Investor Presentation • Feb 17, 2021
Investor Presentation
Open in ViewerOpens in native device viewer
17 February, 2021
By receiving this company presentation (the "Presentation") or attending any meeting or oral presentation held in relation thereto, you (the "Recipient") agree to be bound by the following terms, conditions and limitations.
The information in this Presentation has been prepared by Golden Ocean (the "Company") with assistance from Arctic Securities AS and DNB Markets AS (the "Managers") solely for use at the presentation to a limited number of recipients on a strictly confidential basis in connection with a contemplated private placement of shares in the Company (the "Transaction" or the "Private Placement").
This Presentation has not been independently verified nor verified by the Manager unless otherwise required by applicable law(s). A limited legal due diligence review has been conducted on behalf of the Manager, with a customary scope and limited to Norwegian law matters only. No representation, warranty, or undertaking, express or implied, is made by the Company or the Managers or their affiliates or their respective directors, officers, employees, agents or advisers (collectively "Representatives") as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein, for any purpose whatsoever. All information in this Presentation is subject to verification, correction, completion and change without notice. Neither the Company, the Managers nor its Representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from any use of this Presentation or its contents or otherwise arising in connection with this Presentation. The information contained in this Presentation should be considered in the context of the circumstances prevailing at this time and has not been, and will not be, updated to reflect material developments which may occur after the date of the Presentation.
Matters discussed in this Presentation may constitute or include forward-looking statements. Forward-looking statements are statements that are not historical facts and may include, without limitation, any statements preceded by, followed by or including words such as "aims", "anticipates", "believes", "can have", "continues", "could", "estimates", "expects", "intends", "likely", "may", "plans", "forecasts", "projects", "should", "target" "will", "would" and words or expressions of similar meaning or the negative thereof. These forward-looking statements reflect the Company's beliefs, intentions and current expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth and strategies. Forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The forward-looking statements in this Presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions that may not be accurate or technically correct, and their methodology may be forward-looking and speculative. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. None of the Company or the Managers or any of their affiliates provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. Forward-looking statements are not guaranteeing of future performance and such risks, uncertainties, contingencies and other important factors could cause the actual results of operations, financial condition and liquidity of the Company or the industry to differ materially from those results expressed or implied in this Presentation by such forward-looking statements. No representation is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved, and you are cautioned not to place any undue influence on any forward-looking statement.
An investment in the Company's shares should be considered as a high-risk investment. Several factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievement that may be expressed or implied by statements and information in this Presentation. Before making an investment decision with respect to the offer shares, investors should carefully consider all of the information contained in this Presentation, and in particular the risk factors relating to the Company's business, the Company's industry, the Company's shares and the Private Placement, as further discussed on slide [●] to [●] below. Potential investors are however required to make their own assessment and analysis of the risks associated with an investment in the Company. The risk factors discussed herein should be read as a high-level summary only and not so as to contain an exhaustive review of all risks faced by the Company. An investment in the Company's shares is only suitable if you have sufficient knowledge, sophistication and experience in financial and business matters to be capable of evaluating the merits and risks of an investment decision relating to the Company's shares, and if you are able to bear the economic risk, and to withstand a complete loss of your investment. The absence of negative past experience associated with a given risk factor does not mean that the risks and uncertainties described are not a genuine potential threat to an investment in the Company's shares. lf any of the risks discussed herein were to materialise, this could have a material adverse effect on the company and/or the Company's business, results of operations, cash flow, financial condition and/or prospects, which may cause a decline in the value and trading price of the Company's shares, resulting in the loss of all or part of your investment in the same.
A multitude of factors can cause actual results to differ significantly from any anticipated development expressed or implied in this Presentation, including among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Company's businesses, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors. No representation is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved and you are cautioned not to place any undue reliance on any forward-looking statement.
The information obtained from third parties has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading.
The contents of this Presentation are not to be construed as financial, legal, business, investment, tax or other professional advice. By receiving this Presentation, the Recipient acknowledges that it will be solely responsible for its own assessment of the Company, the market and the market position of the Company and that it will conduct its own analysis and is solely responsible for forming its own opinion of the potential future performance of the Company's business. In making an investment decision, the Recipient must rely on its own examination of the Company, including the merits and risk involved.
The distribution of this Presentation may be restricted by law in certain jurisdictions and persons into whose possession this Presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with such restrictions may constitute a violation of the laws of any such jurisdiction. None of the Company or the Managers shall have any responsibility for any such violations.
This Presentation and the information contained herein are not an offer of securities for sale in the United States and are not for publication or distribution to persons in the United States (within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the "US Securities Act")). Any securities referred to herein have not been and will not be registered under the US Securities Act and may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the US Securities Act.
By reviewing this Presentation, you are deemed to have represented and agreed that you and any persons you represent are either (a) qualified buyers ("QIBs") (within the meaning of Regulation 144A under the US Securities act), or (b) are located outside the US. This Presentation is only addressed to and directed at persons in member states of the European Economic Area who are "qualified investors" as defined in the Prospectus Regulation (Regulation (EU) 2017/1129, as amended) ("Qualified Investors") or otherwise pursuant to applicable exemptions on the Company resulting in that no obligation arises for the Company or the Managers to produce a prospectus or otherwise comply with any registration requirements. In addition, in the United Kingdom, this Presentation is being distributed only to, and is directed only at (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), (ii) high net worth entities and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order or (iii) persons to whom distributions may otherwise lawfully be made, communicated, or caused to be communicated (all such persons together being referred to as "Relevant Persons"). This Presentation must not be acted on or relied on (i) in the United Kingdom, by persons who are not Relevant Persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors or otherwise pursuant to applicable exemptions on the Company. Any investment or investment activity to which this Presentation relates is available only to Relevant Persons or Qualified Investors or will be engaged in only with Relevant Persons or Qualified Investors.
This Presentation is not an advertisement for the purposes of applicable measures implementing the EU Prospectus Regulation. This Presentation is not a prospectus and does not contain the same level of information as a prospectus.
The Managers is acting only for the Company and will not be responsible to anyone other than the Company for providing the protections afforded to clients of the Managers or for providing advice in relation to any potential offering of securities of the Company.
This Presentation speaks only as of its date. Neither the delivery of this Presentation nor any further discussions with any of the Recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date.
This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo as legal venue.
TRANSACTION HIGHLIGHTS
Significantly increasing exposure to booming commodity market at turning point in the cycle
| Unique time to acquire quality assets |
Acquisition of 10x 2019-21 built Newcastlemaxes and 8x 2020-21 built Kamsarmaxes for USD 752 million en bloc Purchase at low point in cycle with attractive financing attached Increase operational leverage in segment with most upside on continued market strengthening All acquisition vessels are scrubber fitted and four vessels with Ice-Class |
|---|---|
| Fundamentals in place for prolonged market upturn |
Commodity super cycle will continue to drive dry bulk demand Lowest fleet growth last 30 years and lowest orderbook last 20 years Non-reversible, structural change limit financing options effectively ending speculative ordering Strong momentum building with 1yr TC Capesize rates 27% higher than average 2015-2020 |
