Dry bulk shipping company Golden Ocean (NASDAQ and OSE: GOGL) has announced that it has entered into agreements to acquire 16 modern dry bulk vessels in an all-share transaction valued at $412 million.
Of the 16 vessels, 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 Golden Ocean’s largest shareholder.
Golden Ocean says under the deal it will issue in aggregate 17.8 million consideration shares and assume debt of USD 285.2 million. The company said the acquisition will add significant scale to Golden Ocean’s operating fleet and contribute to reducing cash breakeven levels.
Closing of the acquisition is expected during the second quarter of 2017 and on a vessel-by-vessel basis.
“We are proud to be in the position to acquire a large number of modern, high quality vessels in an all-share transaction. This underscores the value the sellers ascribe to our operating platform, management team and corporate strategy,” commented Birgitte Ringstad Vartdal, CEO of Golden Ocean Management AS. “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. We consider the price obtained to be attractive and expect the transaction to be significantly value-accretive to our shareholders.”
As part of the acquisition, 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. 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.
Additionally, Golden Ocean will acquire two 2017-built ice class Panamax vessels from affiliates of Hemen in consideration for 3.3 million shares of the GOGL 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.
Following the transaction Golden Ocean will own or control a modern fleet of 77 vessels and six capesize newbuilding contracts. On a fully-delivered basis, Golden Ocean’s fleet will have an aggregate carrying capacity of approximately 11.0 million deadweight tons and an average age of less than 5 years on a DWT basis.