Golden Ocean unveils plan to boost balance sheet

FEBRUARY 18, 2016 — The oceans have been less than golden for bulk carrier owners lately, and that’s certainly been the case for Oslo listed Golden Ocean Group. Today it reported a lot of red ink and a plan to strengthen its balance sheet and improve its position that will, among other things, see a sizeable injection of funding by its largest shareholder — Hemen Holding, which is controlled by trusts created by John Fredriksen for the benefit of immediate family members.

Golden Ocean reported a net loss of $69.3 million and a loss per share of $0.40 for the fourth quarter of 2015 compared with a loss of $40.7 million and a loss per share of $0.24 for the preceding quarter. The fourth quarter loss included a loss on sale of newbuildings and amortization of deferred gain of $8.5 million (which includes a loss of $8.9 million on the sale of two converted Capesize newbuilding contracts to Frontline Ltd.); an impairment loss on securities of $23.3 million; a loss provision of $4.7 million against uncollectible receivables, an impairment loss of $4.5 million relating to the Golden Lyderhorn, a vessel held under capital lease, ; an impairment loss of $4.6 million relating to the Company’s investment in Golden Opus Inc., and a mark-to-market gain on derivatives of $3.9 million.
Cash and cash equivalents decreased by $36.6 million in the fourth quarter. The main cash movements were the payment of $65.3 million in respect of the company’s newbuilding program, $46.2 million received from the sale the KSL Baltic and the repayment of debt of $11.4 million. In addition, $6.2 million was used in operations.

Golden Ocean says that over the last 12 months, it has taken several measures to preserve its liquidity position, including postponement of newbuilding deliveries, sale of vessels, sale of newbuildings and sale and leaseback agreements. In light of the continued weak freight markets, the company has been exploring additional measures.Today it announed further measures to strengthen its balance sheet, including amendment of all debt facilities, positive discussions with shipyards about further postponements of newbuilding deliveries, and a new equity issue.The agreement with the banks is conditional upon the company raising $200 million in new equity and the company today commenced a private placement of its common shares in Norway that it expects will yield gross proceeds to be approximately $200 million.

Hemen Holding Limited, currently controlling approximately 43.1% of the shares in the company, will subscribe for and be allocated at a minimum, its pro rata share in the private placement, amounting to the NOK equivalent of approximately $86.2 million. Other leading shareholders in the company have also indicated support for subscribing to at least their pro rata share in the private placement.