Golden Ocean Resells Six Bulk Carriers

Thursday, November 15, 2007
A multinational shipping firm that has signed a deal to have its ships built at an Indian shipyard, which is still under construction, has already sold the ships, an indication of growing demand for ocean-going vessels. This is the first time such a thing is happening at an Indian shipyard. The yard, Pipavav Shipyard Ltd, is under construction and will not start building ships before February 2008. On 19 March, the Bermuda-based Golden Ocean Group Ltd.—the dry bulk cargo ship operating firm controlled by Norwegian shipping tycoon John Fredriksen—had placed orders with Pipavav Shipyard to build four Panamax bulk carriers, each with a cargo carrying capacity of 75,000 tonnes. The agreed price of each vessel was $35.5m. The company also placed an "optional" order for two more Panamax vessels. Subsequently, on 2 July, Golden Ocean exercised the option to build the two vessels, at a price of $36m each. According to the contract signed between the two parties, the six bulk carriers were scheduled to be delivered to the owner between March 2009 and July 2010. But instead of taking their delivery in 2009 and 2010, Golden Ocean has sold the vessels. The Oslo stock exchange-listed Golden Ocean issued a statement saying it had agreed to sell the six Panamax vessels that will be built at Pipavav Shipyard to an unnamed European owner for a total consideration of $352.8m. That will value each ship at $58.8m, which is about 63% more than what it had agreed to pay Pipavav Shipyard. The shipbuilding yard will not benefit in any way from such resale by the owner who had placed the order initially. In this case, Pipavav Shipyard will get the price agreed to in March ($36m) and the profit from the resale will go entirely to the first owner (Golden Ocean). Pipavav Shipyard chief executive officer Ray Stewart could not be reached for comment. Buying and selling vessels is a normal part of the shipping business, and owners are known to sell shipping assets even while they are under construction at a yard. In this case, the sale has taken place at a shipbuilding facility that is being set up, but has not yet started constructing ships. Much ahead of starting operations, Pipavav Shipyard, promoted by Skil Infrastructure Ltd., has signed up shipbuilding orders worth $1.1b as global fleet owners look for yards in countries such as India, Vietnam, and China to build their ships in the wake of the full order book position of shipyards in maritime strongholds such as Japan, South Korea, and Norway. Once completed, Pipavav claims it will be the largest shipbuilding facility in India and the fifth largest in the world, with a capacity to build 12 large ships and other offshore assets in a year. Pipavav has managed to attract several investors, including Punj Lloyd Ltd., one of India's top offshore engineering firms. In August, Punj Lloyd acquired a 25% stake in Pipavav. Other investors include Infrastructure Leasing & Financial Services Ltd., Industrial Development Bank of India Ltd, Exim Bank, UTI Mutual Fund and a string of private equity firms— 2i Capital Pcc, Trinity Capital (Nine) Ltd, New York Life Insurance Fund, New York Life Investment Management India Fund (FVCI) II LLC (Mauritius) and ABN AMRO Asia Merchant Bank (Singapore) Ltd. [Source:]
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