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Japanese shipowners blast ‘unfair’ Western Bulk Chartering sell-off

Six unnamed Japanese shipowners say Kistefos’ acquisition of Western Bulk Chartering (WBC) should be reversed because the company was undervalued and its sale robbed Bulk Invest (was Western Bulk) of much-needed liquidity.

The shipowners believe Kistefos bought WBC at below the fair market price, therefore cutting Bulk Invest’s liquidity and increasing its risk of bankruptcy, according to Norwegian press. The shipowners claim the deal treated Bulk Invest’s creditors unfairly in comparison to its bondholders.

Kistefos is a private investment firm led by Christen Sveaas, who is chairman of Oslo-listed Bulk Invest. The firm acquired WBC in early February for an enterprise value of $47m, comprised of $16m in cash and the acquisition of an unsecured bond worth NOK 271m ($31m).

An independent, indicative cost assessment conducted by Deloitte after the deal’s completion indicated that the real value of WBC is between $60m and $100m, according to a release from lawyer Kristian Lindhartsen from Oslo-based law firm Kyllingstad Kleiveland, seen by Norwegian press.

The Japanese shipping companies have a residual claim against Western Bulk for long-term timecharters worth a combined $172m related to 23 new Japanese-built bulkers of around 60,000 dwt, Lindhartsen stated.

In November, Bulk Invest (then Western Bulk) agreed with certain vessel owners and its banks to amend financial covenants for some loan agreements and related bareboat charter and timecharter contracts. A recapitalisation plan was launched in which $15m in additional equity was to be raised through a partially guaranteed rights offering – but this was cancelled as soon as WBC was sold. Lindhartsen said the premise of the dialogue was that Kistefos would contribute $10m through the private placement but did not.

Western Bulk’s CEO Jens Ismar told Norway’s Dagens Næringsliv:The transaction is conducted in a proper manner, and I do not understand on what basis this is done. We have been in dialogue with the Japanese to try to restructure the company, and this does not match the previous signals.”

Earlier this month, Bulk Invest sent a written request to its creditors, asking for dialogue to resolve the company’s financial situation.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.
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