January 7, 2010
International Shipholding takes stake in mini-bulker JV
International Shipholding Corporation (NYSE: ISH) reports that it has invested $6.25 million to acquire a 25 percent equity stake in Oslo Bulk Shipping, a six-party joint venture that contracted, in 2008, to build eight new mini bulkers. The 8,000 dwt vessels are being constructed at Yangzijiang Shipyard and are scheduled for deliveries commencing in the third quarter of 2010.
Focusing on market opportunities in the Caribbean, South America, Southeast Asia, the Mediterranean and Baltic regions, the Oslo Bulk Shipping joint venture plans to employ the eight mini-bulkers on medium to long-term contracts. These mini bulk carriers have the versatility to move a wide variety of agricultural, construction, metal and energy-related commodities.
Niels M. Johnsen, chairman and chief executive officer, commented: "Oslo Bulk Shipping marks our second transaction in two months aimed at opportunistically growing the company in a prudent manner. This joint venture positions the company to once again take advantage of the strong long-term fundamentals in an underserved niche of the drybulk market. Specifically, the mini bulk market is characterized by an aging fleet, a favorable order book and a diverse cargo base.
The total delivered cost for the eight drybulk vessels is expected to be approximately $110 million. Upon signing the agreement for the eight vessels in 2008, Oslo Bulk Shipping paid an initial installment of 20 percent of the contract price. Future installments will be paid over the construction period, with the final installment due upon the delivery of the vessels. Oslo Bulk Shipping has already secured construction and permanent financing for 80 percent of the delivered cost. International Shipholding funded its initial investment in Oslo Bulk Shipping with available cash.