-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jigmro9axMAKIA6YXABYBTIQ2OoLbTvtIjX1u3VpaZLns6DMkeofN10hwXoYCXon o2KQqURPI72hTzHxjteTBA== 0000919574-99-000828.txt : 19990623 0000919574-99-000828.hdr.sgml : 19990623 ACCESSION NUMBER: 0000919574-99-000828 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990622 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLDEN OCEAN GROUP LTD CENTRAL INDEX KEY: 0001058092 STANDARD INDUSTRIAL CLASSIFICATION: DEEP SEA FOREIGN TRANSPORTATION OF FREIGHT [4412] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: SEC FILE NUMBER: 333-08468 FILM NUMBER: 99650047 BUSINESS ADDRESS: STREET 1: PO BOX 265 STE 6 TOWER HILL HOUSE STREET 2: LA BORDAGE ST PETER PORT CITY: GY1 3QU CHANNEL ISLA STATE: X0 MAIL ADDRESS: STREET 1: PO BOX 265 STE 6 TOWER HILL HOUSE STREET 2: LE BORDAGE ST PETER PORT GY1 3QU CITY: CHANNEL ISLANDS 6-K 1 FORM 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For the month of June, 1999 GOLDEN OCEAN GROUP LIMITED (Translation of registrant's name into English) P.O. Box 265, Suite 6 Tower Hill House, Le Bordage St. Peter Port, GY1 3QU Channel Islands (Address of principal executive offices) Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F X Form 40-F Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes No X GOLDEN OCEAN GROUP LIMITED QUARTERLY REPORT 31st MARCH, 1999 CHAIRMAN'S STATEMENT This statement accompanies Golden Ocean Group Limited's report for the first quarter of 1999. The unaudited financial statements show a profit for the first quarter of $5.6 million compared to a loss in the first quarter of 1998 of $1.8 million. The main contribution to this improvement comes from a foreign exchange gain of $13.3 million as the yen weakened against the dollar from yen 112.8 at the year-end to yen 118.4 at March 31, 1999. During the first quarter of 1999 we took delivery of two VLCCs, the Golden Victory and the joint venture owned New Circassia. We also took delivery of a Panamax bulk carrier, the Golden Disa and of the Handymax Cos Hero. With a total tonnage of three million tons deadweight, almost double on a year ago, Golden Ocean Group Limited now has one of the largest and most modern fleets in the world, under independent ownership. The New Circassia has been placed on bareboat charter to Hong Kong Ming Wah Shipping Company for one year with an option for a further year. The sister vessel Pacific Lagoon, due for delivery at the end of June, also owned by a joint venture company, has fixed on a one-year time charter. Arrangements to charter the VLCC (hull number 1618) due for delivery from Kawasaki Heavy Industries in August have been finalised. The vessel will be named 'Opalia' and will be bareboat chartered to Shell for a minimum period of two years. We have taken action in South Africa to prevent the dismemberment of Safmarine, one of our most important charterers, to whom we have six bulk carriers on twelve year time charter. This follows the sale by Safmarine of its container liner business to A P Moller and the planned intention of distributing the $200 million net sales proceeds to Safmarine's shareholders. Our claim is due to be heard before the court on September 6th. In the meanwhile the court has ruled that $200 million may not be disposed of and ordered that $25 million of the money be placed in an escrow account. The key challenges facing the Company are to arrange finance for the remaining VLCCs to be delivered in 1999 and to deal with the interest payments due to Senior Note Holders from 2000 onward. The two are not unconnected. We intend to have meetings with the Note Holders commencing June 16th to negotiate a more viable capital structure for the Company. The effects of the Asian crisis that started in the second half of 1997 are now receding. We continue to believe that with some of the best quality assets 2 in the shipping industry Golden Ocean Group has a robust and profitable future. 