Golden Ocean Group Ltd 6-K, filed Feb 17, 2021
Golden Ocean Group Ltd (GOGL)
About this 6-K
Golden Ocean Group Ltd filed this 6-K on February 17, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13A-16 OR 15D-16 UNDER THE SECURITIES
EXCHANGE ACT OF 1934
For the month of February 2021
Commission File Number: 000-29106
GOLDEN OCEAN GROUP LTD.
(Translation of registrant's name into English)
Par-la-Ville Place
14 Par-la-Ville Road,
Hamilton, HM 08, Bermuda
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ________
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ________
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Attached hereto as Exhibit 99.1 is a press release of Golden Ocean Group Ltd. (the “Company”) dated February 17, 2021, announcing that the Company is contemplating entering into a transaction (the “Transaction”) for the acquisition of 18 modern scrubber fitted dry bulk vessels consisting of 10x Newcastlemaxes built 2019-21 and 8x Kamsarmaxes built 2020-21 from affiliates of Hemen Holding Limited, a company indirectly controlled by trusts established by Mr. John Fredriksen for the benefit of his immediate family, the Company's largest shareholder.
Attached hereto as Exhibit 99.2 is a Company presentation regarding the Transaction.
The information contained in this Report on Form 6-K and the exhibits attached hereto are hereby incorporated by reference into the Company's Registration Statement on Form F-3 (File No. 333-232709) filed with the U.S. Securities and Exchange Commission with an effective date of July 26, 2019.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GOLDEN OCEAN GROUP LTD. | |
|---|---|
| By: /s/ Peder Simonsen | |
| Date: February 17, 2021 | Name: Peder Simonsen |
| Title: Principal Financial Officer |
Exhibit 99.1
GOGL – Acquisition of 18 dry bulk vessels and contemplated private placement of USD 338 million
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN, OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.
17 February 2021, Hamilton, Bermuda
Golden Ocean Group Limited (NASDAQ and OSE: GOGL) (“Golden Ocean” or the "Company”) is contemplating to enter into a transaction (the "Transaction") for the acquisition of 18 modern scrubber fitted dry bulk vessels consisting of 10x Newcastlemaxes built 2019-21 and 8x Kamsarmaxes built 2020-21 (the "Vessels") from affiliates of Hemen Holding Limited, a company indirectly controlled by trusts established by Mr. John Fredriksen for the benefit of his immediate family ("Hemen"), the Company's largest shareholder. The Transaction will add significant scale to Golden Ocean’s operating fleet, contribute to reducing cash breakeven levels and is in line with the Company's fleet renewal strategy.
The total consideration payable for the Vessels is approximately USD 752 million (the "Transaction"). The completion of the Transaction is subject to completion of the Private Placement (as defined below).
Affiliates of Hemen has agreed to provide a loan facility of USD 414 million, corresponding to 55% of the purchase price, in order to give the Company time and flexibility to arrange long term financing for the vessels. The loan facility is contemplated to be refinanced on favorable terms in the international debt market after completion of the Transaction.
In connection with the Transaction, the Company is contemplating a private placement to raise gross proceeds of approximately USD 338 million through the issuance of new ordinary shares in the Company (the "Private Placement"). The subscription price for the offer shares will be determined by the Board of Directors of the Company based on an accelerated bookbuilding process.
The net proceeds from the Private Placement will be used to finance the cash portion of the consideration in the Transaction, in addition to working capital and general corporate purposes.
Hemen has pre-committed to subscribe for, and will be allocated, 50% of the Private Placement, equivalent to USD 169 million.
The Company has engaged Arctic Securities AS and DNB Markets, a part of DNB ASA as Global Coordinators and Joint Bookrunners as managers in the Private Placement, and ABN AMRO Bank N.V., Danske Bank A/S, Norwegian branch, Fearnley Securities AS, ING Bank N.V., Nordea Bank Abp, filial i Norge, Pareto Securities AS and Skandinaviska Enskilda Banken AB (publ), Oslo Branch has been engaged as Joint Bookrunners (together with the Global Coordinators and Joint Bookrunners, the "Managers"). The Private Placement is directed towards investors subject to, and in compliance with, applicable exemptions from relevant prospectus or registration requirements.
Q4 financial trading update:
• Net income of $25.4 million and earnings per share of $0.18 for the fourth quarter of 2020 compared with $39.1 million and $0.27 per share for the third quarter of 2020.
• Adjusted EBITDA of $59.3 million for the fourth quarter of 2020, compared with $76.7 million for the third quarter of 2020.
• Strengthened balance sheet with cash and equivalents of $175.1 million
• The Board of Directors remains committed to returning value to its shareholders through dividends. While the amount and timing of any future dividend payments will be based on both the Company’s results, investment opportunities and the prevailing market conditions, it is the Company’s intent to distribute a significant portion of its earnings in line with the Company’s current strong market expectations.
The private placement:
The Private Placement comprises up to a number of ordinary shares in the Company to raise gross proceeds of approximately USD 338 million.
