Dubai-based shipping company Gulf Navigation has won approval from the Securities and Commodities Authority to issue $60m in convertible bonds.

The bonds, convertible into shares, form part of the firm’s restructuring and debt settlement strategy.

The troubled company, which is listed on the Dubai Financial Market (DFM), has been struggling with mounting debts and has been posting losses for several years.

Gulf Navigation announced a turnaround plan at the beginning of the year, which included plans to reduce its capital, increase its foreign ownership limit and issue a convertible bond of up to $130m as a means of increasing capital again.

The company also sold off its two very large crude carrier (VLCC) vessels in February, in an effort to repay its debts.

By July, Gulf Navigation completed a reduction in capital from AED1.7bn ($450.5m) to AED551.6m by writing off accumulated losses of AED1.1bn.

The company also secured approval to increase its foreign shareholding limit up to 49 per cent from an earlier 20 per cent.

The turnaround strategy has helped Gulf Navigation return to profitability this year, with profits of AED3.6m recorded for the first half of 2014, which compares with a AED29.6m loss in the same period last year.

Gulf Navigation’s earlier losses were blamed on tough conditions in the VLCC shipping sector, as well as the increasing cost of financing.  The global shipping industry has also been suffering from a problem of oversupply, which places pressure on the fees that companies can charge.