GOGL – First Quarter 2015 Results
In this report, the Company is defined as Knightsbridge Shipping Limited prior to the Merger on 31 March 2015, and the combined company, renamed to Golden Ocean Group Limited, following the Merger with the Former Golden Ocean.
Knightsbridge completed the merger with the Former Golden Ocean on March 31, 2015 and was renamed Golden Ocean Group Limited.
The Company reports a net loss of $15.3 million and a loss per share of $0.18, excluding vessel impairment loss and bargain purchase gain, for the first quarter of 2015
The Company reports a net loss of $75.3 million and a loss per share of $0.88 for the first quarter of 2015.
The Company reports EBITDA of $(3.6) million and EBITDA per share of $(0.04) for the first quarter of 2015.
The Company took delivery of five Capesize newbuildings in the first quarter.
In January 2015, the Company entered into an index-linked, long term time charter contract for chartering out a total of 15 Capesizes.
In February 2015, the Company entered into a $425.0 million secured post-delivery term loan facility to part finance 14 newbuilding vessels.
In March 2015, the Company completed the previously announced acquisition of 12 newbuilding contracts from Frontline 2012.
In April 2015, the Company received $40.1 million in relation to the cancellation of newbuilding contracts at Jinhaiwan.
In April 2015, the Company agreed to the sale of two vessels, which were acquired as a result of the Merger.
In April 2015, the Company agreed to the sale of four newbuilding Capesize vessels, which were owned by the Company prior to the completion of the Merger.
In April 2015, the Company agreed to a sale and leaseback transaction with Ship Finance for eight Capesize vessels.
In April 2015, the Company agreed to postpone delivery of several of its newbuilding contracts by 79 months in aggregate.
In May 2015, the Company took delivery of one Supramax newbuilding.
Merger with Golden Ocean
On October 7, 2014, the Company (formerly Knightsbridge Shipping Limited) and Golden Ocean Group Limited, or the Former Golden Ocean, entered into an agreement and plan of merger, the Merger, pursuant to which the two companies agreed to merge, with the Company as the surviving legal entity. The Merger was approved by the shareholders of the Former Golden Ocean and the Company in separate special general meetings, which were held on March 26, 2015. At the special general meeting of the shareholders of the Company, the Amended and Restated Bye-laws of the Company were adopted and it was also agreed that the name of the Company be changed to Golden Ocean Group Limited immediately after the effective time of the Merger.
The Merger was completed on March 31, 2015, at which time the Company acquired 100% of the Former Golden Ocean’s outstanding shares and the name of the Company was changed to Golden Ocean Group Limited. Shareholders in the Former Golden Ocean received shares in the Company as merger consideration. Pursuant to the Merger Agreement, one share in the Former Golden Ocean gave the right to receive 0.13749 shares in the Company, and the Company issued a total of 61.5 million shares (gross) to shareholders in the Former Golden Ocean as merger consideration. Prior to completion of the Merger, the Company had 111,231,678 common shares outstanding.
Following completion of the Merger, and pursuant to the merger agreement, the cancellation of 51,498 common shares (which were held by the Former Golden Ocean) and the cancellation of 4,543 common shares (which account for fractional shares that we will not be distributed to the Former Golden Ocean shareholders as merger consideration), the Company has 172,675,637 common shares outstanding. Trading in the Company’s shares commenced on the Oslo Stock Exchange on April 1, 2015 under the ticker code “VLCCF”. Commencing on April 7, 2015, the Company’s shares traded on the Oslo Stock Exchange under the ticker code “GOGL”. The Company’s common shares began trading under our new name and ticker symbol “GOGL” on the Nasdaq Global Select Market on April 1, 2015.
The results for the three months ended March 31, 2015 (and comparatives for the three months ended March 31, 2014 and full year 2014) are those of the former Knightsbridge Shipping Limited while the balance sheet at March 31, 2015 includes the asset and liabilities of the Former Golden Ocean (based on a preliminary assessment of the fair values of such assets and liabilities) and thereby reflects the Merger, which was completed on that date. The balance sheets at March 31, 2014 and December 31, 2014 are those of the former Knightsbridge Shipping Limited.
First Quarter 2015 Results
The Company reports a net loss of $15.3 million and a loss per share of $0.18 for the first quarter, excluding a vessel impairment loss of $141.0 million and preliminary bargain purchase gain of $80.9 million, compared with net income of $5.2 million and earnings per share of $0.06 for the preceding quarter. Net income in the preceding 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 average daily time charter equivalent (“TCE”) earned by the Capesize vessels in the first quarter was $3,100 compared with $13,200 in the preceding quarter. The earnings in the first quarter were hit by idle vessels and vessels being delivered from yard with expensive bunkers and start-up costs.
The Company has recorded a vessel impairment loss of $141.0 million in the three months ended March 31, 2015. This impairment loss relates to five vessels (KSL China, Battersea, Belgravia, Golden Future and Golden Zhejiang), which the Company in April 2015 has agreed to sell to, and lease back, from Ship Finance. (See Fleet Development below). The impairment loss represents the amount by which the carrying value of the vessels exceeded the sales price.
The fair value of the Former Golden Ocean’s identifiable tangible and intangible assets acquired and liabilities assumed is based on a preliminary estimate of fair values and this is in excess of the consideration amount. Management has reassessed whether it has correctly identified all of the assets acquired and all of the liabilities assumed and this excess remains. Consequently, the Company recognized a bargain purchase gain of $80.9 million in the income statement in the three months ended March 31, 2015.
The Merger has not had an impact on the results of operations in the three months ended March 31, 2015, except for the bargain purchase gain, as it was completed at the end of the quarter. Consequently, the results of the Former Golden Ocean for the first quarter are not reported but the asset and liabilities are included in the balance sheet at quarter end (based on a preliminary assessment of the fair values of such assets and liabilities).
Cash and cash equivalents increased by $143.1 million in the first quarter. Cash of $128.0 million was acquired upon completion of the Merger and the Company acquired $108.6 million in connection with the acquisition of 12 SPCs from Frontline 2012 Ltd, or Frontline 2012. Cash of $6.2 million was absorbed by operations, the Company paid $222.6 million in respect of its newbuilding program, increased bank borrowings by $141.8 million (net of debt fees paid) and increased its restricted cash balance by $6.5 million.
The full report is available in the link below.
May 28, 2015
The Board of Directors
Golden Ocean Group Limited
Questions should be directed to:
Herman Billung: CEO Golden Ocean Management AS
+47 22 01 73 41
Birgitte Ringstad Vartdal: CFO Golden Ocean Management AS
+47 22 01 73 53
Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements, which include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. Words such as “believe,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “plan,” “potential,” “may,” “should,” “expect,” “pending” and similar expressions identify forward-looking statements. The forward-looking statements in this press release are based upon various assumptions. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this communication.
In addition to these important factors and matters discussed elsewhere herein, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions, including fluctuations in charter hire rates and vessel values, changes in demand in the dry bulk market, changes in our operating expenses, including bunker prices, drydocking and insurance costs, the market for our vessels, availability of financing and refinancing, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events or acts by terrorists, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission.