The circumstances are very familiar in shipping boardrooms during depressions.
The company was losing money—$14.5 million in the previous year—and the
ship was laid up and generating a negative cashflow. For several years the company
had accepted this drain on its cashflow, in the hope that the market would improve,
but the board had now decided that ‘with the benefit of hindsight it is evident that
our hopes for the future of the VLCC were ill founded’ and had decided to sell the
vessel. Its sale would mean writing off as a loss the remainder of its ‘book value’
not covered by the selling price, so the company would have to announce a large
loss, but the proceeds from the sale would improve the cashflow.