter of 2014.

Drydock expenses of $0.5 million relate to the drydock of M/V Mykonos Bay completed within the first quarter 2014. This drydock cost is expensed as part of OPEX.

Depreciation Expenses increased by $1.2 million for the three month period ended June 30, 2014 to $2.7 million as compared to $1.5 million in the three month period ended March 31, 2014. The increase is attributable to the full quarter effect of vessels acquired at the end of the first quarter of 2014 as mentioned in the discussion above.

General and Administration Expenses increased by $0.3 million for the three month period ended June 30, 2014 to $0.9 million as compared to $0.6 million in the three month period ended March 31, 2014.

Fleet List as of June 30, 2014

                                                               Delivery Date
                          Type          DWT      Year Built         (1)

Current fleet:
Reunion Bay            Handysize      32,354        2006        Nov 1, 2013
Paradise Bay            Handymax      46,232        2003       Nov 11, 2013
Eden Bay               Handysize      28,342        2008        Dec 2, 2013
Fortune Bay            Handysize      28,671        2006        Mar 4, 2014
Mykonos Bay            Handysize      32,411        2009        Dec 2, 2013
Emerald Bay            Handysize      32,258        2008       Jan 27, 2014
Azure Bay              Handysize      31,700        2005       Mar 10, 2014
Teal Bay               Handysize      32,327        2007       Jan 17, 2014
Calm Bay               Handysize      37,534        2006        Mar 4, 2014
Ha Long Bay            Handysize      32,311        2007       Feb 14, 2014
Jupiter Bay            Handysize      29,997        2012       Apr 22, 2014
Venus Bay              Handysize      30,003        2012       Mar 31, 2014
Orion Bay              Handysize      30,009        2012       Mar 25, 2014

Vessels under construction:

GY311                  Handysize      38,800          -            2015
GY312                  Handysize      38,800          -            2015
GY313                  Handysize      38,800          -            2015
GY314                  Handysize      38,800          -            2015
GY315                  Handysize      38,800          -            2015
GY316                  Handysize      38,800          -            2015
GY317                  Handysize      38,800          -            2015
GY318                  Handysize      38,800          -            2015
GY319                  Handysize      38,800          -            2015
GY320                  Handysize      38,800          -            2015
GY321                  Handysize      38,800          -            2016
GY322                  Handysize      38,800          -            2016
SF130111               Handysize      38,000          -            2016
SF130112               Handysize      38,000          -            2016

(1)  Estimated year of completion for vessels under construction

Summary of Operating Data (unaudited)
(Dollars in Thousands, Except Per Day and number of days data)

                                                         Three        Three
                                                        Months       Months
                                                    Ended June  Ended March
                                                      30, 2014     31, 2014
                                                   -----------  -----------

Revenue, net                                            12,156        6,126
Voyage expenses                                         (4,695)      (1,307)
                                                   -----------  -----------
Time charter equivalent revenue                          7,461        4,819

Vessel operating expense                                (6,414)      (3,865)
Drydock expense                                              -         (511)
Depreciation expense                                    (2,654)      (1,511)
General and administration expense                        (885)        (594)
Other expenses, net                                         (2)          (1)
                                                   -----------  -----------
Net loss                                                (2,494)      (1,663)
                                                   -----------  -----------

Vessel Utilization:
  Ship days (2)                                        1,162.3        627.3
  Off-hire days                                           23.5         28.9
  Off-hire days due to drydock                                         24.9
                                                   -----------  -----------
  Operating days (3)                                   1,138.8        573.5
                                                   -----------  -----------

TCE per day (1)                                          6,551        8,403
Opex per day                                             5,519        6,163

                                                   -----------  -----------
(1)  Time Charter Equivalent, or TCE revenue, are non-GAAP measures. Our
     method of computing TCE revenue is determined by voyage revenues less
     voyage expenses (including bunkers and port charges). Such TCE revenue,
     divided by the number of our operating days during the period, is TCE
     per day, which is consistent with industry standards. TCE revenue is
     included because it is a standard shipping industry performance measure
     used primarily to compare period-to-period changes in a shipping
     company's performance irrespective of changes in the mix of charter
     types (i.e., spot charters and time charters), and it provides useful
     information to investors and management.
(2)  Ship days: We define ship days as the aggregate number of days in a
     period during which each vessel in our fleet has been owned by us. Ship
     days are an indicator of the size of our fleet over a period and affect
     both the amount of revenues and the amount of expenses that we record
     during a period.
(3)  Operating days: We define operating days as the number of our ship days
     in a period less days required to prepare vessels acquired for their
     initial voyage and off-hire days associated with off-hire while a
     vessel is employed, scheduled repairs, drydockings or special surveys.
     The Company uses operating days to measure the number of days in a
     relevant period during which vessels should be capable of generating

