Megacore Shipping New Product Tankers

Thursday, December 24, 2009

Omega Navigation Enterprises, Inc. (NASDAQ:ONAV, SGX: ONAV50), a provider of global marine transportation services focusing on product tankers, announced that it has formed an equal partnership (50/50) joint venture company with Topley Corporation, a wholly owned subsidiary of Glencore International AG (Glencore). The name of the joint venture company is Megacore Shipping Ltd.

Companies owned by Omega and the Glencore group have novated their respective original shipbuilding contracts entered into with Hyundai Mipo, consisting in total of 10 newbuilding 37,000 dwt product/chemical carriers (MR1s) (5 vessels each partner), to companies wholly owned by Megacore. This order has now been converted to two 37,000 dwt product/chemical tankers (MR1s) and seven 75,000 dwt. product/oil tankers (LR1s) while one MR1 vessel has been suspended and remains as an option for Megacore to exercise in the future.

The original delivery schedule of eight vessels in 2010 and two vessels in the beginning of 2011 has been amended to three vessels in 2010 four in 2011 and two in 2012. The overall aggregate purchase cost based on contract price has remained similar to the original contracts, while the amount of equity that would need to be invested based on vessels assessed fair market values has been reduced.

All nine vessels will be owned by companies fully owned by Megacore, with Omega providing the technical, operating and administrative services and ST Shipping (wholly owned subsidiary of Glencore) providing commercial management. The first of these vessels will be delivered during the first quarter of 2010 and has secured a three year time charter with NYK lines which was announced previously. Also, Omega had previously announced financing commitments on its newbuildings and has transferred these commitments to Megacore.

Omega President and CEO George Kassiotis said, "We are very pleased to have entered this joint venture with a very strong partner and thus reinforce the already strong relationship with the Glencore group. Megacore will allow Omega to enjoy significant operating and commercial synergies with one of the largest commodities trading companies in the world. The joint venture will have access to Glencore's global trading network and system cargoes and ST Shipping's commercial chartering experience and will enable us to deploy collectively with our partner a fleet of vessels with significant scale and geographic coverage. Also, the amendment of the newbuilding order has allowed Omega to better manage its capital exposure in this very difficult operating and credit environment. In addition, by spreading the deliveries into 2010, 2011 and 2012, while maintaining the same pre delivery payment terms it allows time for a market recovery and extends out our required cash outlays for the vessels. It is apparent that our 2010 equity requirements have thus been significantly reduced. The conversion into LR1 vessels is also beneficial as the LR1 sector arguably has been the strongest sector in these difficult times both in terms of asset value as well as chartering rates demonstrating the market perception for strong fundamentals based on the increased use of longer haul routes.

“This off balance sheet structure and revised delivery dates has enabled the company to shore up its balance sheet and be better able to face these challenging economic times we are in. The LR1 vessels have been contracted at a very high specification and we feel very happy to enjoy such a strong relation and good cooperation with a preeminent shipyard like Hyundai Mipo. Megacore gives both Omega and the Glencore group a very strong platform to build upon going forward."
 

Maritime Reporter August 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

Strong Returns for Sovcomflot

Russia’s biggest shipping company PAO Sovcomflot (SCF Group) surpassed its own expectations and went forward on both revenue and net profit in the first six months.

CSDC Profts Soar

The bulker and tanker unit of state conglomerate China Shipping Group, China Shipping Development Co (CSDC) has delivered a first half performance which saw its profit spike,

Med Crude-Russian Urals Edges Lower in Med, Baltic

Russian Urals crude weakened in the Mediterranean and in the Baltic on Friday, while trading activity was limited ahead of a long holiday weekend in Britain, traders said.

 
 
Maritime Careers / Shipboard Positions Maritime Standards Naval Architecture Navigation Pipelines Pod Propulsion Port Authority Salvage Ship Simulators Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.3182 sec (3 req/sec)