Genco swaps old for new

U.S.-based drybulk shipowner Genco Shipping & Trading Limited has entered into an agreement to acquire three eco Ultramax vessels in exchange for six older Handysize ships.

As explained, the transaction is part of Genco’s efforts to modernize its fleet and create a more focused asset base while reducing its carbon footprint.

The agreement is structured as an asset swap without monetary consideration or additional capital required.

The three Ultramaxes acquired by Genco will be renamed Genco Vigilant, Genco Freedom and Genco Magic. They were built between 2014 and 2015.

In return, the company is selling Genco Ocean, Baltic Cove, Genco Avra, Genco Mare, Genco Spirit and Baltic Fox. The vessels, built between 2010 and 2011, are expected to be delivered to both parties through the first quarter of 2021, according to Genco.

The deal, which cash and asset value neutral, will enable Genco to maintain its liquidity position and accomplish a number of other key objectives. Specifically, the company will continue to build scale in the core Ultramax sector, reduce the average age of its fleet by 0.3 years, avoid drydocking and ballast water treatment system costs in 2021 of approximately $3.6 million relating to three Handy units included in the transaction and preserve exposure to the upside of the Capesize sector.

Separate from the vessel swap transaction, Genco has also agreed to sell two other vessels as part of its fleet renewal plan — the Baltic Cougar, a 2009-built Supramax vessel, for $7.60 million, and the Baltic Hare, a 2009-built Handysize vessel, for $7.75 million.

Following the conclusion of the transactions, Genco will have fully exited the Handysize sector while creating a more focused fleet consisting of Capesize, Ultramax and Supramax tonnage.

“We are pleased to continue to efficiently execute our fleet renewal strategy, acquiring three modern, fuel-efficient Ultramax vessels, while divesting older, less fuel-efficient tonnage, as we further implement our barbell approach to fleet composition,” John C. Wobensmith, Chief Executive Officer, commented.

“In one transaction, we were able to expand within a key growth sector for Genco while completing a strategic goal of the company to exit the ownership of older Handysize tonnage. This transaction further builds scale in our Ultramax and Supramax sector that we believe will … integrate into our … in-house commercial operating platform.”

“Furthermore, the addition of these Ultramax vessels, which will improve the overall age profile, earnings capacity, and carbon footprint of our fleet, complements our strong presence in the Capesize sector, enhancing our ability to take advantage of a favorable drybulk market,” Wobensmith concluded.

Genco’s pro forma fleet will consist of 41 vessels including 17 Capesize, nine Ultramax and 15 Supramax vessels with an aggregate capacity of approximately 4,422,000 dwt and an average age of 10 years.