Knightsbridge Fleet Merger Half-Way There

Knightsbridge Tankers Limited has completed the first stage of its previously announced shares for vessels transaction with Frontline 2012 Ltd. Knightsbridge has issued 31 million shares in exchange for 11 Cape size bulk carrier newbuildings, and two Newcastlemax newbuildings.

Back in April 2014, Knightsbridge Tankers and Frontline 2012 agreed to combine Frontline 2012’s remaining fleet of 25 vessels with Knightsbridge.

The newbuildings are expected to be delivered between September 2014 and September 2016, with five vessels planned for delivery 2014, 14 vessels in 2015 and six vessels in 2016.

Prior to the agreement Knightsbridge  had acquired five Capesize newbuildings from Frontline 2012 and one vessel from Hemen Holding Ltd.

The companies say that the combination of Knightsbridge and Frontline 2012 Capesize fleet will create the leading US listed Capesize company with a fleet of 39 vessels.

Commenting on the April agreement, Ola Lorentzon, Chief Executive Officer of Knightsbridge, stated: “The Frontline 2012 transaction will be a transformative step for the Company and will make us the leading US listed Capesize owner.

With a fleet of 39 modern vessels, of which 34 are “Eco design” fuel efficient vessels, which could achieve higher time charter equivalent earnings than existing vessels in any market situation and a targeted breakeven rate below USD 15,000 per day, we are setting the groundwork to be in a unique position to benefit from an expected dry bulk market recovery.

As the market recovers we expect this transaction to be highly accretive to our cash flow per share and give us the ability to pay high dividend to our shareholders.”

The closing is being executed in two stages, with 31 million shares issued on September 15, 2014 and another 31 million shares expected around March 15, 2015.