The bookbuilding period for the Private Placement will commence today, 17 February 2021 at 16:30 hours CET and will close on 18 February 2021 at 08:00 hours CET. The Company reserves the right to at any time and in its sole discretion resolve to close or to extend the application period or to cancel the Private Placement in its entirety. The minimum order size and allocation in the Private Placement will be the NOK equivalent of EUR 100,000, provided that the Company may, at its sole discretion, offer and allocate an amount below EUR 100,000, pursuant to any applicable exemptions from the prospectus requirement being available.
Allocation of Offer Shares will be made at the sole discretion of the Board in consultation with the Managers shortly after the end of the bookbuilding period.
Completion of the Private Placement is subject to the necessary corporate resolutions in the Company being made, including the approval by the Board of Directors to complete the Private Placement and issue the Offer Shares. The Private Placement will be cancelled if the conditions are not fulfilled, and may be cancelled by the Company in its sole discretion for any other reason.
In order to facilitate timely delivery of already listed shares, delivery of the Offer Shares allocated in the Private Placement will be settled by delivery of existing and unencumbered shares in the Company borrowed from Hemen. The shares delivered to investors in the Private Placement (other than Hemen) will thus be tradable on the Oslo Stock Exchange immediately after allocation. The Managers will settle the share loan from Hemen with the new shares issued in the Private Placement. The new shares will be registered under a separate ISIN pending approval of a listing prospectus by the Financial Supervisory Authority of Norway, and will not be listed or tradable on the Oslo Stock Exchange until the listing prospectus is approved, expected early April 2021.
The Company will announce the result of the Private Placement, the number of Offer Shares allocated and the subscription price for the Offer Shares in the Private Placement through an announcement expected to be published before opening of trading on Oslo Børs on 18 February 2021.
The contemplated Private Placement involves the setting aside of the shareholders’ preferential rights to subscribe for new shares. The Board has considered the Private Placement in light of the rules of equal treatment set out in the Euronext Oslo Continuing Obligations and the Oslo Stock Exchange's guidelines on the rules on equal treatment. The Board is of the opinion that the Private Placement will allow for the Company to raise capital more quickly and, at a lower discount compared to a rights issue. Furthermore, the Board is of the opinion that, in the current market, a private placement has a larger possibility of success compared to a rights issue. On this basis, the Board has concluded that the Private Placement is in compliance with these requirements.
The Company may, subject to completion of the Private Placement, and certain other conditions, resolve to carry out a subsequent offering of new shares which, subject to applicable securities law, will be directed towards existing shareholders in the Company as of 20 January 2021 (as registered in the VPS two trading days thereafter), who (i) were not included in the pre-sounding phase of the Private Placement, (ii) were not allocated Offer Shares in the Private Placement, and (iii) are not resident in a jurisdiction where such offering would be unlawful or, would (in jurisdictions other than Norway) require any prospectus, filing, registration or similar action.
Advokatfirmaet Wiersholm AS is acting as legal advisor to the Company in connection with the Private Placement.
For further queries, please contact:
Ulrik Andersen: Chief Executive Officer, Golden Ocean Management AS
+47 22 01 73 53
Peder Simonsen: Chief Financial Officer, Golden Ocean Management AS
+47 22 01 73 45
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
Important information:
The release is not for publication or distribution, in whole or in part directly or indirectly, in or into Australia, Canada, Japan or the United States (including its territories and possessions, any state of the United States and the District of Columbia). This release is an announcement issued pursuant to legal information obligations, and is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. It is issued for information purposes only, and does not constitute or form part of any offer or solicitation to purchase or subscribe for securities, in the United States or in any other jurisdiction. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "US Securities Act"). The securities may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the US Securities Act. The Company does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into Australia, Canada, Japan or the United States. The issue, exercise, purchase or sale of subscription rights and the subscription or purchase of shares in the Company are subject to specific legal or regulatory restrictions in certain jurisdictions. Neither the Company nor the Managers assumes any responsibility in the event there is a violation by any person of such restrictions. The distribution of this release may in certain jurisdictions be restricted by law. Persons into whose possession this release comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. The Managers are acting for the Company and no one else in connection with the Private Placement and will not be responsible to anyone other than the Company providing the protections afforded to their respective clients or for providing advice in relation to the Private Placement and/or any other matter referred to in this release.
Forward-looking statements:
This release and any materials distributed in connection with this release may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect the Company's current expectations and assumptions as to future events and circumstances that may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.
