Spend it like Fredriksen

John Fredriksen’s Golden Ocean may be talking about selling ships before it buys again but analysts following the company are anticipating major moves on the acquisition front.
John Fredriksen

John Fredriksen

Despite purchasing 16 bulkers over the past 12 months the Oslo-listed owner is flush with cash, analysts note after the company’s fourth quarter report.

Jonas Advocaat Kraft and Eirik Haavaldsen of Pareto Securities say Golden Ocean is set to receive around $150m from cancelled newbuildings, which will add to $200m from a convertible bond sale in January.

“The company has plenty of dry powder to continue its spending spree,” they said in a report.

“Golden Ocean could spend another $300m through 2014 and thus acquire another nine modern kamsarmax secondhand vessels without adding more debt, we estimate.”

Frode Morkedal and Herman Hildan of RS Platou Markets say the Herman Billung-led owner is drowning in cash.

They note it had $99m in cash on its balance sheet at the end of the fourth quarter and anticipate $340m in operating cash flow will likely be generated between 2014 and 2016.

“Consequently, Golden Ocean could add 24 capesize vessels with average age of five years based on $350m equity investment and 70% debt financing,” they said.

“Alternatively, Golden Ocean could pay around 40% of its market cap in a one-off dividend.”

Yesterday Golden Ocean showed its confidence for a dry cargo market recovery by jacking up its fourth quarter dividend.

The owner, which introduced a symbolic dividend in the second quarter of 2013, has boosted the payout to $0.025 per share for the final three months of the year.

It came as profit for the quarter reached $18.11m, beating the $9.33m of a year ago and the $16.8m forecast.

Golden Ocean Group
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