Tuesday, June 29, 2010

Dry Bulk Shipping Line Increases Fleet 30% With Another 16 New Vessels

Genco Agree to Buy Yet More Ships This Month
Shipping News Feature

US - Genco Shipping & Trading Limited, the drybulk specialists and owners of Baltic Trading Ltd., have agreed to purchase a further sixteen ships, all Supramax size and including two new builds, from Setaf SAS, a wholly owned subsidiary of Bourbon SA, for an aggregate purchase price of $545 million. This news comes after our story of just two weeks ago when the group announced they were to invest in five Handysize carriers, the new acquisitions will take their fleet to fifty three vessels with a total carrying capacity of approximately 3,813,000 dwt and an average age of approximately 6.4 years.

Genco intends to retain 13 of the vessels, 12 of which are expected to be delivered to Genco in the third quarter of 2010, with the remaining vessel scheduled to be delivered in the first quarter of 2011. Six of these 13 vessels are secured on time charters with remaining durations between approximately one month and 54 months.

The company plans to finance the acquisition of these vessels using bank debt for approximately 60% of the purchase price, cash on hand, and up to $150 million of capital markets financing in the debt, equity-linked and equity markets, depending on which is more attractive at the time. If Genco does not obtain financing sufficient for the acquisition by July 13, 2010, they can withdraw from the deal.

John C. Wobensmith, Genco’s Chief Financial Officer, commented:

"With these agreements to acquire 13 Supramax vessels and five Handysize vessels, Genco is poised to considerably expand its modern, high-quality fleet by 31% on a deadweight tonnage basis. In maintaining our disciplined approach to growth, this en bloc transaction meets our strict return criteria related to earnings and cash flow accretion as well as return on capital hurdles.”

Genco President Robert Gerald Buchanan said:

“Our agreement to acquire 13 Supramax vessels at a compelling valuation significantly strengthens Genco's industry leadership and enhances the age profile of the Company's modern fleet. As we continue to take advantage of the positive long-term demand for core commodities in China, India and other developing countries, we will maintain our focus on employing a large portion of our expanding fleet on favorable contracts with world-class charterers."

Photo; ‘Endeavor’ Setraf owned 30,000 tonne Cement Carrier Built last year.