Company Presentation attached
Exhibit 99.2
Acquisition of 10x Newcastlemaxes and 8x Kamsarmaxes 17 February, 2021
IMPORTANT INFORMATION (I/II) By receiving this company presentation (the "Presentation") or attending any meeting or oral presentation held in relation thereto, you (the "Recipient") agree to be bound by the following terms, conditions and limitations.The information in this Presentation has been prepared by Golden Ocean (the "Company") with assistance from Arctic Securities AS and DNB Markets AS (the "Managers") solely for use at the presentation to a limited number of recipients on a strictly confidential basis in connection with a contemplated private placement of shares in the Company (the "Transaction" or the "Private Placement").This Presentation has not been independently verified nor verified by the Manager unless otherwise required by applicable law(s). A limited legal due diligence review has been conducted on behalf of the Manager, with a customary scope and limited to Norwegian law matters only. No representation, warranty, or undertaking, express or implied, is made by the Company or the Managers or their affiliates or their respective directors, officers, employees, agents or advisers (collectively "Representatives") as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein, for any purpose whatsoever. All information in this Presentation is subject to verification, correction, completion and change without notice. Neither the Company, the Managers nor its Representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection with this Presentation. The information contained in this Presentation should be considered in the context of the circumstances prevailing at this time and has not been, and will not be, updated to reflect material developments which may occur after the date of the Presentation.Matters discussed in this Presentation may constitute or include forward-looking statements. Forward-looking statements are statements that are not historical facts and may include, without limitation, any statements preceded by, followed by or including words such as “aims”, “anticipates”, “believes”, “can have”, “continues”, “could”, “estimates”, “expects”, “intends”, “likely”, “may”, “plans”, “forecasts”, “projects”, “should”, “target” “will”, “would” and words or expressions of similar meaning or the negative thereof. These forward-looking statements reflect the Company's beliefs, intentions and current expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth and strategies. Forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The forward-looking statements in this Presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions that may not be accurate or technically correct, and their methodology may be forward-looking and speculative. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. None of the Company or the Managers or any of their affiliates provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. Forward-looking statements are not guaranteeing of future performance and such risks, uncertainties, contingencies and other important factors could cause the actual results of operations, financial condition and liquidity of the Company or the industry to differ materially from those results expressed or implied in this Presentation by such forward-looking statements. No representation is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved, and you are cautioned not to place any undue influence on any forward-looking statement.An investment in the Company's shares should be considered as a high-risk investment. Several factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement that may be expressed or implied by statements and information in this Presentation. Before making an investment decision with respect to the offer shares, investors should carefully consider all of the information contained in this Presentation, and in particular the risk factors relating to the Company's business, the Company's industry, the Company's shares and the Private Placement, as further discussed on slide [●] to [●] below. Potential investors are however required to make their own assessment and analysis of the risks associated with an investment in the Company. The risk factors discussed herein should be read as a high-level summary only and not so as to contain an exhaustive review of all risks faced by the Company. An investment in the Company's shares is only suitable if you have sufficient knowledge, sophistication and experience in financial and business matters to be capable of evaluating the merits and risks of an investment decision relating to the Company's shares, and if you are able to bear the economic risk, and to withstand a complete loss of your investment. The absence of negative past experience associated with a given risk factor does not mean that the risks and uncertainties described are not a genuine potential threat to an investment in the Company's shares. lf any of the risks discussed herein were to materialise, this could have a material adverse effect on the company and/or the Company's business, results of operations, cash flow, financial condition and/or prospects, which may cause a decline in the value and trading price of the Company's shares, resulting in the loss of all or part of your investment in the same. 2
