Australian livestock carrier group Wellard is selling and chartering back one of its modern vessels as part of a restructuring plan to reduce debts and improve financial and operating flexibility.
The Fremantle-based company is getting $22m for the Ocean Swagman (built 2010) in a deal that comes a month after the company parted way with long-term boss and chief executive Mauro Balzarini.
The Ocean Swagman, which has a capacity of 7,000 cattle or 26,000 sheep, has been bought by Heytesbury Holdings.
Booking a loss
Heytesbury is a minority shareholder that started buying into Wellard two years ago and today owns holds 11.4% of its shares.
The Ocean Swagman will be chartered back to Wellard until March 2021 at an initial rate of $7,232 per day, with the option to extend the fixture for up to four years at market levels.
Heytesbury’s purchase of the Ocean Swagman provides an attractive opportunity for Wellard to realise the equity value in the ship while retaining continued use of the vessel for chartering or exporting opportunities
John Klepec
Wellard will book a loss of around $7.6m on the sale of the vessel.
Just two years ago, Wellard sold the sister ship Ocean Outback (built 2010) for $26m.
Wellard’s executive chairman, John Klepec, said in a statement that the transaction reduces Wellard’s debt profile and provides additional time and ability to restructure the company’s balance sheet.
Reducing debt
He said the sale of the Ocean Swagman will reduce Wellard’s debts of $85m to around $64m.
Some $6m will be used to settle debts with German financier Nord/LB, while another $10m will be paid to convertible noteholders.
“Heytesbury’s purchase of the Ocean Swagman provides an attractive opportunity for Wellard to realise the equity value in the ship while retaining continued use of the vessel for chartering or exporting opportunities,” Klepec said.
Ocean Swagman is one of four livestock carriers in the fleet of the Fremantle-based company built between 1994 and 2016, including the Ocean Drover, Ocean Shearer, and Ocean Ute.
'More work to do'
The sale also lets Wellard renew a standstill agreement with bondholders, who are still owed $5.5m.
“There is still more work to do on the balance sheet to get it to a level where it needs to be, and this remains a priority for the company,” Klepec said.
In June, Balzarini stepped down as chief executive of Wellard, one of Australian biggest live export businesses, which has struggled since being floated in 2015.
Balzarini’s departure was made possible after it negotiated the removal of certain “key man” clauses and their consequences, contained in a vessel finance agreement with Italian bank Intesa Sanpaolo.
