2020 Bulkers Ltd (“2020” or the “Company”) – Financing and dividend update
Hamilton, Bermuda - October 15th 2019,
2020 Bulkers Ltd announces that the Company has agreed to enter into a sale and lease back arrangement with Ocean Yield for its two Newcastlemax vessels, Bulk Seoul and Bulk Shanghai. The vessels are expected to be delivered from the yard on 30 October and 6 November, respectively, and will at delivery be sold to Ocean Yield for a price per vessel of USD 42 million, net of a USD 5 million sellers’ credit. The vessels will be chartered back to the Company on thirteen year bareboat charters which include a purchase obligation at the end of the respective charter periods and certain options to either sell or acquire the vessels during the charter periods. The Company expects the sale and leaseback transactions to be accounted for as finance leases.
The lease financing arrangements are subject to customary conditions precedent and the execution of definitive documentation.
The lease financing will replace the original USD 30 million committed bank financing per vessel and is expected to increase the Company’s liquidity by approximately USD 21 million upon closing.
2020 Bulkers is scheduled to have two further newbuildings delivered in January 2020, with the last two newbuildings expected to be delivered in April and May 2020. The Company expects an average cash breakeven level of USD 14,100 per vessel per operating day for 2020.
Upon completion of the sale and leaseback transactions referred to above and supported by the robust market, the attractive charter coverage secured, as well as the increased liquidity, the Board now expects to declare its first monthly dividend payment in November 2019 when four of our ships will have commenced operations.
Magnus Halvorsen, CEO of 2020 Bulkers Management AS, says in a comment: “We are pleased that only three months after delivery of our first vessel we are already in a position to fulfill our commitment to return the majority of free cashflow as dividends to our shareholders, while we still maintain a strong balance sheet and a low cash break even.
Assuming the remaining three open ships are fixed on terms similar to the last done index charter for Bulk Shanghai, the Company would, based on the current Baltic Capesize spot index rate of USD 26,000 and forward fuel prices for 2020, generate in excess of USD 50 million in free cash flow after interest payments and debt amortization for the full year. The Board see a strong possibility to return a significant part of the current market capitalization to shareholders over the coming two to three years.
2020 Bulkers Limited press release