3 Management's Discussion and Analysis of Financial Condition and Results of Operations. General The Group is an international owner, operator and manager of VLCCs and dry-bulk carriers. The Group focuses on long-term chartering of newbuilding vessels. Fleet Review A fleet list is included in this report. The Group has a delivered fleet of seventeen ships, comprising ten dry-bulk vessels and seven VLCCs. It has on order eleven VLCCs and two dry cargo vessels and has options to purchase a further seven VLCCs ordered by the parent company Golden Ocean Limited. Of the delivered fleet, two existing VLCCs and two dry cargo vessels are owned by Joint Ventures. One VLCC newbuilding is owned by a Joint Venture. In the first three months of 1999 there were four additions to the fleet. In January, the third of the Group's double-hulled VLCCs, the Golden Victory was delivered. This vessel has been placed on a seven-year time charter to NYK. The Group also took delivery of the Handymax Cos Hero in January which has been fixed on bareboat charter to COSCO (Singapore) Pte. Ltd. for fifteen years. In March, the Group took delivery of the Panamax Golden Disa which has been fixed on a time charter to Safmarine for twelve years and the VLCC New Circassia which has been placed on a bareboat charter to Hong Kong Ming Wah Shipping Co. for one year. The New Circassia is owned by a Joint Venture. Results of Operations for the quarter ended March 31, 1999 compared to the quarter ended March 31, 1998. Operating revenues Net operating revenues (charter income less brokers' commissions) for the quarter ended March 31, 1999 were $19.2 million compared with $9.3 million for the quarter ended March 31, 1998. This increase resulted from the expansion of the fleet. Between April 1, 1998 and March 31, 1999, the wholly owned fleet increased from eight to thirteen vessels. Available operating days of 1,075 days were 88% higher in the first quarter of 1999 than in the first quarter of 1998 (571 days). Total off hire for the first three months of 1999 amounted to 1 day compared with 4 days for the same period in 1998. Total operating revenues for the quarter ended March 31, 1999 increased by 107% to $21.3 million 4 compared with $10.3 million for the quarter ended March 31, 1998, primarily due to the expansion of the fleet. Share of earnings of Joint Ventures The Company's share of earnings of Joint Ventures for the quarter ended March 31, 1999 was $2.1 million compared with $0.5 million for the same period in 1998. Net operating revenues of the Joint Ventures grew by 70% to $5.1 million in the quarter ended March 31, 1999 compared to $3.0 million in the quarter ended March 31, 1998. This increase in revenues resulted from the expansion of the Joint Venture owned fleet between April 1, 1998 and March 31, 1999 from two to four vessels and from improved earnings of the Golden Fountain. The Golden Fountain achieved time charter equivalent earnings of $36,800 per day from voyage charters in the first three months of 1999 compared to time charter earnings of $30,000 per day in the same period in 1998. The Group's currently operating Joint Ventures are the owning companies of the Golden Fountain and New Circassia, both VLCCs, and the owning companies of the Golden Daisy and Golden Rose, both Handymaxes. Operating expenses Vessel operating costs, which include crew wages and expenses, insurance, lubricating oils, stores and spares, repairs and maintenance, increased by 50% to $3.3 million for the quarter ended March 31, 1999 compared with $2.2 million for the quarter ended March 31, 1998. Vessel operating costs amount to 17% of net operating revenues for the period. This compares with 24% for the same period in 1998. The reduction in vessel operating costs as a proportion of net operating revenues is a reflection of the Group chartering a higher proportion of its vessels on bareboat rather than time charters. As at March 31, 1999, three wholly owned VLCCs and one dry-bulk carrier were on bareboat charters. At the same date a year previously, there were two VLCCs on bareboat charters. The Group does not bear operating costs for vessels under bareboat charter apart from some sundry insurance costs. Due to the expansion the fleet, depreciation expense increased by 100% to $6.6 million for the quarter ended March 31, 1999 compared with $3.3 million for the quarter ended March 31, 1998. Administrative expenses were $2.7 million for the quarter ended March 31, 1999, and were $1.8 million for the quarter ended March 31, 1998. Administrative expenses principally cover expenses of the subsidiary