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Gulf Navigation eyes bargains

Gulf Navigation eyes bargains
Owner waiting for secondhand prices to fall before investing budget of up to $100m

Gulf Navigation eyes vessel bargains.

UNITED Arab Emirates shipowner Gulf Navigation has earmarked $50m-$100m to spend on expanding its fleet of chemical carriers and tankers in 2010.

But the Dubai-based group, which late last year scuttled ambitious plans to buy 49 product tankers from Hong Kong-based Cido Shipping, said secondhand prices still needed to fall further before it was prepared to buy.

?We have the money available, so we are ready to move when we see the right type of deal at the right price,? said Gulf Navigation chief executive Per Wistoft.

The company is in discussions with two companies, including one to buy a fleet of up to six chemical tankers in a deal thought to be worth around $50m.

?We are specifically looking at one project that involves four to six chemical tankers. It is a very complicated as it is not directly a fleet from someone else,? Mr Wistoft said, declining to reveal the companies selling the ships.

?We are trying to put more than one sale together in a total acquisition that will make it [more] attractive to us than if it was just one of the two sellers.

?We are trying to put these two sellers together to sell us the ships at the same time. We are not really interested in just one of them selling.?

Mr Wistoft said the company preferred to buy ships en bloc, but few opportunities had been available.

?We have looked at two or three different projects, but it has to stay within where we believe it is the right way of doing it,? he said.

He did not name Cido as the shipowner, although he confirmed that negotiations on one major deal had ended unsuccessfully in 2009.

?We were talking in the middle of last year about acquiring a fleet of tankers. We went as far as having a signed term sheet that outlined the main details and price,? he added.

?But the seller was not in [a] position to deliver what he had promised. It was not a question of willingness ? on the contrary, there were outside factors over which he had no control.?

Mr Wistoft said that cash-rich ship-owners were ?sitting on the sidelines? and ?waiting to reinvest?.

?People expected a lot of forced sales, but the amount of these will be less because cash is still available, making life easier for companies that others thought would be sellers,? he said.

?I would like to have 20 ships by the end of the year. This will allow our technical management to reach a critical mass in terms of optimising the operating expenses.

?When we have done this next phase of expansion, we will take a closer look at the world at the end of 2010. We will see how much cash we have been able to generate and then we want to continue the expansion.?

Profits for 2009 at Gulf Navigation Holdings, Dubai"s only listed maritime and shipping company, were down 82%, with net income equivalent to $7.2m.

Its fleet of 12 ships includes one very large crude carrier, one suezmax, four chemical carriers of 22,000 dwt and four offshore crew boats.

The chemical carriers are all chartered to International Shipping Co, a subsidiary of Saudi Basic Industries Corp on 15-year deals.

Gulf Navigation has two chemical carriers on order at SLS Shipyard in South Korea that should have been delivered in 2009. However, construction delays mean that they may be cancelled.

Last month, Gulf Navigation said it had $150m in cash, part of which would be spent on down payments for four new petrochemical carriers. The company wants to increase the cargo it aims to lift this year by one third to 6m tonnes, Mr Wistoft said.

In January 2009, the company said it owned and operated a total of 19 vessels.


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