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March 23, 2010

OceanFreight orders three VLOCs

Athens-headquartered OceanFreight Inc. (NASDAQ:OCNF)--whose CEO is George Economou's nephew Anthony Kandylidis--said today that it has entered into an agreement to build three 206,000 dwt Very Large Ore Carriers (VLOCs) at Shanghai Waigaichao Shipbuilding. Two of the vessels are scheduled to be delivered in the second and fourth quarters of 2012 and the third vessel is scheduled to be delivered in the first quarter of 2013. The total purchase price for the three vessels is approximately $204 million.

Basset Holdings, the company's founding shareholder controlled by Mr. Kandylidis, has agreed to make a commitment to provide up to 50% of the total contract price or $102 million in the form of an unsecured shareholder loan. OceanFreight says the pricing of the shareholder loan will be on an arms-length basis and in line with third party market pricing.

Utilizing existing relationships with its charterers, OceanFreight has entered into time charter agreements securing long term employment for the three vessels upon their deliveries:

Newbuilding No.1: Upon delivery in the second quarter of 2012 the vessel will commence fixed rate employment for a minimum period of three years at a gross rate of $25,000 per day.

Newbuilding No. 2: Upon delivery in the fourth quarter of 2012 the vessel will commence fixed rate employment for a minimum period of five years at a gross base rate of $23,000 per day. The time charter contract includes a 50% profit share arrangement that applies from above the base rate to $40,000 per day.

Newbuilding No.3: Upon delivery in January 2013 the vessel will commence fixed rate employment for a minimum period of seven years at a gross rate of $21,500 per day. The time charter contract includes a 50% profit share arrangement that applies from above the base rate to $38,000 per day.

The company expects to finance these acquisitions with a combination of cash currently on-hand, internally generated cash flows and debt through the support of Basset Holdings.

"This newbuilding order is pivotal for the long-term development of OceanFreight," commented Mr.Kandylidis. "These three high specification bulk carriers were ordered at the behest of our customers and are specifically designed to serve the long-haul Brazil to China iron ore trade. Utilizing our close relationships with charterers we have secured employment for the vessels well in advance of their contractual delivery dates thereby locking in visible cash flows. The staggered periods and profit sharing element of the charters will serve us well into the future achieving both profitability and upside potential. Basset's support for the project ensures that the project is fully funded from day one."

OceanFreight Inc., is an owner and operator of both dry bulk and tanker vessels that operate worldwide. As of today, it owns nine dry bulk vessels (3 Capesize, 6 Panamaxes) and four crude carrier tankers (1 Suezmax, 3 Aframaxes) with a combined deadweight tonnage of about 1.4 million tons.

On March 5, OceanFreight reported that it had received written notification from Nasdaq. dated March 1, 2010 indicating that because the closing bid price of the company’s common stock for the previous 30 consecutive business days was below the minimum $1.00 per share bid price requirement for continued listing on the Nasdaq Global Market,it was not in compliance with Nasdaq Listing Rule 5450(a)(1). The applicable grace period to regain compliance is 180 days.

The company said it intends to monitor the closing bid price of its common stock between now and August 30, 2010 and is considering its options in order to regain compliance with the Nasdaq minimum bid price requirement.


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