IMPORTANT INFORMATION (II/II) A multitude of factors can cause actual results to differ significantly from any anticipated development expressed or implied in this Presentation, including among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Company's businesses, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors. No representation is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved and you are cautioned not to place any undue reliance on any forward-looking statement.The information obtained from third parties has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading.The contents of this Presentation are not to be construed as financial, legal, business, investment, tax or other professional advice. By receiving this Presentation, the Recipient acknowledges that it will be solely responsible for its own assessment of the Company, the market and the market position of the Company and that it will conduct its own analysis and is solely responsible for forming its own opinion of the potential future performance of the Company’s business. In making an investment decision, the Recipient must rely on its own examination of the Company, including the merits and risk involved.The distribution of this Presentation may be restricted by law in certain jurisdictions and persons into whose possession this Presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with such restrictions may constitute a violation of the laws of any such jurisdiction. None of the Company or the Managers shall have any responsibility for any such violations.This Presentation and the information contained herein are not an offer of securities for sale in the United States and are not for publication or distribution to persons in the United States (within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the "US Securities Act")). Any securities referred to herein have not been and will not be registered under the US Securities Act and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the US Securities Act.By reviewing this Presentation, you are deemed to have represented and agreed that you and any persons you represent are either (a) qualified buyers (“QIBs”) (within the meaning of Regulation 144A under the US Securities act), or (b) are located outside the US. This Presentation is only addressed to and directed at persons in member states of the European Economic Area who are "qualified investors" as defined in the Prospectus Regulation (Regulation (EU) 2017/1129, as amended) ("Qualified Investors") or otherwise pursuant to applicable exemptions on the Company resulting in that no obligation arises for the Company or the Managers to produce a prospectus or otherwise comply with any registration requirements. In addition, in the United Kingdom, this Presentation is being distributed only to, and is directed only at (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), (ii) high net worth entities and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order or (iii) persons to whom distributions may otherwise lawfully be made, communicated, or caused to be communicated (all such persons together being referred to as "Relevant Persons"). This Presentation must not be acted on or relied on (i) in the United Kingdom, by persons who are not Relevant Persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors or otherwise pursuant to applicable exemptions on the Company. Any investment or investment activity to which this Presentation relates is available only to Relevant Persons or Qualified Investors or will be engaged in only with Relevant Persons or Qualified Investors.This Presentation is not an advertisement for the purposes of applicable measures implementing the EU Prospectus Regulation. This Presentation is not a prospectus and does not contain the same level of information as a prospectus.The Managers is acting only for the Company and will not be responsible to anyone other than the Company for providing the protections afforded to clients of the Managers or for providing advice in relation to any potential offering of securities of the Company.This Presentation speaks only as of its date. Neither the delivery of this Presentation nor any further discussions with any of the Recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date.This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo as legal venue. 3
TRANSACTION HIGHLIGHTS
Significantly increasing exposure to booming commodity market at turning point in the cycle TRANSACTION HIGHLIGHTS 5 Unique time to acquire quality assets Fundamentals in place for prolonged market upturn Acquisition of 10x 2019-21 built Newcastlemaxes and 8x 2020-21 built Kamsarmaxes for USD 752 million en blocPurchase at low point in cycle with attractive financing attached Increase operational leverage in segment with most upside on continued market strengtheningAll acquisition vessels are scrubber fitted and four vessels with Ice-Class Commodity super cycle will continue to drive dry bulk demandLowest fleet growth last 30 years and lowest orderbook last 20 yearsNon-reversible, structural change limit financing options effectively ending speculative orderingStrong momentum building with 1yr TC Capesize rates 27% higher than average 2015-2020 Improving earnings power and commitment to dividends Vessels on the water immediately able to capitalize on strong market Attached financing enables swift execution of transaction Strong balance sheet enabling dividend policy to signal commitment to return capital to shareholdersLow cash break even ensuring post acquisition cash yield of 22% at 1yr TC Capesize rates Cementing position as the leading large-size dry owner Increasing fleet size to 96 vessels (+23%) and pushing market cap above USD 1.3 billion (+35%)Reducing average fleet age from 7.4 to 6.0 years further improves fuel efficiency and lowers emissionsNew digitalization initiatives and industry low opex and SG&ACommitment to ESG to enhance transparency and lower environmental impact over time
