Golden Ocean Reshuffles Fleet, Delays Newbuilds

 

Golden Ocean Group Limited has entered into several agreements concerning its fleet.

Golden Ocean has agreed with Ship Finance International Ltd ("Ship Finance") a sale leaseback transaction of eight Capesize vessels currently owned by Golden Ocean.

The vessels are named Golden Beijing, Golden Zhoushan, Golden Magnum, Battersea, Belgravia, Golden Zheijang, Golden Future and KSL China and were built in Korea and China between 2009 and 2013. The total acquisition price will be $272 million, or $34 million average per vessel. The vessels are expected to be delivered to Ship Finance within July 2015, subject to customary closing conditions.
 
The vessels will be chartered on time-charter basis to a subsidiary of Golden Ocean for a period of 10 years. The daily base charter rate will be $17,600 during the first seven years, and $14,900 thereafter. In addition, there will be a 33% profit share for revenues above the base rate, calculated and paid on a quarterly basis. Golden Ocean will have a purchase option after year 10 of $112 million enbloc, and if such option is not exercised, Ship Finance will have the option to extend the charters by 3 years at $14,900 per day.

Golden Ocean has also reached agreements with several of its yards to delay the construction of the newbuilding contracts with about 75 months on aggregate basis. This will postpone capital expenditure and possible cash burn on sailing vessels as the market is currently below cash break even. After this it is expected that 6 vessels will be delivered in 2015, 15 vessels in 2016 and 4 vessels in 2017.  There is still work in progress to improve delivery positions further.

Golden Ocean has also agreed to sell four of the Capesize vessels currently under construction at a Chinese yard to a third party. The Company will finalize the construction of the vessels and transfer ownership to the new owner upon delivery from yard. For three of the vessels Golden Ocean will charter the vessels back on time charter for 6 to 12 months. The sales price is in line with the original contract price.

Further, the Company has sold the vessels Channel Alliance and Channel Navigator to a third party, as part of the Company's fleet renewal. These vessels will be delivered to new owners within the end of June 2015.

When these adjustments to the fleet have been completed the Company will have an owned and long term chartered in fleet of 40 Capesize vessels, in addition to one owned in a JV, 10 ice class Panamax vessels, 1 Panamax vessel, 9 Kamsarmax vessels and 9 Supramax vessels. Of the total fleet, 17 Capesize vessels and 4 Supramax vessels are newbuildings to be delivered to the Company. Following these transactions Golden Ocean has secured financing for all newbuilding contracts except nine vessels with delivery in 2016 and 2017 and none of the existing loan facilities are due for refinancing before 2018.

These various initiatives are taken in order to strengthen the cash position and balance sheet of the company in the current weak market. Golden Ocean is not abandoning its strategy to be a much needed consolidator within the industry, but is rather positioning itself for interesting opportunities which are expected to be available over the coming months.