Golden Ocean and Knightsbridge Shipping have agreed to merge in a plan that will see the two businesses combine into one of the largest dry bulk companies in the world.
The newly formed business, to be called Golden Ocean Group Limited, will have a combined fleet of 72 vessels, made up of 46 capsize vessels, 10 ice class panamax vessels, eight kamsarmax vessels and eight supramax vessels. Thirty-six of these are currently under construction.
Speaking about the merger, Ola Lorentzon, chairman and CEO of Knightsbridge, and chairman and CEO John Fredriken: "By combining Knightsbridge and Golden Ocean we seek to create a company with a unique fleet and strong balance sheet and build one of the world's leading dry bulk shipping companies.
"With the current weakness in the dry bulk market, we believe there will be attractive consolidation opportunities going forward. Our ambition is to be a clear market leader both from a financial and operational perspective. Upon an expected recovery of the dry bulk market and as newbuilds are brought into the fleet, we believe the Combined Company will generate significant cash flow. The intention is to pay out excess cash as dividends in the Board's discretion.”
Knightsbridge’s ordinary shares are listed for trading on NASDAQ Global Select Market and Golden Ocean’s ordinary shares are currently listed for trading on the Oslo Stock Exchange and the Singapore Stock Exchange.
When the merger is completed shareholders in Golden Ocean will receive shares in Knightsbridge as merger consideration. One share in Golden Ocean will allow a shareholder the right to receive 0.13749 shares in Knightsbridge, and Knightsbridge will issue a total of 61.5 million shares to shareholders in Golden Ocean as merger consideration.
When the merger completes, the 3.07 percent Golden Ocean Group Limited senior unsecured convertible bond issue 2014/2019 that was issued by Golden Ocean in January 2014 will be converted into a convertible bond in the combined company according to the terms of the bond agreement.
In connection with the special general meetings, Hemen Holding Limited, a company indirectly controlled by John Fredriksen for the benefit of his immediate family, and certain of its affiliates, (including Frontline 2012 Ltd) have entered into voting agreements to vote all of their respective shares in favor of the merger. Approval of the merger by the shareholders of each company requires the affirmative vote of those shareholders, as of the record date, representing 75 percent of the ordinary shares of that company which are voted at its special general meeting.
After the merger is completed it is expected that Hemen and such affiliates, collectively will own approximately 39 percent of the shares and votes in the Combined Company, which includes Hemen's indirect ownership in the shares owned by Frontline 2012. After the second step of the Frontline transaction is completed in March 2015, this will increase to approximately 42 percent.