Dallas, Texas 02/13/2014 (FINANCIALSTRENDS) – The $283 million market capped dry bulk shipping firm Baltic Trading Ltd (NYSE:BALT) announced on 13th January that it had gone ahead and exercised its option to buy out two additional bulk carriers. The vessels are of the same make and specification that the New York based firm had taken ownership of previously. The two new orders of “Ultramax newbuildings” class vessels are expected to be handed over to the shipping firm in the June to August time frame of 2015. Thanks to the exercising of the option, the ship maker is going to get the new ships at the original costs negotiated a year back.
Why The Expansion Move Now ?
Explaining the decision to go in for this huge capital expenditure, Baltic Trading Ltd (NYSE:BALT) President and Chief Financial Officer Mr. John C. Wobensmith has been quoted to have said that, “Management’s strategic decision to exercise the option to acquire two additional Ultramax newbuildings is consistent with our ongoing efforts to take advantage of favourable asset prices. With four Ultramax newbuildings now scheduled to be delivered to Baltic Trading, combined with the recently completed acquisitions of two Capesize and two Handysize vessels, we are poised to more than double the size of our modern fleet on a tonnage basis.”
Charters Picking Up
Baltic Trading Ltd (NYSE:BALT) has indicated that it would be financing this latest asset acquisition by using up its “cash on hand” and will also dip into its future cash flow. It has also signalled that it would seek debt from financial institutions to raise gap financing to pay for the four vessels. The dry bulk shipping firm has gone on this major expansion, keeping in mind its growing order book. It has in the recent weeks entered into chartering contracts with various customers at spot rates and hence the aggressive expansion plans.