Young Brothers finance director says expenses rose, draws used for barge progress payments; company withheld some harbor fees

Young Brothers LLC’s director of finance told the Public Utilities Commission during a hearing that the company’s forecasted operating expenses for its 2025 test year are substantially higher than the budget used to set rates and that draws on the company’s previously approved capital credit facility were used to make progress payments for new barges.

At the hearing, finance director Kim Kishimoto testified that an exhibit summarizing January–July 2025 actuals “shows that our expenses are $13,000,000 forecasted higher than what we had anticipated in the budget column in column b.” She said the company has also incurred higher interest expense because it has drawn more on short-term working capital and because market interest rates rose.

Kishimoto said Young Brothers relied on its $60,000,000 capital facility to cover progress payments for two barges delivered in 2024 and that several draws were taken once the lender approved them. Company witness Michael Nakagawa later summarized the draw chronology to the commission: following an initial approval in March 2023 and then an October 2023 request that was denied, the company returned with a June 14, 2024 request tied largely to barge payments that the commission approved. Nakagawa said the company had intended the facility to allow annual draws to cover planned capital needs, but that the company filed several draw requests in a short period as build progress required payments from Young Brothers.

Kishimoto said the draws were used to meet shipyard progress payments for the barges and that the company would have been in default with the shipyard had it not paid those amounts: “We would be in default with our contract with our shipyard provider.” She said the barges are important to maintain the sailing schedule and that selling one (the Naulu) would “risk our sailing schedule.”

Kishimoto also told commissioners Young Brothers made several dividend distributions before she joined the company and she listed company-reported distribution dates in the record: payments around Jan. 10, 2023; Oct. 31, 2023; and Jan. 5, 2024. She said making those distributions reduced cash and equity and that, separately, the company drew on its credit facilities and that interest expense increased with higher outstanding debt.

Beginning in October 2024 the company stopped remitting some harbor (wharfage) payments the company had collected from customers, Kishimoto said, citing near-term liquidity and covenant concerns. She told the commission the company notified the harbor agency it would withhold payments (she said she was not aware of anyone who sought formal permission) and that penalties on those withheld harbor fees had been accrued on the company’s books; Kishimoto estimated roughly $2,000,000 in accrued penalties through August (the transcript records the company saying it had “accrued close to 2,000,000”). She said the fees carry a 1% per‑month penalty on past‑due amounts.

Commissioners questioned whether the timing and frequency of credit‑facility draws (multiple requests across 2023–24) undercut the stated purpose of the $60 million facility to provide multi‑year stability. Commissioner Yost told the company the commission viewed multiple draw requests within a short period as a material change from the facility’s original intent and said that contributed to the commission’s decision to deny a later draw request in 2023. Company witnesses replied that portions of the draw schedule predated current management and that the subsequent draws were primarily tied to progress payments on barge construction.

Kishimoto said Young Brothers had been in compliance with its financial covenants until late 2024, and that the company did not breach covenants until Dec. 31, 2024. She told the commission the company had used a combination of the capital facility and a separate short‑term working capital facility (Kishimoto said the short‑term facility had a limit that was later reduced to $10 million and that $7 million was outstanding) to manage cash needs.

The testimony does not represent any new PUC order; it summarizes company witnesses’ answers to cross‑examination and shows the commission raising questions about the timing of draws, dividend policy and the practice of withholding harbor payments.

Looking ahead, commissioners pressed the company for more detail about how the capital project financing and the company’s operating forecasts interact; the company said it would rely on monthly reporting filed with the commission and on follow‑up exhibits to show balances and covenant status.

Clarifying details: Kishimoto said the company’s fleet average age fell (from 30.6 years pre‑purchase to about 24.6 years after the two barges were added) and that new barges avoid near‑term large dry‑docking events (she gave a 55‑year barge dry‑dock cost “over a million dollars” as an example). The company confirmed progress payments made out of cash totalled roughly $3–5 million during the early build schedule; later bank draws reimbursed or funded remainder progress payments.

Ending: The hearing record shows commissioners focused heavily on firm liquidity, the timing and justification for draws on the $60 million facility, and the company’s decision to withhold collected harbor fees; the commission and company indicated follow‑up reporting and documents (monthly financial reports, draw documentation, and detailed progress‑payment invoices) will be needed to complete the record.