March 24, 2009
Golden Ocean set to unveil restructuring plan
John Fredriksen's dry bulk shipping company Golden Ocean Group Limited (OSL:GOGL) says its short term liquidity situation is "still challenging," but it is making good progress in discussions with banks, creditors and shipyards and the Board expects that a proposed restructuring can be presented before the end of the month,
Today the company was able to report that it had increased its net liquidity by $18 million after delivering the Panamax M/V Bellflower to buyers in accordance with the revised sale terms. $40 million was paid in cash at delivery while $10 million will be paid over a seven years period. The "seller's credit" is secured by a second priority mortgage on the vessel.
On February 11, Golden Ocean reported that it had agreed to sell the vessel for $50 million after the buyer had informed Golden Ocean that it did not have the financial resources to take delivery of the vessel at the originally agreed price of $76 million.
The sale will have a marginal positive effect in the profit and loss statements in the current quarter, as the majority of the profit will be taken over the same period as the "seller's credit" period.
"More importantly," notes Golden Ocean, "the sale has increased the company's net liquidity with $18 million including the declaration of the purchase option on the vessel. The cash will be used to strengthen the working capital and to reduce short term debt.
Golden Ocean also reports that it has recently taken delivery of the third Capesize (M/V Golden Feng) from Daehan Shipbuilding during the last weeks. The vessel has been delivered to its charter and has commenced on a five year time charter contract at $48.000 per day.
Short term liquidity situation is still challenging since, due to non compliance with certain loan agreements, the company is not able to draw on existing committed financing lines. A solution to this situation will give the company the ability to draw on existing loan agreements of approximately $40 million, which will bring it in to a more comfortable cash situation.
The board is hopeful that a final restructuring of Golden Ocean can be completed with an injection of less than $100 million in new equity. The main shareholder, Mr. Fredriksen's Hemen Holding Ltd. has indicated a potential interest to subscribe to its part of the equity issue.
"The proposed solution," says the company, "will if accepted by all parties substantially reduce Golden Ocean's outstanding debt and commitments, and make Golden Ocean into a profitable and financial robust company well protected against any further market downside. It is an important target for the Board that creditor's interests are protected in the best possible way and that the current shareholders will retain significant upside in vessel values and market rates if market improves from current levels."