The Genco Shipping & Trading Ltd (Genco) has initiated an agreement to acquire two 2016-built, South Korean 180 000 DWT capesize vessels for a purchase price of approximately US$98 million.
Move to promote fuel-efficient vessel
The agreement is a follow up on Genco’s previous announcement agreements to purchase two 2015-built 180 000 DWT capesize vessels, one 2016-built 60 000 DWT ultramax vessel and one 2014-built 61 000 DWT ultramax vessel. Genco intends to fund the acquisition of these fuel-efficient vessels with a new credit facility, as described below, and cash on hand. All six vessels are expected to deliver to Genco in the third quarter of 2018.
Five year commitment
The company has received a commitment for a five-year senior secured credit facility to be led by Crédit Agricole Corporate & Investment Bank with an estimated aggregate principal amount of approximately US$107 million. Under the terms of the new credit facility, borrowings are to bear interest at LIBOR plus 250 basis points through 30 September 2019 and LIBOR plus a range of 225 to 275 basis points thereafter, dependent upon Genco’s ratio of total net indebtedness to the last twelve months EBITDA.
Strategy favours dry bulk
CEO of Genco, John C. Wobensmith, said: “Following our success in transforming Genco’s commercial platform, we have taken another important step in implementing our strategy of positioning Genco to more fully capitalise on the favourable dry bulk fundamentals. Our ability to access the capital markets and commercial bank financing highlights our industry leadership and has enabled us to enter into attractive vessel acquisitions and benefit from an improving dry bulk market. Building on our successful capital raise and the closing of our US$460 million credit facility, we are pleased to have a commitment for a new facility with attractive pricing and a favourable amortisation profile.”
He further said, “We expect our pending acquisitions of a total of six modern, fuel efficient vessels to increase our earnings power during a time when the dry bulk vessel supply growth rate remains near multi-decade lows and the global demand for iron, coal and other dry bulk commodities is strong”.
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Source: Dry bulk news and industry magazine
