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Bahri merger expected to be formally completed next month

Bahri merger expected to be formally completed next month
The National Shipping Company of Saudi Arabia (Bahri) is close to completing the physical merger of Vela Marine International’s vessels into its fleet and expects the process to be concluded by December, new ceo Ibrahim Al-Omar, said at Seatrade Middle East Maritime today.

 “Hopefully we are going to complete the merger by end-November, December,” said  Al-Omar, who was appointed ceo on 1 October, speaking to Seatrade Global at the Seatrade Middle East Maritime event in Dubai today.

“[The regulatory approval] is all done. We are receiving one ship per week on average. Most of the VLCCs have been taken and now we are taking the product tankers,” he added.

The financial merger, valued at $1.3bn, of Saudi Aramco subsidiary Vela was announced earlier this year. Saudi Aramco owns 20% of Bahri’s shares, while the Public Investment Fund is the other major shareholder, with 22.5%. Most of the Bahri fleet is engaged in long-haul voyages to bring crude from Ras Tanura to the US Gulf of Mexico, with backhaul voyages carrying oil to India, China and Singapore from the Caribbean.

“We have taken 14 ships already, very smoothly, and there are six to go. Then the merger is complete. There are 14 VLCCs, one storage VLCC and five product tankers, including four MRs and one Aframax,” said Robert Houston, president, Mideast Ship Management, the ship-management arm of Bahri.

The merger received approval from shareholders in June, as Bahri won 60% support from institutions and retail investors to merge with Vela, after formally announcing the merger in late 2012. Houston said a major growth area was expected to be in grain imports through Bahri’s joint venture with ARASCO, which owns five bulk carriers for this purpose. Saudi Arabia is to phase out wheat production in 2016 to save water.

Al-Omar said that Bahri could announce new orders for VLCCs and dry bulk vessels in the next three to four months, although there was “nothing definite” at this stage. Bahri’s is the biggest fleet in the Middle East, with 77 ships, and it is the third-largest VLCC owner in the world, with a total of 23 VLCCs, after Mitsui OSK Lines and John Fredriksen’s Frontline Ltd.