agents of the Group in London and Tokyo and 5 affiliated agents of the Group in Hong Kong, Shanghai, and Vancouver, together with audit, administrative and legal fees for the Group. Where affiliated agents have been used, these costs have been charged to the Group on an actual cost basis. Administrative expenses for the quarter include an exceptional charge of $1.0 million payable on the appointment of Chase Securities Inc. as financial advisors to the Group. Primarily as a result of these developments, total operating expenses increased by 71% to $13.2 million for the quarter ended March 31, 1999 compared with $7.7 million for the quarter ended March 31, 1998. Net operating income As a result of the foregoing factors, net operating income increased by 224% to $8.1 million for the quarter ended March 31, 1999, compared with $2.5 million for the quarter ended March 31, 1998. EBITDA for the quarter ended March 31, 1999 was $13.2 million, compared with $6.7 million for the quarter ended March 31, 1998, an increase of 97%. Other income/expenses Foreign exchange gains for the quarter ended March 31, 1999 were $13.3 million compared with $4.5 million for the quarter ended March 31, 1998. The foreign exchange gains were due principally to the appreciation of the Dollar against the Yen since the year- end. At March 31, 1999, the exchange rate had risen to Yen 118.4 per $1 from Yen 112.8 per $1 at December 31, 1998, an appreciation of 5% in the quarter. Interest income, mainly from escrow funds held as security for the Senior Notes and from the uninvested portion thereof, amounted to $0.7 million in the quarter ended March 31, 1999. Interest expense increased by 64% to $16.2 million as compared with $9.9 million for the quarter ended March 31, 1998, primarily due to the issuance of the Senior Notes. The interest expense for the quarter ended March 31, 1999 represents an average interest cost of 5.1% on interest bearing secured loans and capital leases and an overall interest expense cost of 9.6% on all debt including the Senior Notes. Interest expense for the quarter ended March 31, 1998 represented an average interest cost of 4.3% on interest bearing secured loans and capital leases and an overall interest expense cost of 8.5% on all debt including the Senior Notes. 6 Net income As a result of the foregoing, net income was $5.6 million for the quarter ended March 31, 1999, compared to a loss of $1.8 million for the quarter ended March 31, 1998. Outlook for Current Year As all delivered vessels in the wholly owned fleet are on time or bareboat charter, some of the constituent factors of net operating income are relatively predictable. With the heavy cost of servicing the Senior Notes, a loss for the full year is expected. However, the results in the latter quarters in the year to December 31, 1999 will vary from those in the first three months due to among other factors the following: (a) The Yen has depreciated against the Dollar from Yen 112.8 per $1 at December 31, 1998 to Yen 118.4 per $1 at March 31, 1999. Future changes in the exchange rate of Yen to Dollars will affect the Company's result of operations. (b) The Joint Venture owned Golden Fountain is currently employed in the voyage charter market. Fluctuations in the market rate for voyage charters of VLCCs will affect the results of operations of this vessel. Management continues to monitor market conditions for favourable time charter opportunities. (c) The Channel Alliance is expected to redeliver on expiry of its current charter in August and will commence a new five year time charter to Bocimar at a daily rate of $13,750 plus 50% of any profit made on subcharters of the vessel. (d) The second and subsequent quarters will have the full benefit of the earnings of the Golden Victory (delivered January 7, 1999), Cos Hero (delivered January 12, 1999) and Golden Disa (delivered March 19, 1999) and a 50% share of earnings of the Joint Venture owned New Circassia (delivered March 24, 1999). Later quarters are expected to benefit also from the earnings of a further five VLCCs and one dry-bulk carrier which are scheduled for delivery later in the year. Scheduled delivery dates are shown in the fleet list included in this report. Liquidity and Capital Resources Total shareholders equity at March 31, 1999 was $60.4 million compared to $54.8 million at December 31, 1998 . The increase was due to the net profit for the quarter of $5.6 million. 