Western Bulk ASA to sell Western Bulk Chartering AS

Western Bulk to transfer assets after meeting Wednesday. 

The board of directors of Western Bulk ASA (Western Bulk) have initiated a rapid sale agreement that will see Western Bulk Chartering AS sold to a wholly-owned subsidiary of Kistefos AS for $47 million.

The board, which said it first discussed it was exploring "available solutions to ensure the future viability of the Company" will proceed with the deal according to an "accelerated sales process."

"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," said Western Bulk.

"This has resulted in significant strains on the Company's short term liquidity situation."

The transaction is conditional upon approval from the company's bondholders, but the board hopes to complete the transfer of shares and bonds within a "few days."

Once the deal is completed Western Bulk Chartering AS will be an independent company outside the Western Bulk Group, and WB Chartering will enjoy a "more robust financial position and will have a viable basis for further operations," according to the release.

The company will continue its operations with the current key management until further notice.

The accelerated sales process demanded by the challenging liquidity situation have necessitated a unique set of procedural rules for the sale be adopted; a shareholder meeting to approve the sale of WB Chartering to the purchaser will be held by the company on or about February 3, 2016.

In order to rectify non-compliance with statutory procedural rules, the shareholders will be invited to a subsequent extraordinary general meeting confirming the resolution to approve the transaction as soon as possible; Kistefos AS controls approximately 60.4 percent of the shares.

The dry bulk markets have experienced an unprecedented downturn over the last year, a situation that has only worsened in 2016.

On Wednesday Ship & Bunker reported that, as the Baltic Dry Index fell to another record low of 303, dry bulk players are facing the reality that mass scrapping and lay-ups of vessels will be necessary to address the slump.