Dry bulk shipping companies Golden Ocean Group and Knightsbridge Shipping have chosen March 26 to hold a special general meeting and finalize the merger talks.
If the shareholders approve the plan, the companies expect to conclude the merger by the end of March 2015, subject to the execution of certain definitive documents, customary closing conditions and regulatory approvals.
The merger was announced back in October. The combined company, with Knightsbridge as the surviving entity, will be renamed Golden Ocean Group Limited and will operate a fleet of 72 vessels, of which 34 are newbuildings under construction as of December 31, 2014.
The companies ended 2014 on different notes, with Golden Ocean posting a fourth quarter net loss of USD 135.1 million, while Knightsbridge ended the same period with a USD 5.3 million net profit.
Golden Ocean attributes the fourth quarter loss to a decrease in the net operating income, down by USD 120.6 million and net financial items, down by USD 2.7 million.
Looking ahead, the companies say the market in the first quarter has been disappointing so far and this will affect the earnings for the first quarter.
Future earnings will continue to correlate with the spot market as long as the majority of the companies’ vessels are employed in the spot market. Should the weak market continue it will force changes on the industry, some participants will disappear, and it will open up for consolidation and for those that have stamina to stand through this period there will be opportunities in the other end.
During a period with a weak market the companies expect to see increased scrapping, postponed orders, cancellations and conversions, and in long term it will cater for better fundamentals for an upturn in the market in the future.