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Genco to perform Ultramax for Handysize vessel exchange

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Dry Bulk,

Genco Shipping & Trading Limited has entered into an agreement to acquire three modern, eco Ultramax vessels in exchange for six older Handysize vessels.

This transaction, which is part of Genco’s efforts to modernise its fleet and create a more focused asset base, while reducing its carbon footprint, is structured as an asset swap without monetary consideration or additional capital required. The vessels are scheduled to deliver to both parties through 1Q21.

Through the execution of this transaction, which is cash and asset value neutral, Genco will maintain its sizeable liquidity position and accomplish a number of other key objectives including the following:

  • • Continue to build scale in the core Ultramax sector and complement its in-house commercial platform while divesting non-core assets.
  • • Reduce the average age of its fleet by 0.3 years.
  • • Avoid drydocking and ballast water treatment system costs in 2021 of approximately US$3.6 million relating to three of the Handysize vessels included in the transaction.
  • • Preserve exposure to the upside of the Capesize sector.

Separate from this vessel swap transaction, Genco has also agreed to sell two other vessels as part of its fleet renewal plan: the Baltic Cougar, a 2009-built Supramax vessel, for US$7.60 million; and the Baltic Hare, a 2009-built Handysize vessel, for US$7.75 million.

Following the conclusion of the transactions, Genco will have fully exited the Handysize sector, while creating a more focused fleet consisting of Capesize, Ultramax, and Supramax tonnage.

Genco’s pro forma fleet will consist of 41 vessels including 17 Capesize, nine Ultramax and 15 Supramax vessels. The fleet will have an aggregate capacity of approximately 4.42 million dwt and an average age of 10 years.

John C. Wobensmith, Chief Executive Officer, commented, “We are pleased to continue to efficiently execute our fleet renewal strategy, acquiring three modern, fuel-efficient Ultramax vessels, while divesting older, less fuel-efficient tonnage, as we further implement our barbell approach to fleet composition. In one transaction, we were able to expand within a key growth sector for Genco while completing a strategic goal of the company to exit the ownership of older Handysize tonnage. This transaction further builds scale in our Ultramax and Supramax sector that we believe will seamlessly integrate into our world-class in-house commercial operating platform. Furthermore, the addition of these Ultramax vessels, which will improve the overall age profile, earnings capacity, and carbon footprint of our fleet, complements our strong presence in the Capesize sector, enhancing our ability to take advantage of a favourable dry bulk market.”

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