7 Long term debt as of March 31, 1998 consists of $241.0 million of 10% Senior Notes on an accreted value basis and $547.6 million of long term secured debt and obligations under capital leases. At March 31, 1999, the Company had cash and cash equivalents of $10.7 million compared with $8.5 million at December 31, 1998. This included restricted or escrow cash of $5.4 million at March 31, 1999 and $4.9 million at December 31, 1998. Management believes that it will be able to enter into long term charters for each of the remaining uncharted VLCC newbuildings and that on the strength of these charters it will be able to arrange long term financing. Since release of the company's annual report, arrangements have been made for the charter of the next newbuilding VLCC, the Pacific Lagoon, which is due for delivery in June. This vessel will be fixed on a one-year time charter at $24,100 per day plus 40% of sub-charter earnings above $28,000 per day. The Joint Venture owning company will reimburse 50% of the charterer's losses on sub-charters of the vessel subject to a maximum claim of $1,250 per day. This vessel has committed financing sufficient to pay the remaining instalments due to the shipyard. Management is now focusing on arranging suitable long- term charters for the unfinanced VLCCs to be delivered in 1999, the first two of which are due for delivery in July and September. 8 GOLDEN OCEAN GROUP LIMITED (INCORPORATED IN LIBERIA) CONSOLIDATED BALANCE SHEETS (EXPRESSED IN US$'000) March 31 December 31 1999 1998 ASSETS CURRENT ASSETS Cash and cash equivalents 10,720 8,487 Inventories 616 549 Trade accounts receivable 33 27 Prepaid expenses and other accounts receivable 2,832 1,358 Short term investments 14,375 28,747 - ------------------------------------------------------------------------------ Total current assets 28,576 39,168 Vessels owned, net 517,524 420,889 Vessels under capital lease, net 133,559 107,898 Vessels under construction 111,520 132,276 Options to purchase vessels 48,654 48,654 Investment in joint ventures 3,484 1,382 Loans to joint ventures 23,781 23,012 Goodwill, net 18,245 18,439 Deferred note issue costs, net 8,082 8,917 - ------------------------------------------------------------------------------ Total assets $893,425 $800,635 - ------------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current maturities of long term debt 26,596 23,050 Obligations under capital leases 7,634 6,524 Trade accounts payable and accrued expenses 5,614 3,765 Note interest payable 2,428 9,713 Time charter income received in advance 2,496 1,949 Amounts due to related parties 236 237 Drydocking and special survey provisions 1,188 1,045 - ------------------------------------------------------------------------------ Total current liabilities 46,192 46,283 Other loans 13,515 13,262 Long term debt 392,375 324,527 Obligations under capital leases 121,032 104,893 9 Notes payable 241,043 236,372 Amounts due to shareholder 17,828 19,820 Drydocking and special survey provisions 917 611 - ------------------------------------------------------------------------------ Total liabilities 832,902 745,768 Minority interest 140 41 SHAREHOLDERS' EQUITY Share capital - - Additional paid in capital 63,661 63,661 Retained deficit (3,278) (8,835) - ------------------------------------------------------------------------------ Total shareholder's equity 60,383 54,826 - ------------------------------------------------------------------------------ Total liabilities and shareholders' equity $893,425 $800,635 - ------------------------------------------------------------------------------ 10 GOLDEN OCEAN GROUP LIMITED (INCORPORATED IN LIBERIA) CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (EXPRESSED IN US$'000) 3 months 3 months ended ended March 31, 1999 March 31, 1998 OPERATING REVENUES Charter income 19,416 9,369 Brokers' commission (187) (112) Share of earnings/(losses) of joint ventures 2,102 528 Interest on direct financing sub-lease - 499 - ------------------------------------------------------------------------------ Total operating revenue 