ACQUISITION OF 18x VESSELS AT LOW POINT IN CYCLE TARGET FLEET – 18X NEWCASTLEMAX AND KAMSARMAX SOURCES AND USES Sources USDm Uses USDm Equity private placement 338 Acquisition of 18x Vessels 752 Financing 414 Total 752 Total 752 6 High quality fleet with favorable financing attached enabling swift execution Vessel Type Vessel name Built Dwt Yard Ice-Class Scrubber Performance vs. index Purchase Price (USDm) 1 Newcastlemax Golden Coral 2019.7 208 000 NTS √ 2 Newcastlemax Golden Champion 2019.9 208 000 NTS √ 3 Newcastlemax Golden Comfort 2020.1 208 000 NTS √ 4 Newcastlemax Golden Courage 2020.1 208 000 NTS √ 5 Newcastlemax Golden Confidence 2020.6 208 000 NTS √ 6 Newcastlemax Golden Competence 2020.6 208 000 NTS √ 7 Newcastlemax Golden Skies 2020.6 210 000 Bohai √ 8 Newcastlemax Golden Spirit 2020.6 210 000 Bohai √ 9 Newcastlemax Golden Saint 2020.4 210 000 Bohai √ 10 Newcastlemax Golden Spray 2021.6 210 000 Bohai √ 2,080,000 11 Kamsarmax Golden Fortune 2020.1 81 600 Dalian √ 12 Kamsarmax Golden Forward 2020.6 81 600 Dalian √ 13 Kamsarmax Golden Friend 2020.7 81 600 Dalian √ 14 Kamsarmax Golden Fellow 2020.8 81 600 Dalian √ 15 Kamsarmax Golden Frost 2020.10 81 600 Dalian √ √ 16 Kamsarmax Golden Freeze 2021.1 81 600 Dalian √ √ 17 Kamsarmax Golden Fast 2021.4 81 600 Dalian √ √ 18 Kamsarmax Golden Furious 2021.4 81 600 Dalian √ √ 652,800 Total 2,732,800 752 USD 520m en bloc50-53m per vessel USD 232m en bloc28-31m per vessel 123% + Scrubber premium 130% + Scrubber premium Competitive Financing adds flexibility The vessels will be purchased using cash proceeds from the equity raise and attractive financing from Affiliate of HemenAttractive terms with 2.35% margin¹, 17 year profile and 18 month tenorEnables swift execution of deal and give company time to secure the most attractive commercial bank financing possible Margin adjustment last 6 months to be agreed + Ice-class premium
UNIQUE SITUATION WITH ALL KEY FACTORS FOR A BULL MARKET RUN PRESENT Fundamentals in place for prolonged market upturn STARS ARE ALIGNED – STRONGER FOR LONGER 7 Source: Arctic Securities Research, Sea-Web, Clarksons Shipping Intelligence Substantial scrapping due to high scrap prices and aging fleetLowest fleet growth seen over last 30 years Lack of financing shut down speculative ordering activityNon-reversible, structural change driven by banking regulations Increasing commodity prices continue to push relative freight cost downStrong economic growth prospects following market reboundThe start of a commodity super cycle 2021e 5y avg 10y avg 2021e 15y avg Current Demand growth Net fleet growth Orderbook as % of fleet
Significantly increasing size and reducing fleet age at low point in cycle TRANSFORMATIONAL ACQUISITION 8 Fleet size (Million dwt) Average age (years) Market cap (USDm) +25% +35% -19% Current Acquisition Post-Deal Current Post-Deal Acquisition Current New Equity Post-Deal Source: ManagersClosing price as of February 16th 2021
Positioned to take advantage of market upturn through focus on larger vessel segments and profitable ice class niche SOLIDIFYING POSITION AS LEADING DRY BULK POWERHOUSE 9 Market cap (USDm) Average age (years) SBLK 2020 GNK GOGL (post) BEL EGLE SB SBLK GOGL (post) 2020 GNK EGLE BEL SB Cape & Newcastlemax (Million dwt) Source: ManagersClosing price as of February 16th 2021, USD/NOK 8.45 Fleet size (Million dwt) GNK 2020 SBLK SB GOGL (post) BEL EGLE 2020 GOGL (post) SBLK GNK SB EGLE BEL
Source: Clarksons Shipping Intelligence NetworkCash flow generation calculated based on cash break even rates subtracted from x-axis TCE rates. Rates not adjusted for Newcastlemax and Kamsarmax premiums of 130% and 123%, respectively, of benchmarks or taking into account assumed scrubber premiumsHistorical figures for scrubber-fitted Capesize bulker. YTD Average 1yr TC 2020 Average 2020 Highest Monthly Avg January 2021 levels observed STRONG CASH FLOW POTENTIAL 10 Accretive acquisition strengthens dividend potential PRO-FORMA ANNUALIZED CASH FLOW SENSITIVITY ANALYSIS¹ Benchmark Capesize rates²
Source: Clarksons Shipping Intelligence Network, Managers 11 HIGHLY ATTRACTIVE ENTRY POINT CAPESIZE VESSEL PRICES (USDm) Kamsarmax and Panamax vessels have also performed strongly since H2 2020 Attractive acquisition price at turning point in cycle Immediate cash flow generation Increased vessel sale activity on the back of rising prices Combination of low newbuild price and near-record discount to asset resembles trough in 2016
ELEVATED COMMODITY PRICES STRONG COMMODITY PRICES COST OF FREIGHT AS % OF IRON ORE PRICE Commodity prices have recorded significant gains in h2/20 as a rebound in economic growth has spurred demand for energy, steel and other commodity related economic drivers Capesize rates and iron ore prices tend to correlate. This time around, Capesize rates have been lagging and the cost of freight as percentage of the iron ore price remains at the lowest level seen in recent years Source: Arctic Securities Research, Bloomberg. 12 Current low levels leave ample room for freight to increase
Source: ClarksonsNote: Rates and relative performance displayed are based on weekly averages for each vessel segment 13 Capesize vessels have been the biggest beneficiaries of normalizing trade after unforeseeable events disrupted the market – Newcastlemaxes provide natural next step LARGER VESSELS OUTPERFORM VESSEL PERFORMANCE IN RECOVERING MARKETS Kamsarmax and Panamax vessels have also performed strongly since H2 2020
ILLUSTRATIVE SCRUBBER- AND NEWCASTLEMAX PREMIUM Scrubbers and Newcastlemax provide premium earnings potential POSITIONED TO CAPTURE INCREMENTAL EARNINGS 14 Illustrative scrubber benefit for Newcastlemax only assuming VLSFO vs. HFO fuel spread of USD 112 per ton and fuel consumption for Newcastlemax on a 365 day basis of 31 tons per dayOn a voyage basis, average of Brazil-China at USD18/tonnes and Australia –China at USD8.0/tonnes of c25k tonnes of additional iron ore cargo equals 4.0k/day in extra TCE rates for the shipowner. Capesize - 1 yr TC Newcastlemax premium Scrubber premium 28,100 24,600 Acquired Newcastlemaxes earning up to ~7,500 USD/day more than standard Capesize Scrubber premium Standard Cape Newcastlemax premium Scrubber fitted Newcastlemax Benefit vs. standard tonnage (Per vessel per day) $ 3,5121 $ 4,0002
