Western Bulk Chartering: We are up and flying again

The controversial restructuring, including the separation of Western Bulk Chartering, in 2016 was "very painful and unfortunate," Jens Ismar, CEO of the Norwegian dry bulk carrier, tells ShippingWatch. He does not rule out new downturns in the market.

Following an eventful 2016 which included a restructuring and a controversial change in ownership – triggering strong reactions from a series of Japanese shipowners – Jens Ismar, CEO of Western Bulk Chartering, is now seeing the dry bulk carrier regaining trust in the market.

The fact that we were forced to do the restructuring last year was very painful and unfortunate"

Jens Ismar, CEO, Western Bulk Chartering
The dry bulk carrier published its annual report a little over two weeks ago, showing a decline in time charter revenue (TCE) to USD 4.4 million in 2016, and the net result fell to deficit of USD 20 million against a profit in 2015.

Western Bulk Chartering also informed that the carrier would in the first three months of the year raise USD 18 million through a share issue, which was completed last week. The carrier has raised a total of USD 40 million since last summer.

"We have access to the market and we are now basically doing business with all the people we want to do business with. During parts of last year that was a challenge," Ismar tells ShippingWatch.

"People notice that we are up and flying again and we have the cash, the capital base and the people to be a successful company. Apart from a few people that are not with us anymore we have the same staff and setup."

Western Bulk aims to raise millions on the stock exchange

The executives who left the carrier last year include Christian V. Christensen, who stepped down after serving more than 15 years at the Norwegian dry bulk carrier where he was responsible for the Atlantic division and long-term contracts on the Japanese market. He now serves as head of dry cargo at Denmark's Norden.

Jens Ismar, CEO, Western Bulk Chartering

Last year's change in ownership meant that the majority shareholder in what was then Western Bulk – Kistefos Equity Operations, owned by billionaire Christian Sveaas – bought out the profitable part of the carrier, Western Bulk Chartering.

Bulk Invest, as the remaining part of Western Bulk was named, was then declared bankrupt, and this made six Japanese shipowners – who, through vessels on charter, had USD 172 million trapped in the collapsed carrier – puzzled about the price of the sale to Kistefos.

The Japanese shipowners felt that Western Bulk Chartering was sold at too low a price, as the owner bought the company from himself for USD 16 million plus USD 31 million in debt.

Japanese shipowners in fierce battle against Bulk Invest

The process was subsequently investigated by a trustee who in November cleared the acquisition by Sveaas and Kistefos, reported Norwegian business daily Dagens Næringsliv. However, the estate criticized Sveaas and the Group CEO of Kistefos, Beng A. Rem, for failing to declare a conflict of interest in their involvement in all cases concerning the sale, from the point Kistefos considered acquiring Western Bulk Chartering and onwards.

"The fact that we were forced to do the restructuring last year was very painful and unfortunate especially to our Japanese long term counterparties. On the positive side we still have several running deals with Japan both on cargo and vessels and have continuously done deals," says Ismar.

Eyes improvements in dry bulk

It’s still not a good market but it’s better than people expected"

Jens Ismar, CEO, Western Bulk Chartering
The dry bulk carrier, which currently operates a fleet of close to 140 vessels, expects a positive bottom line this year following the deficit for 2016.

And there have been overall improvements in the dry bulk sector in recent weeks and months, according to Ismar, though the CEO expects fluctuating rates in the time to come. The market is especially influenced by Chinese policies, as more than 40 percent of the combined dry bulk market depends on Chinese demand, he explains.

"The last quarter of 2016 and this year so far have been surprising a little bit on the upside. People have become quite a bit more optimistic. It’s still not a good market but it’s better than people expected," says Ismar, adding:

"I expect that we will see some volatility this year and there is absolutely no guarantee that we will see a continuing improving market. I’m sure we will have our downturns throughout the year."

As for the scrapping activity, the CEO notes that activity has slowed down "quite considerably." If this trend continues throughout the year, it will, says Ismar, take even longer for the market to become more balanced.

English Edit: Daniel Logan Berg-Munch

Western Bulk Chartering in deficit after owner's default

Western Bulk Chartering reduces deficit

Jens Ismar rejects all accusations of foul play

Bulk Invest bankruptcy hits Western Bulk Chartering

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