21,331 10,284 OPERATING EXPENSES Vessel operating costs 3,302 2,202 Administrative expenses 2,718 1,752 Depreciation and amortisation expense 6,574 3,323 Amortisation of goodwill 195 195 Drydocking and special survey costs 436 263 - ------------------------------------------------------------------------------ Total operating expenses 13,225 7,735 - ------------------------------------------------------------------------------ Net operating income 8,106 2,549 OTHER INCOME (EXPENSES) Foreign exchange gain 13,309 4,476 Interest income 653 1,112 Interest expense (16,207) (9,937) Other income (expenses) (205) - - ------------------------------------------------------------------------------ Net other income (expense) (2,450) (4,349) - ------------------------------------------------------------------------------ Net income/(loss) before minority interest 5,656 (1,800) Minority interest (99) - - ------------------------------------------------------------------------------ Net income/(loss) 5,557 (1,800) - ------------------------------------------------------------------------------ Retained earnings/(deficit) at beginning of the period (8,835) 61,578 - ------------------------------------------------------------------------------ Retained earnings/(deficit) at end of the 11 period (3,278) $59,778 - ------------------------------------------------------------------------------ ADDITIONAL FINANCIAL INFORMATION EBITDA 13,221 6,650 Ratio of earnings to fixed charges 1.09 0.60 EBITDA to interest expense, net 0.82 0.67 12 GOLDEN OCEAN GROUP LIMITED (INCORPORATED IN LIBERIA) CONSOLIDATED STATEMENTS OF CASH FLOWS (EXPRESSED IN US$'000) 3 months 3 months ended ended March 31, 1999 March 31, 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net income 5,557 (1,800) Adjustments to reconcile net income to net cash provided by operating activities: Foreign exchange gain (13,309) (4,476) Depreciation and amortisation expense 6,574 3,323 Share of earnings of joint ventures (2,102) (528) Amortisation of note discount 4,671 3,418 Amortisation of goodwill 195 195 Amortisation of deferred note issue costs 836 702 Interest receivable on loans to joint ventures (107) - Minority interest 99 - Net change in: Inventories (67) (69) Trade accounts receivable (6) (31) Prepaid expenses and other accounts receivable (1,671) (2,157) Trade accounts payable and accrued expenses 2,102 1,075 Note interest payable (7,284) (4,238) Accrued profit share - (6,243) Time charter income received in advance 547 804 Drydocking and special survey provisions 448 264 - ------------------------------------------------------------------------------ Net cash used in by operating activities (3,517) (9,761) CASH FLOWS FROM INVESTING ACTIVITIES Loans to joint ventures (661) (993) Payments received on direct financing sub-lease - 506 Additions to vessels under construction (108,116) (97,237) Proceeds from sale of vessels - 40,000 Payments to acquire pledged investments - (13,646) Proceeds from redemption of investments 14,569 10,000 - ------------------------------------------------------------------------------ Net cash used in investing activities (94,208) (61,370) CASH FLOWS FROM FINANCING ACTIVITIES 13 Proceeds from long term debt 108,760 90,266 Repayment of long term debt (5,088) (1,809) Payment of capital lease obligations (1,721) (27,514) Amounts due to related party (1) (208) Repayments to shareholder (1,992) (3,649) Proceeds of note issue - 69,140 Payments for deferred note issue costs - (2,814) - ------------------------------------------------------------------------------ Net cash provided by financing activities 99,958 123,412 - ------------------------------------------------------------------------------ Net increase in cash and cash equivalents 2,233 52,281 Cash and cash equivalents at beginning of period 8,487 6,419 - ------------------------------------------------------------------------------ Cash and cash equivalents at end of period $10,720 $58,700 - ------------------------------------------------------------------------------ 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GOLDEN OCEAN GROUP LIMITED (registrant) Dated: June 22, 1999 By: /s/Fred W.Y. Cheng Fred W.Y. Cheng Chairman 15 02052005.AA5 -----END PRIVACY-ENHANCED MESSAGE-----