Golden Ocean Group, the listed dry bulk shipping company in John Fredriksen’s business empire, has sold eight Capesize vessels and leased them back.
It has also sold a further six units and postponed deliveries of newbuildings to raise cash in a weak market.
The company has sold eight ships to Ship Finance International, the listed tonnage provider in John Fredriksen’s business empire, and leased them back.
The vessels are Golden Beijing, Golden Zhoushan, Golden Magnum, Battersea, Belgravia, Golden Zheijang, Golden Future, and KSL China. They were all built in Korea and China between 2009 and 2013.
“The total acquisition price will be USD272 million, or USD34 million average per vessel,” Golden Ocean said in a statement. “The vessels are expected to be delivered to Ship Finance within July 2015 subject to customary closing conditions.”
They will be chartered for a period of 10 years on time-charter basis to a subsidiary of Golden Ocean. The daily base charter rate will be USD17,600 during the first seven years and USD14,900 thereafter.
In addition, there will be a 33% profit share in revenues above the base rate, calculated and paid on a quarterly basis. Golden Ocean will have a purchase option after year 10 of USD112 million en bloc, and if such option is not exercised, Ship Finance will have the option to extend the charters by three years at USD14,900 per day.
Furthermore, Golden Ocean has also reached agreements with several of its yards to delay the construction of the newbuilding contracts with about 75 months on aggregate basis. “This will postpone capital expenditure and possible cash burn on sailing vessels as the market is currently below cash break even. After this it is expected that six vessels will be delivered in 2015: 15 vessels in 2016 and six in 2017. “There is still work in progress to improve delivery positions further,” the company said.
Golden Ocean also agreed to sell to a third party four of the Capesize vessels currently under construction at a Chinese yard. “The company will finalise the construction of the vessels and transfer ownership to the new owner on delivery from yard. For three of the vessels Golden Ocean will charter the vessels back on time charter for six to 12 months. The sales price is in line with the original contract price. Further, it has sold the vessels Channel Alliance and Channel Navigator to a third party as part of its fleet renewal.
When these adjustments to the fleet have been completed, the company will have an owned and long-term chartered in fleet of 40 Capesize vessels, in addition to one owned in a joint venture, 10 ice-class Panamax vessels, one Panamax vessel, nine Kamsarmax vessels, and nine Supramax vessels.
Of the total fleet, 17 Capesize vessels and four Supramax vessels are newbuildings to be delivered to the company. “Following these transactions Golden Ocean has secured financing for all newbuilding contracts except nine vessels with delivery in 2016 and 2017, and none of the existing loan facilities are due for refinancing before 2018,” it said.
“These various initiatives are taken in order to strengthen the cash position and balance sheet of the company in the current weak market. Golden Ocean is not abandoning its strategy to be a much-needed consolidator within the industry but is rather positioning itself for interesting opportunities that are expected to be available over the coming months.”
The company this spring merged with Knightsbridge Shipping, another listed dry bulk shipping venture that Fredriksen controlled. Frontline, the listed VLCC and Suezmax operator in his empire, is expected to merge with Frontline 2012, another tanker company in the same sphere, in the near future. Ship Finance International owns most of the ships in the Frontline fleet.