Golden Ocean Agrees Refinancing amid Weaker Markets

Norway-based dry bulk shipping company Golden Ocean Group Limited (GOGL) has reached refinancing deals related to 14 ships.

During the second quarter of 2019, John Fredriksen’s company entered into two new credit facilities, one for USD 93.7 million and one for USD 131.8 million, to refinance its obligations under the three non-recourse loan facilities which financed the 14 vessels acquired from Quintana Shipping in 2017. The new loans each have a five-year tenor and a 19-year age adjusted profile.

“The refinancing was done at favorable terms with both existing and new lenders. The refinancing reduces the cost of the debt for these vessels from a margin of 310 bps to 212 bps, and extends the amortization profile, which reduces the company’s daily running cash break even rates by USD 1,300 for these 14 vessels and by USD 200 for the entire fleet,” Per Heiberg, Chief Financial Officer of Golden Ocean Management AS, said.

In the first quarter of the year, the company extended its USD 420 million term loan facility for the 14 vessels by three years from June 2020 to June 2023 without amending existing terms and conditions and upsized the facility to partially finance the installation of scrubbers on up to 11 vessels.

The developments were revealed as part of the company’s first quarter of 2019 financial report, in which GOGL said that it recorded a net loss of USD 7.5 million in the quarter, compared with a net income of USD 23.6 million seen in the fourth quarter of 2018.

“Golden Ocean’s first quarter results reflect a weaker market environment brought about by disruptions in iron ore trade and continued uncertainty due to trade tensions. Strong commercial performance with well-timed contract coverage late last year combined with a modern, fuel-efficient fleet allowed the company to generate earnings well above the market benchmarks in the quarter,” Birgitte Ringstad Vartdal, Chief Executive Officer of Golden Ocean Management AS, said.

“In weaker markets with high fuel prices, the value of fuel efficiency gains relative importance. With IMO 2020 approaching we believe the benefit of having a modern, fuel efficient fleet will continue to be a competitive advantage in the market,” Vartdal added.