Golden Ocean seeks to cut newbuilding exposure

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Tony Gray - Monday 1 December 2008

John Fredriksen's Golden Ocean is seeking to reduce its $1.6bn newbuilding exposure

DRY bulk shipping specialist Golden Ocean is seeking to reduce its $1.6bn newbuilding exposure at the same time as putting together a financing package that will help the company survive a persistent downturn in the freight market. 
The John Fredriksen company’s gameplan was disclosed along with third quarter results which show net income more than doubled to $118.7m from $52.9m in the like period of last year, or to $0.43 from $0.20 on a per share basis. 
However, the advance reflected a gain of $54.4m on the sale of one panamax newbuilding delivered from China’s Jiangsu Rong Sheng Heavy Industries and one capesize newbuilding delivered from Daehan Shipyard in South Korea. 
Golden Ocean said the fourth quarter would “continue to show positive operating income,” based on the “strong” charter coverage. 
“However, the company’s main focus will be to monitor a tight liquidity situation caused by a very weak spot market and a difficult financing environment.” 
Golden Ocean, which has a newbuilding programme of 30 vessels, is seeking ‘amendments’ to its contracts. 
“The purpose of such a discussion is to reduce, postpone or achieve financing for parts of this newbuilding program and thereby improve the company’s liquidity position,” the company said. 
“A constructive dialogue has been established with the yards; however, no results have so far been achieved.” 
Golden Ocean said about 55%of the remaining newbuilding programme had committed financing. 
Out of the $385m in capital expenditure payable in 2009, 76% had already been financed. 
“The company has a good dialogue with the banks in order to achieve a resistant total financing package which can make the company less vulnerable if the market continues to be weak for some time,” Golden Ocean said. 
“Such a package will, however, be dependent of cancellation and or postponement of part of the newbuilding programme.”