The National Shipping Co. of Saudi Arabia (Bahri) informed that it had signed a Murabaha financing agreement on Sunday, June 22 with JPMorgan Chase Bank, N.A. (Riyadh Branch), Samba Financial Group and the Saudi British Bank (SABB) for SAR 3.18 billion ($848 million) to finance the cash consideration of Vela merger and the costs associated with the merger.
The sharia-compliant bridge financing is for a period of 12 months, according to which Bahri will mortgage Vela transferred vessels in favor of the financing banks.
“Bahri will arrange for a shariah-compliant long term financing during a year to repay the bridge financing,” the company said, adding that the details of the long term financing will be announced once obtained.
Bahri approved the purchase of Vela at a shareholder meeting last Thursday, making way for Bahri to become the world’s fourth-largest owner of very large crude carriers (VLCCs) and sole provider of VLCC crude oil shipping services to Aramco.
Bahri and Vela, a subsidiary of Saudi Arabian Oil Company (Aramco), confirmed the $1.3 billion deal on June 17th.
The deal includes shifting the whole fleet of Vela to Bahri, consisting of 14 VLCCs used for floating storage, 5 refined petroleum product tankers, all crew of Vela’s carriers, employees and part of its business systems, so that they can be integrated within Bahri’s structure. The first ship transfer is envisaged for the third quarter and the last ship transfer is slated for the fourth quarter.
Press Release, June 23, 2014