UNIQUE ACCESS TO CAPITAL In Nov 2020, the Company fully refinanced the $425.0 million credit facility with a $304.0 million term loan and revolving credit facilityL + 235 bps, 5y tenor and improved repayment profile (20 years age adjusted), reducing the cash break-even rate for the vessels in the facility by more than $1,000 per day STRONG BALANCE SHEET SUPPORTING DIVIDEND STORY No maturities before 2023, virtually no capex and favorable debt terms Transaction financing from affiliate of Hemen to be replaced with commercial bank financing with longer tenor in due course Banking group consisting of the largest and most active global shipping banks Recent history shows track record throughout the cycleStrong liquidity position and consistent access to competitive financing Very little capex until 2023 and no near-term maturities enable full focus on dividends going into a strengthening market NO NEAR-TERM MATURITIES 15
Achieved through well timed acquisitions, economies of scale and access to competitive financing INDUSTRY LOW CASH BREAK-EVEN 16 POST TRANSACTION CASH BREAK EVEN CAPESIZE 1YR TC RATES (USD/DAY) NEWCASTLEMAX/ CAPESIZE12,860 Source: Clarksons Shipping Intelligence Network 0 6 1 5 2 3 4 7 8 9 10 11 12 13 USD k/d Interest G&A Opex Amortization Leases KAMSARMAX/ PANAMAX8,560 CASH BREAK EVEN
ONGOING COMMITMENT TO GOVERNANCE, ESG AND TRANSPARENCY REPORTING FRAMEWORK GOVERNANCE AND CONTROL PROCEDURES (0.8m dwt) COMMITMENT TO FOUR UN SDGs - Spills and releases - CO2 emissions - Energy consumed - Other emissions to air - EEDI - Marine protected areas - Ballast water - Corruption index - Anti Corruption - Lost time incident rate - Marine casualties - Conditions of class - Port state control 17 All key policies in place, includingCode of Business Ethics and ConductFinancial Crime PolicyComplaints ProcedureSanctions PolicyKnow Your Business Partner PolicyShip Recycling PolicyEnvironmental PolicyImplemented throughout operations and with key third party vendors Ahead of requirements set by stock exchanges and lending banksSOX compliance and internal control procedures ensured through internal SOX compliance officer and close cooperations with external auditorsSeatankers establishing internal ESG and compliance forum for best practice learning between the forum companiesESG report for 2019 available at https://www.goldenocean.bm/esg/ Source: Company Filings
MARKET UPDATE
HISTORICALLY LOW ORDERBOOK CAPESIZE ORDERBOOK ONLY ~6.5% OF FLEET DROP IN CAPESIZE NEWBUILD CONTRACT ACTIVITY Orderbook is at historically low levels and ordering likely to stay mutedAs a percentage of the sailing fleet, the orderbook stands at 6.5% Lowest level in Capesize newbuild contract activity in 20 yearsOrders have been limited in 2019-2020, and ordering is expected to be low as traditional bank financing is less obtainable Source: Arctic Securities Research, Sea-Web, Clarksons Shipping Intelligence Network 19
STEEL CONSUMPTION IS FORECASTED TO REBOUND AS THE GLOBAL ECONOMY RECOVERS STEEL PRODUCTION VS EXPORTS IN CHINA GLOBAL STEEL PRODUCTION EXPECTED TO INCREASE Steel production in China has remained strong and exports have been droppingChinese production and consumption increased by 6.2% and 2.0% in 2020 World steel consumption is forecast to rebound as the global economy recovers, growing by 3.8% in 2021 and by 3.6% in 2022Production is expected to follow a similar trend – falling by 2.0% in 2020 before rising by 3.0% in 2021 and 3.6% in 2022 Monthly volumes Monthly volumes Source: Arctic Securities Research, Bloomberg. 20
GLOBAL ECONOMY Source: International Monetary Fund World Economic Outlook, January 2021 EMERGING ECONOMIES 21 Global recovery backed by unprecedented global stimulus expected to be led by China and India and to boost demand for dry bulk transportation (primarily iron ore and coal). DEMAND TO REBOUND STRONGLY IN 2021 Rebound in global GDP growth for 2021 led by strong growth in China and India - the two largest importers of dry bulk commodities
RECENT WEEKLY DRY BULK SHIPPING RATES Source: Clarksons Shipping Intelligence Network Q1 2020Chinese New Year celebration beginsIMO 2020 in effectWuhan lockdown beginsCOVID-19 declared a pandemic by WHO Q2 2020Wuhan lockdown endsChina unveils largest ever stimulus package Q3 2020Record Chinese steel production and iron ore importsContinued recovery in Brazilian iron ore export Q4 2020Continued strong Chinese iron importExtremely cold weather in China obstructing dischargingWeaker than expected Brazilian export Q1 2021Cape rates up 200% y-o-yPanamax rates up 167% y-o-yThe Panamax segment had the best start to a year since 2010 22 RECENT MARKET DEVELOPMENTS Q1 is usually the weakest quarter of the year, but 2021 is off to a flying start
Based on the current orderbook, as well as scrapping estimates1 and ordering assumptions, estimated dry bulk net fleet growth is 1.6% and 1.6% in 2021 and 2022, respectively ESTIMATED NET FLEET GROWTH OF ~1.6% in 2021 AND 2022 – the lowest in 30 years Source: Arctic Securities Research, Sea-Web.50% of vessels turning 20, vessels turning 25 and 30 years scrapped 23 DRY BULK NET GROWTH NEAR TO THE GROUND
FURTHER IMPROVEMENT IN UTILIZATION SUPPLY/DEMAND MARKET BALANCE Further increase in utilization going forward, based on slippage, as well as slow-steaming and scrapping potential of older vessels Source: Arctic Securities Research, Sea-Web. 24
FINANCIALS
(in thousands of $) Q4 2020 Q3 2020 QuarterlyVariance Operating revenues and other operating income / expenses 168,001 186,892 (18,891) Voyage expenses (42,904) (43,935) 1,031 Net revenues 125,097 142,957 (17,860) Ship operating expenses (47,632) (43,444) (4,188) Administrative expenses (4,024) (3,103) (921) Charter hire expenses (17,130) (20,443) 3,313 Depreciation (27,592) (27,631) 39 Impairment loss on vessels (721) - (721) Net operating expenses (97,099) (94,621) (2,478) Net operating income (loss) 27,998 48,336 (20,338) Net financial expenses (9,352) (9,805) 453 Derivatives and other financial income (loss) 6,735 570 6,165 Net income before taxation (loss) 25,381 39,101 (13,720) Income Tax expense 11 40 (29) Net income (loss) 25,370 39,061 (13,691) Earnings (loss) per share: basic and diluted $0.18 $0.27 ($0.09) Adjusted EBITDA 59,328 76,742 (17,414) TCE per day 15,893 17,912 (2,019) PROFIT & LOSS 26