| Improving earnings power and commitment to dividends |
Vessels on the water immediately able to capitalize on strong market Attached financing enables swift execution of transaction Strong balance sheet enabling dividend policy to signal commitment to return capital to shareholders Low cash break even ensuring post acquisition cash yield of 22% at 1yr TC Capesize rates |
| Cementing position as the leading large-size dry owner |
Increasing fleet size to 96 vessels (+23%) and pushing market cap above USD 1.3 billion (+35%) Reducing average fleet age from 7.4 to 6.0 years further improves fuel efficiency and lowers emissions New digitalization initiatives and industry low opex and SG&A Commitment to ESG to enhance transparency and lower environmental impact over time |
| Vessel Type | Vessel name | Built | Dwt | Yard | Ice Scrubber Class |
Performance vs. index |
Purchase Price (USDm) |
|
|---|---|---|---|---|---|---|---|---|
| 1 | Newcastlemax | Golden Coral | 2019.7 | 208 000 | NTS | √ | ||
| 2 | Newcastlemax | Golden Champion | 2019.9 | 208 000 | NTS | √ | ||
| 3 | Newcastlemax | Golden Comfort | 2020.1 | 208 000 | NTS | √ | ||
| 4 | Newcastlemax | Golden Courage | 2020.1 | 208 000 | NTS | √ | 130% + | USD |
| 5 | Newcastlemax | Golden Confidence | 2020.6 | 208 000 | NTS | √ | Scrubber | 520m |
| 6 | Newcastlemax | Golden Competence | 2020.6 | 208 000 | NTS | √ | premium | en bloc |
| 7 | Newcastlemax | Golden Skies | 2020.6 | 210 000 | Bohai | √ | 50-53m | |
| 8 | Newcastlemax | Golden Spirit | 2020.6 | 210 000 | Bohai | √ | per vessel | |
| 9 | Newcastlemax | Golden Saint | 2020.4 | 210 000 | Bohai | √ | ||
| 10 | Newcastlemax | Golden Spray | 2021.6 | 210 000 | Bohai | √ | ||
| 2,080,000 | ||||||||
| 11 | Kamsarmax | Golden Fortune | 2020.1 | 81 600 | Dalian | √ | ||
| 12 | Kamsarmax | Golden Forward | 2020.6 | 81 600 | Dalian | √ | 123% + | |
| 13 | Kamsarmax | Golden Friend | 2020.7 | 81 600 | Dalian | √ | Scrubber | USD |
| 14 | Kamsarmax | Golden Fellow | 2020.8 | 81 600 | Dalian | √ | premium | 232m en bloc |
| 15 | Kamsarmax | Golden Frost | 2020.10 | 81 600 | Dalian | √ √ |
||
| 16 | Kamsarmax | Golden Freeze | 2021.1 | 81 600 | Dalian | √ √ |
+ Ice-class | 28-31m per vessel |
| 17 | Kamsarmax | Golden Fast | 2021.4 | 81 600 | Dalian | √ √ |
premium | |
| 18 | Kamsarmax | Golden Furious | 2021.4 | 81 600 | Dalian | √ √ |
||
| 652,800 | ||||||||
| Total 2,732,800 |
752 |
| Sources | USDm | Uses | USDm |
|---|---|---|---|
| Equity private placement | 338 | Acquisition of 18x Vessels | 752 |
| Financing | 414 | ||
| Total | 752 | Total | 752 |
Fundamentals in place for prolonged market upturn
The start of a commodity super cycle
Substantial scrapping due to high scrap prices and aging fleet
Lowest fleet growth seen over last 30 years
Lack of financing shut down speculative ordering activity
Significantly increasing size and reducing fleet age at low point in cycle
Positioned to take advantage of market upturn through focus on larger vessel segments and profitable ice class niche
Accretive acquisition strengthens dividend potential
Cash flow Cash yield
Source: Clarksons Shipping Intelligence Network
Cash flow generation calculated based on cash break even rates subtracted from x-axis TCE rates. Rates not adjusted for Newcastlemax and Kamsarmax premiums of 130% and 123%, respectively, of benchmarks or taking into account assumed scrubber premiums
Historical figures for scrubber-fitted Capesize bulker.
Combination of low newbuild price and near-record discount to asset resembles trough in 2016
Commodity prices have recorded significant gains in h2/20 as a rebound in economic growth has spurred demand for energy, steel and other commodity related economic drivers
Capesize rates and iron ore prices tend to correlate. This time around, Capesize rates have been lagging and the cost of freight as percentage of the iron ore price remains at the lowest level seen in recent years
Capesize vessels have been the biggest beneficiaries of normalizing trade after unforeseeable events disrupted the market – Newcastlemaxes provide natural next step
VESSEL PERFORMANCE IN RECOVERING MARKETS
Scrubbers and Newcastlemax provide premium earnings potential
Acquired Newcastlemaxes earning up to ~7,500 USD/day more than standard Capesize
Illustrative scrubber benefit for Newcastlemax only assuming VLSFO vs. HFO fuel spread of USD 112 per ton and fuel consumption for Newcastlemax on a 365 day basis of 31 tons per day
On a voyage basis, average of Brazil-China at USD18/tonnes and Australia –China at USD8.0/tonnes of c25k tonnes of additional iron ore cargo equals 4.0k/day in extra TCE rates for the shipowner.
