Nasdaq-listed dry bulk shipping company Golden Ocean Group Limited has entered into agreements to acquire 16 dry bulk vessels.
The acquisition will take the form of an all-share transaction where the company will issue in aggregate 17.8 million consideration shares and assume debt of USD 285.2 million, GOGL said.
Of the 16 vessels to be acquired, 14 will be acquired from subsidiaries of Quintana Shipping, and two ice class Panamax vessels will be acquired from subsidiaries of Seatankers, an affiliate of Hemen Holding, the company’s largest shareholder.
“The acquisition will add significant scale to Golden Ocean’s operating fleet and contribute to reducing cash breakeven levels,” the company said.
Based on the closing price of the Golden Ocean share on the Oslo Stock Exchange on March 14, 2017 of NOK 61.50, equal to USD 7.14 per share, the transaction value stands at USD 412.4 million.
“The acquired vessels, averaging 4 years of age, which matches the age profile of our existing fleet, will further enhance our already significant commercial scale and increase our operational leverage to a potential dry bulk market recovery. Combined with attractive bank financing which includes no fixed debt amortization and soft covenants through June 2019, the transaction should be accretive also in terms of cash breakeven levels,” Birgitte Ringstad Vartdal, CEO of Golden Ocean Management AS, commented.
As part of the deal Golden Ocean will acquire Quintana’s 14 vessel fleet and assume the fleet’s corresponding debt of USD 262.7 million in consideration for 14.5 million shares of Golden Ocean.
In addition, Golden Ocean has agreed to a USD 17.4 million down payment of the debt associated with the fleet in order to obtain no fixed debt repayments and soft covenants through June 2019. A cash sweep mechanism will be in place for excess cash generated by the fleet. The fleet consists of 6 Capesize vessels and 8 Kamsarmax/Panamax vessels, mainly built in Japan and Korea.
The two 2017-built ice class Panamax vessels owned by Hemen’s affiliates will be bought in consideration for 3.3 million GOGL shares to fund the equity portion of the acquisition. Hemen will issue a seller credit of USD 22.5 million that matures in June 2019, with no fixed amortization.
All the said ships will be owned by a non-recourse subsidiary to Golden Ocean.
GOGL added that the completion of the acquisition is subject to the execution of definitive loan documents, raising of sufficient new equity to satisfy certain loan conditions, customary closing conditions and regulatory approvals. Closing is expected in the second quarter of 2017 and on a vessel-by-vessel basis.
Separately, the company said that it has commenced an equity offering for issue of new shares for gross proceeds of approximately USD 60 million.
The net proceeds of this offering are to be used to partially pre-pay debt under the new loan agreements related to the acquisition of fourteen vessels from Quintana Shipping, in an amount of approximately USD 17.4 million, and to use the balance for general corporate purposes.
The subscription price and number of shares issued in the offering will be determined through an accelerated bookbuilding process, the company explained. The bookbuilding period will start March 14, 2017 with expected closure at March 15, 2017 at 3:00 am EST and 08:00 am CET.
On a fully-delivered basis, Golden Ocean’s fleet will have an aggregate carrying capacity of approximately 11 million dwt and an average age of less than 5 years on a DWT basis.