CASH FLOW – Q4 2020 Includes restricted cash 27
BALANCE SHEET (in thousands of $) Q4 2020 Q3 2020 QuarterlyVariance ASSETS Short term Cash and cash equivalents (incl. restricted cash) 175,102 130,826 44,276 Other current assets 109,427 120,696 (11,269) Long term Vessels and equipment, net (including held for sale) 2,277,190 2,300,566 (23,376) Leases, right of use of assets 136,219 141,609 (5,390) Other long term assets 23,129 23,796 (667) Total assets 2,721,067 2,717,493 3,574 LIABILITIES AND EQUITY Short term Current portion of long term debt 87,831 83,158 4,673 Current portion of finance lease obligations 23,475 23,117 358 Current portion of operating leases obligations 16,783 14,852 1,931 Other current liabilities 113,586 107,149 6,437 Long term Long term debt 957,652 981,762 (24,110) Non-current portion of finance lease obligations 127,730 133,679 (5,949) Non-current portion of operating lease obligations 25,254 30,691 (5,437) Equity 1,368,756 1,343,085 25,671 Total liabilities and equity 2,721,067 2,717,493 3,574 28
RISK FACTORS
RISK FACTORS (I/III) 30 RISKS RELATED TO THE INDUSTRYCharter hire rates for dry bulk vessels are volatile, have declined significantly the past years since their historic highs and may remain at low levels or further decrease in the future, which may adversely affect the Group's earnings, revenue and profitability and its ability to comply with its loan covenants.Global economic conditions may negatively impact the dry bulk shipping industry.The over-supply of dry bulk vessel capacity may depress charter rates, which has and may continue to limit the Group's ability to operate its dry bulk vessels profitably.The Group is dependent on spot charters and any decrease in spot charter rates in the future may adversely affect its earnings.The Group may not be able to obtain financing on terms acceptable to it or at all, which may negatively impact its business.Risks involved with operating ocean-going vessels could affect the Group's business and reputation, which could have a material adverse effect on its results of operations and financial condition.World events, political instability, terrorist attacks, international hostilities and global public health threats could affect the Group's operations and financial results.The Group's financial results and operations may be adversely affected by the ongoing outbreak of COVID-19, and related governmental responses thereto.The U.K.'s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and the Group's business.The Group faces risks attendant to changes in economic and regulatory conditions around the world.Changes in the economic and political environment in China and policies adopted by the government to regulate its economy may have a material adverse effect on the Group's business, financial condition and results of operations.The Group conducts a substantial amount of business in China. The legal system in China has inherent uncertainties that could have a material adverse effect on the Group's business, financial condition and results of operations.Acts of piracy on ocean-going vessels could adversely affect the Group's business.The instability of the Euro or the inability of countries to refinance their debts could have a material adverse effect on the Group's revenue, profitability and financial position.If the Group's vessels call on ports located in countries that are subject to restrictions, sanctions or embargoes imposed by the U.S. government, the European Union, the United Nations or other governments, it could lead to monetary fines or adversely affect its reputation and the market for its shares of common stock and its trading price.Compliance with safety and other vessel requirements imposed by classification societies may be costly and could reduce the Group's net cash flows and net income.Climate change and greenhouse gas restrictions may adversely impact the Group's operations and markets, and may cause the Group to incur substantial costs and to procure low-sulfur fuel oil directly on the wholesale market for storage at sea and onward consumption on the Group's vessels.Increasing scrutiny and changing expectations from investors, lenders and other market participants with respect to the Group's Environmental, Social and Governance policies may impose additional costs on the Group or expose the Group to additional risks.The Group are subject to complex laws and regulations, including environmental laws and regulations, which can adversely affect its business, results of operations and financial condition.If the Group fail to comply with international safety regulations, the Group may be subject to increased liability, which may adversely affect its insurance coverage and may result in a denial of access to, or detention in, certain ports.Maritime claimants could arrest one or more of the Group's vessels, which could interrupt the Group's cash flow.The smuggling of drugs or other contraband onto the Group's vessels may lead to governmental claims against the Group.Governments could requisition the Group's vessels during a period of war or emergency resulting in a loss of earnings.Technological innovation and quality and efficiency requirements from the Group's customers could reduce the Group's charterhire income and the value of its vessels.RISKS RELATED TO THE GROUP'S BUSINESSThe market values of the Group's vessels may decline, which could limit the amount of funds that the Group can borrow, cause the Group to breach certain financial covenants in its credit facilities, or result in an impairment charge, and cause the Group to incur a loss if it sells vessels following a decline in their market value.The Group may require additional capital in the future, which may not be available on favorable terms, or at all.
