Under this transaction, Odfjell will issue new shares to Ceres in exchange for the following
assets:
· 9 chemical tankers aggregating 335,000 dwt, built 1986 - 1988;
· 4 newbuildings aggregating 160,000 dwt for delivery 2001 - 2002;
· and in addition, Odfjell will purchase 100% of the shares in Seachem, the pool company
The balance of the Seachem fleet will be commercially managed by the combined company.
The transaction equals about USD 360 mill. investment on the combined company’s balance sheet.
As part settlement, Odfjell will issue to Ceres a total of appr. 4.9 mill shares dividend into appr. 3.35 mill. A-shares and 1.57 mill. B-shares, at an agreed price of NOK 208 per share, in total the equivalent of about 1 billion NOK worth of equity. The transaction values Odfjell at appr. NOK 4.6 billion before the issue of any new equity, and the combined company at appr. NOK 5.6 billion.
Commenting on the agreement, Mr. Dan Odfjell, Chairman of Odfjell ASA, said: This transaction will position the combined company as the world’s premiere operator of deep sea chemical tankers, with a market share of about 26%. It meets the increasing demand of our customers following a period of consolidation in the chemical industry, and enables us to provide superior service through integration of skilled personnel and control of key assets.
Mr. Peter Livanos, Chairman of Ceres, said: For us this constitutes a great opportunity to contribute further to the development of the chemical transportation industry by effectively combining Seachem’s assets and market position with Odfjell’s solid standing and long-time experience. Thereby building and maintaining strong customer relations. We look forward to the enhanced company’s development of its strong global position.
Mr. Bjørn Sjaastad, Chief Executive Officer of Odfjell ASA said: This transaction significantly increases our earnings potential at a point in time we believe to be at or near the bottom of the current cycle. With the increased asset base and strong financial position, we feel confident of the company’s strength and position as a leading player in the chemical logistics industry. Our position as a major listed company will be enhanced, as will share-holder values.
Mr. Paul Wogan, Chief Executive Officer of Seachem, said: The opportunities created by the combination of Seachem and Odfjell will assure that the combined company accelerates its development of its logistics abilities and infrastructure.
Through this agreement both parties see large potential for added efficiency in the overall operation of the largest chemical tanker fleet in the world, and thereby to be able to deliver a better service to its customers and enhance the financial results attributable to its shareholders. This will be achieved through a further utilisation of Odfjell’s long term expertise in the management and organisation of the transportation of bulk chemicals, and through drawing further on Ceres’ expertise in technical ship management. Furthermore, the solid financial standing of Odfjell will be kept through the funding of the transaction by 35% equity through the private placement.
The transaction is motivated by the common objective of achieving a degree of industry consolidation, yielding the combined unit better customer service capabilities, rationalised trading patterns and overall better fleet utilisation. Furthermore, Seachem’s newbuildings are sophisticated stainless steel chemical carriers, and will by and large satisfy Odfjell’s deep sea fleet renewal requirements the upcoming years. The Group’s turnover is expected to increase from about NOK 4.3 billion to about NOK 5.5 billion during the first year after amalgamation. Book equity increases to about NOK 3.8 billion and, prior to the delivery of the aforementioned 4 newbuildings, total assets increase to about NOK 11.1 billion.
Headquarters of the combined company will be in Bergen, Norway. Branch offices on five continents will be integrated into the new structure. Ceres Hellenic will continue ship management from its Piraeus headquarters.
The agreement is subject to due diligence, including inspection of assets, and approval by Odfjell’s General Assembly. Accordingly, a Share Issue Prospectus will be forthcoming. The General Assembly dealing with the share issue is contemplated for early May.
A press conference will be held today at Hotel Continental, Stortingsgaten 24, Oslo at 2 pm.
Odfjell is a leading player in the global market of transporting chemicals and providing related logistics services. The combined fleet, subsequent to the transaction, will aggregate 92 existing ships, trading both globally and regionally, whereof 49 ships will be wholly or partly owned. Odfjell, additionally, owns and operates tank terminals and tank containers.
Ceres Hellenic Shipping Enterprises Ltd. is one of the world’s largest shipping companies with a history dating back to 1824. Ceres is generally recognised for their expertise in ship management. Ceres has been ISO 9002 certified since 1998, and was the first major shipping company in the world to achieve the ISO 14001 environmental certification. Through Seachem, Ceres has been a major player in the chemical transportation industry for more than a decade