Friday, May 26, 2000
Golden Ocean holds interest in 14 VLCCs (all built after 1995), 3 VLCC newbuilding contracts and 10 bulk carriers. It filed for a Chapter 11 restructuring in the Bankruptcy Court for the District of Delaware on January 14, 2000.
The Official Committee of Unsecured Creditors of Golden Ocean fully supports and will be a co-proponent of the Golden Ocean Plan. Once the plan becomes effective, Golden Ocean will become a wholly owned subsidiary of Frontline.
The plan includes a payment to all unsecured creditors in Golden Ocean including the bondholders. Frontline has committed to pay up to $33 million in cash, or to issue up to 4.1 million shares and 1.9 million warrants in Frontline valued up to $48 million to take over all unsecured debt and all upstream guarantees. These numbers do not include a "take out" of the $78 million Golden Ocean bonds currently controlled by Frontline.
The payment gives the bondholders a payment of between 15 % and 22 % of their claim dependent on which alternative they take. Other unsecured claims will receive approximately 5 %.
The issue price for the Frontline shares is set at $10.00 while the strike price for the warrants is set at $12.21. If the Frontline share price in the fifteen day period prior to closing is lower than $10.00 or higher than $12.21 certain price adjustments will be made.
Under the plan, the old share capital in Golden Ocean will be canceled while new share capital will be injected by Frontline. In addition, the plan will provide for the release of upstream guarantees in favor of the bondholders.
Frontline Chairman John Fredriksen commented that the Golden Ocean fleet "fits nicely" into Frontline's existing fleet of 41 modern VLCCs and Suezmaxes. He said "the combined strength in the chartering market will give the new Frontline group a unique opportunity to offer an even more flexible service to our clients. It is Frontline's idea to absorb the whole of Golden Ocean under the existing Frontline administration. We anticipate that a co-ordination with the Frontline fleet will reduce the Golden Ocean cost structure by approximately $10 million per year through a reduction in overhead and ship operating cost. Golden Ocean's existing charter portfolio, the planned reduction in cost plus the existing mortgage financing should secure the future financial stability of Golden Ocean. The combination of a limited equity investment, and an asset exposure in excess of $ 1 billion makes this into a very interesting investment opportunity in today's market."
Meanwhile, Frontline has signed a deal to buy the VLCC newbuilding, Kawasaki 1638( 300,000 dwt) from Golden Ocean for $73.8 million. The ship, to be named M/T Front Tina , will be delivered from the yard next week and will immediately after delivery enter the Tankers International pool.
If Golden Ocean Plan does not go into effect by October 1, 2000, Golden Ocean shall have the right to declare an option to repurchase the vessel back from Frontline at Frontline's actual cost plus a profit component. In order to finance the ship, Frontline Ltd. has placed three million shares through a private placement arranged by Fearnley Fonds ASA and Enskilda Securities. The issue price was $10.15 per share.
The purchase of the Kawasaki 1638 was approved by the U. S. Bankruptcy Court for the District of Delaware in Golden Ocean's chapter 11 bankruptcy case.
The ship is a sister vessel to two other
Golden Ocean controlled vessels
Commenting on the deal, Fredriksen, said: " With the current strength in the tanker market, we are excited to add another VLCC newbuilding to the Frontline fleet. With an interest in 16 modern VLCCs and an agreed plan to restructure Golden Ocean, which could add another 13 modern VLCCs, Frontline is uniquely positioned to benefit from the fundamental strengthening we now see in the tanker market. The deal should improve future earnings and value development per share.
In a comment on the private placement
Fredriksen said: " We are very pleased with the group of
investors who supported us in the private placement. They are
all leading US institutions, who we expect will contribute positively
to the further development and expansion of our company, and
to increase the interest for the Frontline stock in the U.S.
Mosvold has nominated a Norwegian limited
partnership, in which it has a 52.8% stake, as the owner of the
contract and the option. The net proceeds of a 1:3444 rights
issue of 15,000,000 shares at NOK 2.00 per share, which is underwritten,
will be used to finance Mosvold's participation in the limited
keeps it safe and simple
The KISS system will occupy twenty per cent less space than current systems of the same capacity. It will also weigh twenty per cent less. And maintenance will be twenty per cent less too, with cassette replacement of parts and simplified systems. "But safety will still be one hundred per cent," says Per Brinchmann, business development director of Schat-Harding.
One example of the new philosophy is the use of tiller steering. There are fewer components than in a wheel steering system, so there is less maintenance, and the system is less vulnerable in an emergency. Electrical components and systems are also kept to a minimum.
"Sophisticated problems demand sophisticated solutions. But there is a real demand in the offshore and merchant shipping world for simpler, more cost-effective boats, davits and evacuation systems," says Brinchmann. "There is also the question of weight. Until recently, the only way to ensure a boat was strong enough to withstand use in an emergency was to over-design it. Today we can use our experience and new technology to optimize design in a way which saves both weight and space, which are at a premium on offshore units and merchant ships. We use sophisticated technology to produce simple, safe, solutions."
The KISS system will be in production by
the end of 2000, initially for the offshore market. "We
will spread the concept over the range of conventional systems
first," says Brinchmann. "There will be small, medium,
large and extra-large sizes, to suit all types of units and ships."
Whatever the capacity chosen, the KISS system will be smaller
and lighter than its predecessors, and anything else on the market.