Norwegian shipping tycoon plans to merge dry bulk shipping assets

Norwegian shipping tycoon John Fredriksen plans to merge his dry bulk shipping arms Golden Ocean and Knightsbridge Shipping in an attempt to fight off a downturn in the sector and create one of its biggest fleets.

Fredriksen, who owns a plethora of shipping assets ranging from offshore rig firm Seadrill to tanker group Frontline, would own 42 percent of the combined firm, to be named Golden Ocean Group, the companies said in a statement.

“With the current weakness in the dry bulk market, we believe there will be attractive consolidation opportunities going forward,” Knightsbridge said.

“Upon an expected recovery of the dry bulk market and as newbuilds are brought into the fleet, we believe the Combined Company will generate significant cash flow,” it added.

Golden Ocean shares, which had plummeted on Tuesday to a 14-month low of 6.39 Norwegian crowns, bounced more than 5 percent on news of the deal, which will involve its takeover by Knightsbridge before the merged group is renamed.

Under the terms of the deal, each share in Golden Ocean will qualify for 0.13749 shares in Knightsbridge, which will issue a total of 61.5 million shares to investors in the target company.

The dry bulk industry has been in a six-year slump as the global financial crisis dented demand for commodities just as shipping firms took delivery of new vessels ordered before the market’s crash.

With the price of key commodities, like iron ore, falling further, the market’s recovery could be even longer than previously thought, analysts said.

The combined Golden Ocean Group will have 72 vessels, including 36 currency under construction. The fleet will include 46 capesize vessels, among the biggest in the world, and will also have 10 ice class vessels, capable of traversing the northern sea route.

The acquisition is conditional on approval from holders of 75 percent of the equity in both companies as well as regulatory clearance. Shareholder meetings to vote on the deal will be held at a date to be set either in December or January.
Source: Reuters (Editing by David Holmes)