RISK FACTORS (II/III) 31 RISKS RELATED TO THE GROUP'S BUSINESS (continued)The Group is highly leveraged, which could significantly limit its ability to execute its business strategy and has increased the risk of default under its debt obligations.The Group may be unable to successfully compete with other vessel operators for charters, which could adversely affect its results of operations and financial position.The Group's results of operations are subject to seasonal fluctuations, which may adversely affect its financial condition.A drop in spot charter rates may provide an incentive for some charterers to default on their charters.The Group's fixed rate time charters may limit its ability to benefit from any improvement in charter rates, and at the same time, its revenues may be adversely affected if it does not successfully employ its vessels on the expiration of these charters.The Group is subject to certain risks with respect to its counterparties on contracts, and failure of such counterparties to meet their obligations could cause the Group to suffer losses or otherwise adversely affect the Group's business.The Group's ability to obtain additional debt financing may be dependent on the performance of its then existing charterers and their creditworthiness.The Group's financing arrangements have floating interest rates, which could negatively affect its financial performance as a result of interest rate fluctuations.Volatility in the London Interbank Offered Rate, or LIBOR, could affect the Group's profitability, earnings and cash flow.Some of the Group's directors, executive officers and major shareholders may have interests that are different from the interests of the Group's other shareholders.The Group is dependent on the success and profitability of the pools in which its vessels operate.The group may not be able to implement its strategy to renew and grow its fleet through selective acquisitions of dry bulk tonnage successfully, due to numerous risks, including, but not limited to undisclosed liabilities and obligations, difficulty obtaining additional qualified personnel and managing relationships with customers and suppliers.Purchasing and operating secondhand vessels may result in increased drydocking costs and vessels off-hire, which could adversely affect the Group's earnings.New vessels may experience initial operational difficulties and unexpected incremental start-up costs.Rising fuel, or bunker, prices may adversely affect the Group's profits.Operational risks and damage to the Group's vessels could adversely impact its performance.The Group rely on its information systems to conduct its business, and failure to protect these systems against security breaches could adversely affect the Group's business and results of operations, including on its vessels. Additionally, if these systems fail or become unavailable for any significant period of time, the Group's business could be harmed.Increased inspection procedures, tighter import and export controls and new security regulations could increase costs and cause disruption of the Group's business.Failure to comply with the U.S. Foreign Corrupt Practices Act could result in fines, criminal penalties and an adverse effect on the Group's business.Incurrence of expenses or liabilities may reduce or eliminate distributions.The Group may be subject to litigation that, if not resolved in its favor and not sufficiently insured against, could have a material adverse effect on it.If the Group does not set aside funds and is unable to borrow or raise funds for vessel replacement at the end of a vessel's useful life, its revenue will decline, which would adversely affect its business, results of operations and financial condition.The Group may not have adequate insurance to compensate it if its vessels are damaged or lost.The Group may be subject to calls because it obtain some of its insurance through protection and indemnity associations.The Company is a holding company, and depends on the ability of its subsidiaries to distribute funds to it in order to satisfy its financial obligations.The international nature of the Group's operations may make the outcome of any bankruptcy proceedings difficult to predict.United States tax authorities could treat the Company and/or the Group as a "passive foreign investment company", which could have adverse United States federal income tax consequences to United States shareholders.The Group may have to pay tax on United States source income, which would reduce its earnings.Because the Group's offices and most of its assets are outside the United States, any relevant person may not be able to bring suit against the Group, or enforce a judgment obtained against it in the United States. As an exempted company incorporated under Bermuda law, the Company's operations may be subject to economic substance requirements. TBC by Bermuda counsel
RISK FACTORS (III/III) 32 RISKS RELATED TO THE TRANSACTIONThe consummation of the transactions contemplated by the heads of agreement (which governs the acquisition of the vessels) is conditional upon satisfaction of a number of conditions that are beyond the control of the Group. The acquisition may hence not be consummated and transaction costs will have been incurred for the Group regardless of whether the acquisition are consummated, which could negatively affect the business, results of operation and financial condition of the Group.The private placement and related acquisition of the vessels are conditional upon necessary corporate approvals by the Company and its subsidiaries, including, but not limited to approval by the Company's shareholders at an extraordinary general meeting. The acquisition may hence not be consummated if such approvals are not given, in which case transaction costs will have been incurred for the Group regardless, which could negatively affect the business, results of operation and financial condition of the Group RISKS RELATED TO AN INVESTMENT IN THE GROUP’S SECURITIES The Company's share price may be highly volatile and future sales of its common shares could cause the market price of its common shares to decline.Future issuance of shares or other securities may dilute the holdings of shareholders and could materially affect the price of the Company's common shares.Because the Company are a Bermuda exempted company, its shareholders may have less recourse against it or its directors than shareholders of a U.S. company have against the directors of that U.S. Company . 2. TBC by Bermuda counsel
