Golden Ocean in $272 million sale and leaseback deal

The Golden Ocean Group has come to an agreement with Ship Finance International for the sale and leaseback of eight Capesize vessels
Golden Ocean in $272 million sale and leaseback deal

Golden Ocean Group has entered into several agreements concerning its fleet.

The company has agreed with Ship Finance International a sale leaseback transaction of eight Capesize vessels currently owned by Golden Ocean.

The vessels named Golden Beijing, Golden Zhoushan, Golden Magnum, Battersea, Belgravia, Golden Zhejiang, Golden Future and KSL China, were built in China and Korea between 2009 and 2013. The total acquisition price will be $272 million or $34 million average per vessel. The vessels are expected to be delivered to Ship Finance within July 2015, subject to customary closing conditions.

The ships will work on a time-charter basis to a subsidiary of Golden Ocean for a period of 10 years. The daily base charter rate will be $17,600 during the first seven years and $14,900 thereafter. The company will also have a purchase option after year 10 of $112 million en bloc, and if such option is not exercised, Ship Finance will have the option to extend the charters by three years at $14,900 per day.

In addition, Golden Ocean has reached agreements with several of its yards to delay the construction of the newbuilding contracts with about 75 months on an aggregate basis. This will postpone capital expenditure and possible cash burn on sailing vessels as the market is currently below cash break even. Six vessels will be delivered in 2015, 15 vessels in 2016 and four vessels in 2017.  There is still work in progress to improve delivery positions further.

Further to this, the company has agreed to sell four of the Capesize vessels currently under construction at a Chinese yard to a third party. The company will finalise the construction of the vessels and transfer ownership to the new owner upon delivery from the yard. For three of the vessels, Golden Ocean will charter the vessels back on time charter for six to 12 months. The sales price is in line with the original contract price.

The company has also sold the vessels Channel Alliance and Channel Navigator to a third party, as part of the company's fleet renewal. These vessels will be delivered to new owners by the end of June 2015. 

One the fleet adjustments have been completed the company will have an owned and long-term chartered in fleet of 40 Capesize vessels, in addition to one owned in a JV, 10 ice-class Panamax vessels, one Panamax vessel, nine Kamsarmax vessels and nine Supramax vessels. Of the total fleet, 17 Capesize vessels and four Supramax vessels are new buildings to be delivered to the company.

Following these transactions Golden Ocean has secured financing for all newbuilding contracts except nine vessels with delivery in 2016 and 2017 and none of the existing loan facilities are due for refinancing before 2018.

In a statement, Golden Ocean said: "These various initiatives are taken in order to strengthen the cash position and balance sheet of the company in the current weak market. Golden Ocean is not abandoning its strategy to be a much-needed consolidator within the industry but is rather positioning itself for interesting opportunities which are expected to be available over the coming months."
 

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by Laura Stackhouse

readmt.com Editor

Laura Stackhouse is the Web Editor of readmt.com, an official publication of the International Marine Purchasing Association (IMPA). To discuss news, features or contributing to readmt.com please get in touch.

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