No maturities before 2023, virtually no capex and favorable debt terms
Achieved through well timed acquisitions, economies of scale and access to competitive financing
ESG report for 2019 available at https://www.goldenocean.bm/esg/
MARKET UPDATE
Global steel production
Rebound in global GDP growth for 2021 led by strong growth in China and India - the two largest importers of dry bulk commodities
Based on the current orderbook, as well as scrapping estimates1 and ordering assumptions, estimated dry bulk net fleet growth is 1.6% and 1.6% in 2021 and 2022, respectively
Further increase in utilization going forward, based on slippage, as well as slow-steaming and scrapping potential of older vessels
Demand growth Supply growth Net Utilization
FINANCIALS
| (in thousands of \$) | Q4 2020 | Q3 2020 | Quarterly Variance |
|---|---|---|---|
| Operating revenues and other operating income / expenses |
168,001 | 186,892 | (18,891) |
| Voyage expenses | (42,904) | (43,935) | 1,031 |
| Net revenues | 125,097 | 142,957 | (17,860) |
| Ship operating expenses | (47,632) | (43,444) | (4,188) |
| Administrative expenses | (4,024) | (3,103) | (921) |
| Charter hire expenses |
(17,130) | (20,443) | 3,313 |
| Depreciation | (27,592) | (27,631) | 39 |
| Impairment loss on vessels |
(721) | - | (721) |
| Net operating expenses | (97,099) | (94,621) | (2,478) |
| Net operating income (loss) | 27,998 | 48,336 | (20,338) |
| Net financial expenses |
(9,352) | (9,805) | 453 |
| Derivatives and other financial income (loss) |
6,735 | 570 | 6,165 |
| Net income before taxation (loss) | 25,381 | 39,101 | (13,720) |
| Income Tax expense |
11 | 40 | (29) |
| Net income (loss) | 25,370 | 39,061 | (13,691) |
| Earnings (loss) per share: basic and diluted | \$0.18 | \$0.27 | (\$0.09) |
| Adjusted EBITDA | 59,328 | 76,742 | (17,414) |
| TCE per day | 15,893 | 17,912 | (2,019) |
| (in thousands of \$) | Q4 2020 | Q3 2020 | Quarterly Variance |
|---|---|---|---|
| ASSETS | |||
| Short term | |||
| Cash and cash equivalents (incl. restricted cash) |
175,102 | 130,826 | 44,276 |
| Other current assets | 109,427 | 120,696 | (11,269) |
| Long term | |||
| Vessels and equipment, net (including held for sale) |
2,277,190 | 2,300,566 | (23,376) |
| Leases, right of use of assets |
136,219 | 141,609 | (5,390) |
| Other long term assets | 23,129 | 23,796 | (667) |
| Total assets | 2,721,067 | 2,717,493 | 3,574 |
| LIABILITIES AND EQUITY Short term |
|||
| Current portion of long term debt |
87,831 | 83,158 | 4,673 |
| Current portion of finance lease obligations |
23,475 | 23,117 | 358 |
| Current portion of operating leases obligations | 16,783 | 14,852 | 1,931 |
| Other current liabilities | 113,586 | 107,149 | 6,437 |
| Long term | |||
| Long term debt |
957,652 | 981,762 | (24,110) |
| Non -current portion of finance lease obligations |
127,730 | 133,679 | (5,949) |
| Non -current portion of operating lease obligations |
25,254 | 30,691 | (5,437) |
| Equity | 1,368,756 | 1,343,085 | 25,671 |
| Total liabilities and equity | 2,721,067 | 2,717,493 | 3,574 |
RISK FACTORS
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.