Pioneer Marine Inc. and Subsidiaries Financial Results for the First Half 2014

Consolidated Statement of Operations (Unaudited)
(Dollars in Thousands, except per share amounts)

                                                                 Six Months
                                                              June 30, 2014
Voyage revenue                                                       18,282

Voyage expense                                                       (6,002)
Vessel operating expense                                            (10,279)
Drydock expense                                                        (511)
Depreciation expense                                                 (4,165)
General & administration expense                                     (1,479)
Total operating expenses                                            (22,436)

Operating profit / (loss)                                            (4,154)
Other expenses                                                           (3)
Net Loss                                                             (4,157)

Net loss per share, basic and diluted                                 (0.20)

Weighted number of shares, basic and diluted                     20,557,667

The following table reconciles net loss to EBITDA:

(Dollars in Thousands)

Three Months Ended                            June 30, 2014  March 31, 2014
                                             --------------  --------------

Net loss                                             (2,494)         (1,663)

Add: Depreciation expense                             2,654           1,511
                                             --------------  --------------

EBITDA (1)                                              160            (152)
                                             --------------  --------------

(1)  EBITDA represents net income/(loss) before interest, taxes,
     depreciation and amortization and is used as a supplemental financial
     measure by management to assess our financial and operating
     performance. We believe that EBITDA assists our management and
     investors by increasing the comparability of our performance from
     period to period. This increased comparability is achieved by excluding
     the potentially disparate effects between periods of and depreciation
     and amortization expense, which items may be affected by various and
     possibly changing financing methods, capital structure and historical
     cost basis and which items may significantly affect net income between
     periods. We believe that including adjusted EBITDA as a financial and
     operating measure benefits investors in selecting between investing in
     us and other investment alternatives EBITDA does not represent and
     should not be considered as an alternative to net income/(loss) or cash
     flow from operations, as determined by United States generally accepted
     accounting principles, or U.S. GAAP, and our calculation of EBITDA may
     not be comparable to that reported by other companies.

Consolidated Balance Sheets (Unaudited)
(Dollars in Thousands)

                                                                December 31,
As at                                           June 30, 2014           2013
                                                -------------  -------------
Current assets
Cash & cash equivalents                                24,083          1,358
Trade accounts receivable & accrued income              5,327            586
Inventories                                             2,726          1,072
Other receivables                                         310            423
                                                -------------  -------------
Total current assets                                   32,446          3,439
                                                -------------  -------------
Non-current assets
Vessels, net                                          224,650         68,170
Other fixed assets                                        101             75
Advances for vessel acquisition and vessels
 under construction                                    17,434         13,621
Deferred financing costs                                  141              -
                                                -------------  -------------
Total non-current assets                              242,326         81,866
                                                -------------  -------------

                                                -------------  -------------
Total assets                                          274,772         85,305
                                                =============  =============
Current liabilities                                     7,734            637
Shareholders'/ owners' equity                         267,038         84,668
                                                -------------  -------------
Total liabilities and shareholders' equity            274,772         85,305
                                                =============  =============

Consolidated Statement of Cash Flows (Unaudited)

(Dollars in Thousands)

                                                                 Six Months
                                                              June 30, 2014
Cash flows from operating activities
Net Loss                                                             (4,157)
Adjustments to reconcile loss to net cash provided by
 operating activities:
  Depreciation                                                        4,165
Changes in operating assets and liabilities:
  Trade accounts receivable & accrued revenue                        (4,741)
  Inventories                                                        (1,654)
  Other receivables                                                     114
  Accounts payable                                                    6,956
Net cash provided by operating activities                               683

Cash flows from investing activities
  Purchase of vessels                                              (155,594)
  Advances for vessel acquisitions and vessels under
   construction                                                      (8,828)
  Purchase of other fixed assets                                        (63)
Net cash used in investing activities                              (164,485)

Cash flows from financing activities
  Cash contributions                                                186,527
Net cash provided by financing activities                           186,527

Net increase in cash and cash equivalents                            22,725
Cash and cash equivalents at the beginning of the period              1,358
Cash and cash equivalents at the end of the period                   24,083

About Pioneer Marine Inc.

Pioneer Marine Inc. is a leading shipowner and global drybulk handysize transportation service provider. Pioneer Marine currently owns twelve Handysize and one Handymax drybulk carriers with an additional 14 Handysize newbuildings on order for delivery in 2015. The Handysize Green Dolphins newbuildings are 'Eco' vessels designed by SDARI.

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "anticipate," "intends," "estimate," "forecast," "project," "plan," "potential," "may," "should," "expect," "pending" and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for dry bulk vessel capacity, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors.

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