Golden Ocean delays six capesize newbuilds; posts 2Q loss

Golden-Ocean

Golden Ocean has delayed the delivery of six capesize newbuildings.

Golden Ocean said that in June it had entered into an agreement with one yard to delay the delivery of six newbuildings by seven to nine months per vessel. The shipowner has six capesize newbuildings on order from New Times Shipbuilding, out of a total of 12 new vessels it has contracted with yards in China.

Of the 12 vessels under construction one has been sold and will be delivered to new owners when it is delivered from by the shipyard in the fourth quarter of 2016. Golden Ocean will receive $46.2m in net sales proceeds when the newbuilding is delivered.

The company has outstanding commitments of $372.7m on its newbuilding programme.

Second Quarter 2016 Results

The Company reports a net loss of $39.2 million and a loss per share of $0.37 for the second quarter compared with a net loss of $68.2 million and a loss per share of $1.10 for the first quarter. The net loss in the second quarter includes (i) a gain on sale of newbuildings and amortization of deferred gain of $0.1 million, (ii) an impairment loss on a vessel held under capital lease of $1.0 million, and (iii) a loss on derivatives of $4.9 million, mainly related to unrealized losses on interest rate hedges. The net loss in the first quarter includes (i) a gain on sale of newbuildings and amortization of deferred gain of $0.1 million, (ii) an impairment loss on securities of $10.0 million, (iii) a loss on derivatives of $12.9 million, mainly related to unrealized losses on interest rate hedges, (iv) a loss provision of $1.8 million against uncollectible receivables, and (v) an impairment loss of $2.1 million relating to the Company’s investment in a joint venture. If these items are excluded, the Company reports a net loss of $33.4 million for the second quarter compared with a net loss of $41.5 million for the first quarter. The decrease in this loss is primarily due to the increase in vessel earnings (or time charter equivalent revenues) of $16.2 million attributable to the improved market in the second quarter, partially offset by an increase in charter hire expenses and an increase in interest expense.

Cash and cash equivalents decreased by $42.8 million in the second quarter. The main cash movements were the payment of $41.3 million in respect of the Company’s newbuilding program, proceeds from the draw down of debt of $25.0 million. In addition, $14.9 million was used in operations.

The Company reports a net loss of $107.5 million and a loss per share of $1.27 for the six months ended June 30, 2016 compared with a net loss of $110.9 million and a loss per share of $4.30 for the six months ended June 30, 2015. The net loss in the first half of 2016 includes (i) a gain on sale of newbuildings and amortization of deferred gain of $0.2 million, (ii) an impairment loss on a vessel held under capital lease of $1.0 million, (iii) an impairment loss on securities of $10.0 million, (iv) a loss on derivatives of $17.8 million, mainly related to unrealized losses on interest rate hedges, (v) a loss provision of $1.8 million against uncollectible receivables, and (vi) an impairment loss of $2.1 million relating to the Company’s investment in a joint venture. The net loss in the first half of 2015 includes (i) an impairment loss on vessels and newbuildings of $141.0 million, (iii) a loss on derivatives of $0.5 million, and (iii) a bargain purchase gain of $78.9 million. If these items are excluded, the Company reports a net loss of $74.8 million for the first half of 2016 compared with a net loss of $48.3 million for the first half of 2015. The increase in this loss is primarily due to the decrease in vessel earnings of $29.1 million attributable to the full impact in the first half of 2016 of the merger with the Former Golden Ocean compared with only three months in the first half of 2015 and poor market conditions.

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