John Fredriksen-backed bulker owner Golden Ocean may be getting ready to cancel some of its newbuilding contracts, according to an analyst at Arctic Securities.
In a note to clients, Erik Nikolai Stavseth said the company could free up around $115m in cash and slash capital expenditures (Capex) by $210m if it pulled the plug on its entire programme.
“However, we find that a likely outcome will be a partial cancellation and partial reduction in prices on the remaining orders,” he added before deeming the potential “spring cleaning” exercise a “highly positive move”.
At the end of the first-quarter, Golden Ocean’s newbuilding programme consisted of one cape, four kamsarmaxes and five ice-class panamaxes on order at Jinhai Heavy Industries in China and India’s Pipavav Shipyard in addition to a pair of options. All but two are financed.
“Due to continuous delays at both yards restructuring of the remaining contracts will be prioritized coming quarter,” it told investors Wednesday. “It is expected that the overall Capex will be reduced which in turn will strengthen Golden Ocean’s balance sheet.”
It booked an impairment of $2.2m in the three months to 31 March on the 74,500-dwt newbuilding Golden Emerald, which was sold to a buyer it identified only as an “independent third party”. The vessel was scheduled to hit the water in June, according data from Clarksons.
Golden says it will be refunded for installment payments and expects a positive net cash effect of around $5m after settling the remaining $16.7m portion of the loan it took out to bankroll construction.
