Livestock exporter Wellard has announced the sale of the MV Ocean Shearer for US$53 million.
Wellard intends to apply A$62 million of the sale proceeds to reducing the Company’s financial debt to A$24.6 million, while the remaining A$15.8 million will be retained as cash for operations, significantly strengthening Wellard’s working capital position.
The vessel, which was delivered in 2016, is the world’s largest purpose-built livestock vessel.
The Company can now focus exclusively on maximising earnings and profits from the company-owned MV Ocean Drover and MV Ocean Ute, and the long-term chartered MV Ocean Swagman.
Wellard is selling the MV Ocean Shearer to Livestock Transport & Trading Co KSC, Kuwait, a company controlled by Al Mawashi Limited, a Kuwaiti publicly listed company, which trades in Australia as Kuwait Livestock Transport and Trading Company and is one of the largest exporters of sheep from Australia to the Middle East.
“The sale of the MV Ocean Shearer cuts Wellard’s financial debt to very manageable levels while crystallising value from an under-utilised vessel in our fleet,” Wellard Executive Chairman John Klepec said.
Mr Klepec said that Wellard was paying A$11.7 million in principal and interest costs on the MV Ocean Shearer annually, in addition to various other fixed costs such as maintenance and crewing.
“Given our comparable sized vessel, the MV Ocean Drover has completed three times the number of voyages as the MV Ocean Shearer in 2019, it makes financial sense to release value and reduce debt from an under-utilised asset, adding A$15.8 million to our cash reserves and reducing our annual debt servicing by US$8 million,” he said.
Wellard’s Executive Chairman, Mr John Klepec said Wellard’s high debt load, which had become a millstone around its neck, would be consigned to history on the successful settlement of the transaction.
“Wellard can now focus on charter utilisation and running its vessels efficiently. Our Company has changed its approach and has become an international livestock logistics business, with more robust systems and processes, best-in-class animal welfare outcomes, a leaner overhead structure, and a more reliable revenue stream from its highly specialised charter operations.”
-Wellard