May 4, 2005
Golden Ocean takes stake in 10 Panamax bulkers
The John Fredriksen controlled dry bulk shipping venture Golden Ocean Group Limited says it has reached an agreement with Louis Dreyfus Grain Division to take over the time charter commitment for a fleet of ten modern Panamax bulk carriers.
Two of the vessels were built in 2001 and four vessels in 2004, all these vessels are fixed out at favorable time charter agreements through 2006.
Four newbuildings will be delivered during 2007; these vessels are unfixed.
For five of the vessels purchase options are attached to the time charter agreements.
Golden Ocean is paying a lump sum of $143 million and will take over the commitments June 1, 2005.
The deal will generate in excess of $100,000 in daily cash flow for the next year.
"Based on existing market valuations for similar kind of tonnage," says Golden Ocean, "there is today material value in the purchase options. The charter-in agreements have an average maturity of 8 years at rates between $9,000 and $12,000 per day. A significant part of the charters is structured as options in favor of Golden Ocean."
The Board of Golden Ocean expects that the transaction can be financed without raising any new equity.
Chief Executive of Golden Ocean, Herman Billung, says the deal "gives Golden Ocean an important critical mass. The secured business and the low cash break even rates protect the downside, while the purchase options and the optional charter-in structure create significant upside for our shareholders."