An investment vehicle owned by Koch Industries has bought a stake in 2020 Bulkers through a placement of shares sold by Tor Olav Troim and a private equity firm.
TradeWinds understands that funds raised from the sale will go towards funding the construction of LNG-fuelled newcastlemax bulkers that Troim ordered separately from 2020 Bulkers. Troim is the Oslo-listed bulker owner's primary backer.
Spring Creek Capital has purchased 1.5m of the shipowner's Oslo-listed shares, which is equivalent to a 6.8% stake in the company, according to regulatory disclosures.
Shares were sold in the placement at NOK 103 each, making Spring Creek's tranche worth around NOK 154.5m ($18.6m).
Secondary placement
2020 Bulkers announced on Monday that the two shareholders were contemplating selling up to 14.2% of the company through the sale of between 1.25m and 1.9m existing shares.
At that time, the shipowner said that "one industrial investor" — since revealed as Spring Creek Capital — had subscribed and been allocated 1.5m shares, covering most of the book before the placement was launched.
Drew Holdings, a trust controlled by 2020 Bulkers' backer Troim, reduced its holding in the company from just over 32% to 24.8% in the placement by selling 1.9m shares.
Shares were also sold by Luxembourg-based insurer Foyer Finance, which held the shares in connection with an insurance policy for Norwegian private equity firm Ubon Partners.
Foyer sold 1.25m shares and now owns 3.5% of 2020 Bulkers, having previously held 9.17%.
2020 Bulkers managing director Magnus Halvorsen told TradeWinds that 2020 Bulkers was pleased to deepen its relationship with Koch Industries, a US commodities and industrial conglomerate.
"We have had an excellent relationship with them as a customer since we took delivery of our first vessel, and we are of course honoured and humbled that one of the world's largest and most successful private companies has decided to buy shares in our company," he said.
Six of the shipowner's eight newcastlemaxes are on long-term charter to Koch Shipping and the other two are on long-term charters to commodities giant Glencore until 2023.
Gas-fuelled bulker investment
TradeWinds understands that Troim intends to spend cash raised in the placement on four LNG-fuelled newcastlemaxes ordered by his private concern Magni Partners.
The quartet are scheduled for delivery in 2023 and 2024.
"The reason why Magni has ordered LNG-fuelled ships is to develop its LNG bunkering business," according to a term sheet circulated by banks during the share placement.
Excitement briefly surrounded 2020 Bulkers in March when it was thought the owner was poised to order up to 12 dual-fuel newcastlemaxes worth close to $820m at China's New Times Shipbuilding.
This was swiftly denied by Halvorsen, who on Monday reiterated to TradeWinds that 2020 Bulkers has no interest in newbuildings and will focus on returning dividends to shareholders.
But LNG fuel was taken into consideration when 2020 Bulkers first ordered its eight newcastlemax vessels in 2017 and 2018.
Troim told TradeWinds in an interview that despite him being an LNG evangelist, 2020 Bulkers decided against using the liquefied gas as fuel for the newbuildings because it was too expensive at that time.
"I think what we have learnt over the last couple of years is that the price of LNG equipment is coming down," he said in the 2019 interview.
Magni, which Troim founded after parting company with John Fredriksen in 2014, has made investments in the small-scale LNG distribution space.
'Dividend potential'
2020 Bulkers' shares were trading in Oslo at NOK 111.50 as of 10:30am on Tuesday, up by 4.2% since the open of trading.
In April, analysts from Arctic Securities praised 2020 Bulkers' "strong dividend potential", but said its first-quarter results fell slightly below expectations.
The Oslo-listed shipowner recorded net profit of $5.8m for the first three months of 2021, according to its financial report.
This is down slightly from the previous quarter but up from the $300,000 profit it made in the same period in 2020.
Analysts think even bigger earnings and dividends could be on the way from 2020 Bulkers if its vessels continue to earn a premium in the strong capesize market.
The firm has declared total cash distributions of $0.26 per share for the first three months of the year.
This article has been amended since publication to reflect that shares were sold by Foyer Finance, rather than Ubon Partners.
