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Cash-strapped Western Bulk to sell chartering arm

Cash-strapped Western Bulk to sell chartering arm
Cash-strapped Western Bulk is selling its chartering arm to its controlling shareholder Norwegian investment fund Kistefos in an effort to improve its liquidity position.

Facing what it describes as a “challenging liquidity situation” Olso-listed Western Bulk is to sell Western Bulk Chartering to Kistefos. The sale has an enterprise value of $47m with Western Bulk to receive $16m in cash and Kistefos will take over its outstanding debt of NOK271m under an unsecured bond issue.

The deal is subject to approval of bondholders who will also have to accept an extension of term on the bonds, reduced interest payment and amendments to some covenants.

Western Bulk said it was undertaking the sale because: “The company is exposed to an increasingly challenging market situation with dramatically low dry bulk charter rates and guarantees granted by group companies for charters for certain ship owners. This has resulted in significant strains on the company's short term liquidity situation.”

Kistefos is Western Bulk’s largest shareholder with a 60.4% stake. The shipping plans to use the funds to try and secure solutions with other creditors.

“The board of directors believes that the transaction provides Western Bulk with a basis for continued operations and to further explore and pursue potential solutions with the remaining creditors, at large ship owners with guaranteed minimum charters,” Western Bulk said.

It added that the company’s continued operations would be assessed if no acceptable solutions could be reached.