The vessel will be purchased by Israeli company, Dabbah Slaughterhouse Limited.
The sale of the mid-sized M/V Ocean Outback, which was built in 2010, is part of Wellard’s ongoing review of its fleet to match its shipping capacity to current market conditions and future fleet additions.
The sale of the M/V Ocean Outback will result in an estimated:
- USD12.17 million (approx. A$16.34 million) reduction in existing debt;
- USD13.57 million (approx. A$18.22 million) increase in cash on hand; and
- USD9.7 million (approx. A$13.02 million) non-cash accounting loss resulting from the impairment in the book value of the asset and related inventory.
Wellard expects completion of the sale of the M/V Ocean Outback to occur in the first quarter of FY2018.
The sale is subject to the Norwegian Shipbrokers’ Association’s Memorandum of Agreement for Sale and Purchase of Ships (BIMCO Form Rev, 2012), which provides standard terms and conditions adopted internationally for sale of oceangoing ships, and includes certain provisions, such as a final inspection of the vessel that may result in minor adjustment to the cash received. The vessel has undergone recent drydocking in Singapore and is considered in good working condition.
The sale proceeds (net of vessel finance) will be used for working capital.
Wellard CEO, Mauro Balzarini said: “Wellard regularly reviews the make-up of itsfleet to match it to current and expected future capacity demands. As previously announced in the Company’s 3 April 2017 Offer Document, Wellard had received several approaches from parties interested in purchasing our vessels, so we used the opportunity to progressthe sale of the M/V Ocean Outback to right-size our fleet. The cash-realisation and efficiencies Wellard gains in our view outweigh the capital loss on this transaction.
“Wellard continues to work through very difficult trading conditions, which have remained soft in the second half of the financial year. As previously announced, there will be trading losses reported in the Company’s year-end accounts.
“The Company is reviewing the carrying value of its assets, and subject to valuation, this may result in impairments when it finalises its accounts at year-end, which, together with expected higher trading losses, will lead to a second half loss higher than the first half. The quantum of such losses is yet to be determined as the year is not complete.
“Notwithstanding the very tough year, we are managing our way through. The completion of the Company’s A$53 million capital raising, our Costs Out Programme, and the sale of the M/V Ocean Outback leaves Wellard with an improved liquidity position. The market signals for the beginning of the new financial year FY2018 are more promising than FY2017, which leads us to expect some improvement in performance in FY2018.”