Do not expect to see 2020 Bulkers sell any more of its newcastlemax bulk carriers going forward.
The Oslo-listed company cashed in the 208,445-dwt Bulk Shanghai and 207,992-dwt Bulk Seoul (both built 2019) to an unaffiliated third party on Monday, since revealed by TradeWinds as Neda Maritime of Greece.
But chairman Magnus Halvorsen said the sale was an opportunistic one.
“These two vessels sold were financed with a higher interest cost, as well as higher leverage than the rest of our bank financed fleet,” he said.
“We have been open to selling these vessels for a sometime and now an opportunity presented itself after a nice rebound in values during recent months.
“As a result of the sale, we will release substantial cash that can allow for both extraordinary return of capital to shareholders and/or further reduction of debt.”
The shipowner will book a net gain of about $40m for the ships, both of which are fixed on index-linked charters that expire in March.
The two vessels are currently owned by Norwegian lessor Ocean Yield under a sale-and-leaseback arrangement and 2020 Bulkers exercised its option with Ocean Yield to carry out the sale.
The strategy has always been about maintaining a relatively low debt ratio based on attractively priced debt and to keep its daily cash breakeven low to maintain its capacity to pay dividends, Halvorsen explained.
Looking ahead, 2020 Bulkers wants to focus on lowering its daily costs further.
Following the sale of these two vessels, 2020 Bulkers’ estimated cash breakeven will be reduced by $1,900 per day to $14,500 per day. Average gross debt per vessel will fall by about $2m to about $23.7m.
“Going forward, we want to be a company with an even lower cash breakeven, which on the margin should provide for more resilient dividend capacity, even when the market is going through weaker periods,” Halvorsen said.
“A lower breakeven rate will also make us less dependent on taking fixed cost coverage in weaker periods and thus over time allow us to maintain more optionality through exposure to the spot market if we so wish.
“We have no plans to sell any more ships at this time.”
Analysts have been positive over the sale by Tor Olav Troim-backed 2020 Bulkers this week.
“Overall, given the recent rise in asset values and market strength, the sale, is in our view, highly attractive and we view it as opportunistically solid,” Fearnley Securities said.
Analysts at the Norwegian finance house said the sale created significant dividend potential that should not be underestimated.
