Contact Information: Contacts: Company Contact: Gregory A. McGrath Chief Financial Officer Omega Navigation Enterprises, Inc. PO Box 272 Convent Station, NJ 07961 Tel. (551) 580-0532 E-mail: gmcgrath@omeganavigation.com www.omeganavigation.com Investor Relations / Financial Media: Nicolas Bornozis President Capital Link, Inc. - New York Tel. (212) 661-7566 E-mail: nbornozis@capitallink.com www.capitallink.com
Omega Navigation Enterprises, Inc. Announces Its Joint Venture Company Megacore Shipping Ltd Will Take Delivery of Newbuilding Product Tankers Pursuant to an Amended Agreement With Hyundai Mipo Dockyard
| Source: Omega Navigation
ATHENS, GREECE--(Marketwire - December 23, 2009) - Omega Navigation Enterprises, Inc. (NASDAQ : ONAV ) (SGX: ONAV50), a provider of global marine transportation services
focusing on product tankers, announced today that it has formed an equal
partnership (50/50) joint venture company with Topley Corporation, a wholly
owned subsidiary of Glencore International AG (Glencore). The name of the
joint venture company is Megacore Shipping Ltd. Companies owned by Omega
and the Glencore group have novated their respective original shipbuilding
contracts entered into with Hyundai Mipo, consisting in total of 10
newbuilding 37,000 dwt product/chemical carriers (MR1s) (5 vessels each
partner), to companies wholly owned by Megacore. This order has now been
converted to two 37,000 dwt product/chemical tankers (MR1s) and seven
75,000 dwt. product/oil tankers (LR1s) while one MR1 vessel has been
suspended and remains as an option for Megacore to exercise in the future.
The original delivery schedule of eight vessels in 2010 and two vessels in
the beginning of 2011 has been amended to three vessels in 2010 four in
2011 and two in 2012. The overall aggregate purchase cost based on contract
price has remained similar to the original contracts, while the amount of
equity that would need to be invested based on vessels assessed fair market
values has been reduced.
All nine vessels will be owned by companies fully owned by Megacore, with
Omega providing the technical, operating and administrative services and ST
Shipping (wholly owned subsidiary of Glencore) providing commercial
management. The first of these vessels will be delivered during the first
quarter of 2010 and has secured a three year time charter with NYK lines
which was announced previously. Also, Omega had previously announced
financing commitments on its newbuildings and has transferred these
commitments to Megacore.
Omega President and CEO George Kassiotis commented, "We are very pleased to
have entered this joint venture with a very strong partner and thus
reinforce the already strong relationship with the Glencore group. Megacore
will allow Omega to enjoy significant operating and commercial synergies
with one of the largest commodities trading companies in the world. The
joint venture will have access to Glencore's global trading network and
system cargoes and ST Shipping's commercial chartering experience and will
enable us to deploy collectively with our partner a fleet of vessels with
significant scale and geographic coverage. Also, the amendment of the
newbuilding order has allowed Omega to better manage its capital exposure
in this very difficult operating and credit environment. In addition, by
spreading the deliveries into 2010, 2011 and 2012, while maintaining the
same pre delivery payment terms it allows time for a market recovery and
extends out our required cash outlays for the vessels. It is apparent that
our 2010 equity requirements have thus been significantly reduced. The
conversion into LR1 vessels is also beneficial as the LR1 sector arguably
has been the strongest sector in these difficult times both in terms of
asset value as well as chartering rates demonstrating the market perception
for strong fundamentals based on the increased use of longer haul routes.
This off balance sheet structure and revised delivery dates has enabled the
Company to shore up its balance sheet and be better able to face these
challenging economic times we are in.
The LR1 vessels have been contracted at a very high specification and we
feel very happy to enjoy such a strong relation and good cooperation with a
preeminent shipyard like Hyundai Mipo.
Megacore gives both Omega and the Glencore group a very strong platform to
build upon going forward."
About Omega Navigation Enterprises, Inc.
Omega Navigation Enterprises, Inc. is an international provider of global
marine transportation services through the ownership and operation of
double hull product tankers. The current fleet includes nine double hull
product tankers (one through a joint venture) with a carrying capacity of
559,358 dwt all of which are under time charter contracts with an average
age of less than three years. In addition to the above mentioned nine
newbuilding vessels the Company has also announced the purchase of an
additional product tanker with a capacity of 47,000 dwt (through a joint
venture) scheduled for delivery in the third quarter 2010. With the
addition of these ten vessels, Omega's fleet will expand to 19 product
tankers with a total deadweight capacity of 1,252,358 dwt.
The Company was incorporated in the Marshall Islands in February 2005. Its
principal executive offices are located in Athens, Greece and it also
maintains an office in the United States.
Omega Navigation's Class A Common Shares are traded on the NASDAQ National
Market under the symbol "ONAV" and are also listed on the Singapore
Exchange Securities Trading Limited under the symbol "ONAV 50."
Cautionary Statement Regarding Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides
safe harbor protections for forward-looking statements in order to
encourage companies to provide prospective information about their
business. Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and underlying
assumptions and other statements, which are other than statements of
historical facts.
The Company desires to take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and is including this
cautionary statement in connection with this safe harbor legislation. The
words "believe," "anticipate," "intends," "estimate," "forecast,"
"project," "plan," "potential," "will," "may," "should," "expect" "pending"
and similar expressions identify forward-looking statements.
The forward-looking statements in this press release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, the Company's management's examination of
historical operating trends, data contained in the Company's records and
other data available from third parties. Although the Company believes that
these assumptions were reasonable when made, because these assumptions are
inherently subject to significant uncertainties and contingencies which are
difficult or impossible to predict and are beyond the Company's control,
the Company cannot assure you that the Company will achieve or accomplish
these expectations, beliefs or projections.
In addition to these important factors other important factors that, in the
Company's view, could cause actual results to differ materially from those
discussed in the forward-looking statements include the strength of world
economies and currencies, general market conditions, including fluctuations
in charter rates and vessel values, changes in demand for product tanker
and dry bulk shipping capacity, changes in the Company's operating
expenses, including bunker prices, drydocking and insurance costs, the
market for the Company's vessels, availability of financing and
refinancing, changes in governmental rules and regulations or actions taken
by regulatory authorities, potential liability from pending or future
litigation, general domestic and international political conditions,
potential disruption of shipping routes due to accidents or political
events, vessels breakdowns and instances of off-hires and other factors.
Please see the Company's filings with the Securities and Exchange
Commission for a more complete discussion of these and other risks and
uncertainties.