VLCCF - 4Q & FY 2014 Results
Knightsbridge Shipping Limited ( VLCCF ) reports net income of $5.2 million and earnings per share of $0.06 for the fourth quarter compared with a net loss of $6.2 million and a loss per share of $0.11 for the preceding quarter. Net income in the fourth quarter includes $6.4 million in respect of cash received in the fourth quarter as final settlement for a claim for damages and unpaid charter hire.
The net loss in the third quarter includes dry docking costs of $2.0 million in connection with the Belgravia and the Golden Future. The average daily time charter equivalent ("TCE") earned by the Capesize vessels in the fourth quarter was $13,200 compared with $10,200 in the preceding quarter. In February 2015, the Company estimates an approximately average cash cost breakeven rate for the remainder of the first quarter of 2015 on a TCE basis for its Capesize vessels of $13,000 per vessel per day.
Cash and cash equivalents decreased by $54.0 million in the fourth quarter. The Company generated cash from operating activities of $2.4 million, paid $106.9 million in respect of its newbuilding program, paid $4.0 million to shareholders, borrowed $58.5 million (net) from the banks and increased its restricted cash balance by $3.9 million.
For the year ended December 31, 2014, the Company reports net income of $16.0 million and earnings per share of $0.30 compared with a net loss of $3.9 million and a loss per share of $0.15 in the year ended December 31, 2013.
The net income in the year ended December 31, 2014 includes aggregate receipts of $19.6 million as settlements for claims for damages and unpaid charter hire and a receipt of $2.6 million upon the early termination of the time charter of the Belgravia. The net loss in the year ended December 31, 2013 includes a net loss from discontinued operations of $7.4 million. The average daily TCE earned by the Capesize vessels in the year ended December 31, 2014 is $14,600 compared with $21,100 in the year ended December 31, 2013.
THE PROPOSED MERGER WITH GOLDEN OCEAN GROUP LIMITED
On October 7, 2014, Golden Ocean Group Limited (“Golden Ocean”) and Knightsbridge announced that the two companies had entered into an agreement and plan of merger (the “Merger Agreement”), pursuant to which the two companies had agreed to merge, with Knightsbridge as the surviving legal entity (the “Combined Company”). The Combined Company will be renamed Golden Ocean Group Limited upon completion of the merger.
As a result of the expected merger, the Combined Company would become one of the world’s leading dry bulk companies with a modern fleet of 72 vessels, of which 34 are newbuildings under construction as of December 31, 2014. The merger is subject to approval by the shareholders of Golden Ocean and Knightsbridge in separate special general meetings which have been called for on March 26, 2015.
The record date for the shareholders meetings is set to February 16, 2015. The merger is expected to close at the end of March 2015. Completion of the merger is also subject to the execution of certain definitive documents, customary closing conditions and regulatory approvals.
Knightsbridge’s ordinary shares are currently listed for trading on the NASDAQ Global Select Market (“NASDAQ”), and Golden Ocean’s ordinary shares are currently listed for trading on the Oslo Stock Exchange (the "OSE") and the Singapore Stock Exchange. In accordance with the Merger Agreement, the Combined Company have applied for a secondary listing of the ordinary shares on the OSE. After the merger its ordinary shares will be listed for trading on both NASDAQ and the OSE. The Singapore Stock Exchange (the “SGX”) has approved the delisting of Golden Ocean on the SGX and it is expected that Golden Ocean will be delisted from the SGX on March 20, 2015.
Shareholders of Golden Ocean will receive shares in Knightsbridge as merger consideration. Pursuant to the Merger Agreement, one share in Golden Ocean will give the right to receive 0.13749 shares in the Company, and the Company will issue at most a total of 61.5 million shares to shareholders in Golden Ocean as merger consideration.
On October 30, 2014, two of the 13 Capesize newbuildings purchased from Frontline 2012 Ltd in September 2014, KSL San Francisco and KSL Santos, were delivered from the yard and commenced trading in the spot market. The final installments of $36.5 million and $37.6 million, respectively, were paid at the time of their delivery.
In January 2015, Knightsbridge took delivery of KSL Sakura, KSL Seville, KSL Seoul and Golden Kathrine. These are four of the newbuilding vessels that were purchased from Frontline 2012 in September 2014.In January 2015, Knightsbridge entered into an agreement with RWE Supply & Trading GmbH, a wholly owned subsidiary of RWE AG (a major European energy company), for chartering out a total of 15 Capesize vessels on long term, index-linked contracts. The vessels are expected to be delivered over the next five quarters starting in the first quarter of 2015.
Knightsbridge originally filed a Registration Statement on Form F-4 with the Securities and Exchange Commission on November 18, 2014, which was declared effective on February 25, 2015, and Knightsbridge and Golden Ocean have called special general meetings on March 26, 2015 to request approval of the previously announced merger, which is
expected to close by the end of the first quarter 2015.
On February 5, 2015, an agreement was signed between Knightsbridge (as guarantor), various SPCs (as borrowers) and various banks for a $425.0 million senior secured post-delivery term loan facility. The purpose of the loan is to partially finance 14 newbuilding vessels. The loan is divided into 12 tranches of $30.0 million and two tranches of $32.5 million.
80,121,550 ordinary shares were outstanding as of December 31, 2014, and the weighted average number of shares outstanding for the fourth quarter was 80,121,550.