Western Bulk has sold its subsidiary Western Bulk Chartering to Kistefos AS, a Norwegian private investment firm led by Christen Sveaas, who is chairman of the Oslo-listed shipping group.
Western Bulk Chartering’s (WBC) enterprise value is $47m, but Western Bulk will receive just $16m as a cash consideration for the business unit.
Kistefos, which controls around 60.4% of Western Bulk shares, will assume WBC’s treasury bonds and its outstanding debt of NOK271m ($31.36m) under its NOK300m ($34.71m) senior unsecured bond.
Western Bulk said the sale was made to boost its liquidity and was in the best interests of the group and its shareholders.
“The company is exposed to an increasingly challenging market situation with dramatically low dry bulk charter rates and guarantees granted by group companies for charters for certain ship owners. This has resulted in significant strains on the company’s short-term liquidity situation,” Western Bulk said in a filing today.
WBC operates a fleet of around 160 bulk carriers, according to the company’s Q3 2015 financial report. Most of its fleet are supramaxes, all of which are chartered-in for varying periods of time from different owners including Western Bulk Shipholding. In April 2015, WBC closed its panamax chartering unit, which had been struggling.
WBC will become an independent company as soon as the transaction is completed and will continue to operate under its current management “until further notice on arm’s-length terms agreed with the purchaser”, Western Bulk said. Kistefos also intends to offer Western Bulk’s existing shareholders the opportunity to acquire a pro-rata portion of WBC.
The sell-off requires approval from the majority of Western Bulk’s bondholders to be completed, for which a extraordinary general meeting is scheduled for around February 3.
The company aims to complete the transaction within three weeks of receiving the approval and to transfer the shares and bonds “within a few days”.