October 28, 2009 / 3:05 PM / 10 years ago

UPDATE 1-K-SEA warns of breach covenants, cuts div; shares tank

* Says may breach covenants by Q2 or Q3

* Slashes quarterly dividend by 42 pct

* Q1 adj EPS $0.04 vs. est $0.29

* Q1 rev $70.6 mln vs. est $80.6 mln

* Stock down as much as 35 percent

Oct 28 (Reuters) - Shares of K-SEA Transportation Partners LP KSP.N lost more than a third of their value after the company said it will not be in compliance with some its financial covenants at the end of the second or third quarter and cut its dividend by 42 percent.

The company, whose tank barges transport refined petroleum products, said that it will be seeking to amend the covenants.

“The absence of any meaningful recovery in petroleum demand is causing further reductions in refinery utilization and thus further reductions in waterborne product movements, including a reduction in the number of new term charters,” Chief Executive Timothy Casey said in a statement.

K-Sea’s stock was trading down 30 percent at $15.65 in morning trade, making it the biggest percentage loser on the New York Stock Exchange. They had touched a low of $14.51 earlier in the session. The company, which cut its distribution to 45 cents per unit, also posted a first-quarter results that were significantly below expectations.

For the quarter, the company posted a net loss of $5.2 million, or 29 cents a share, compared with net income of $3.9 million, or 19 cents a share, in the year-ago quarter.

Excluding an asset impairment charge, the company’s earnings for the quarter was 4 cents a share, well below analysts’ average estimate of 29 cents a share, according to Thomson Reuters I/B/E/S.

Total revenue fell 23 percent to $70.6 million, and also fell short of analysts expectations of $80.6 million. (Reporting by Hezron Selvi in Bangalore; Editing by Savio D’Souza)

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