Norway-based dry bulk shipping company Golden Ocean Group Limited (GOGL) has reached and agreement to purchase two modern Capesize vessels from affiliates of Hemen Holding Limited.
The ships would be bought from the company, indirectely controlled by trusts established by John Fredriksen, at a price of USD 43 million per unit.
“We are pleased to be in the position to acquire high quality, modern Capesize vessels that are expected to generate free cash flow immediately upon delivery. This transaction is consistent with our strategy of focusing our commercial efforts on the vessel segments that we believe will provide the greatest leverage to a recovery in the dry bulk shipping market,” Birgitte Ringstad Vartdal, CEO of Golden Ocean Management AS, said.
As settlement of the purchase price for the ships, Golden Ocean will enter into a non-amortizing seller’s credit loan with an affiliate of Hemen for 50% of the purchase price, which bears interest at LIBOR + 3.00% per annum and matures three years after delivery of the vessels.
GOGL informed that the remaining part of the purchase price will be settled on delivery of the vessels with an estimated USD 9 million of cash and an estimated USD 34 million of newly-issued common shares of the company at a per-share price equal to the offer price in an expected equity offering.
The Capesizes are expected to be delivered within four months of the date hereof, Golden Ocean said, adding that the completion of the transaction is subject to completion of an equity offering and entry into the seller’s credit loan.
Once the acquisition and expected equity offering is finalized, Hemen, together with certain of its affiliates, will maintain its current ownership percentage of around 34.2% of GOGL’s issued and outstanding common shares.
Furthermore, as Golden Ocean’s financial position has been enhanced over the past 12 months, the company intends to terminate the covenant waivers related to its recourse debt upon completion of the expected equity offering, Ringstad Vartdal informed.
“This will reinstate the normal covenants, which the company is now in compliance with, and remove the company’s restrictions on new acquisitions, new debt and dividend payments. The waiver structure in the non-recourse debt related to the transactions announced in March 2017 will remain,” Ringstad Vartdal said.