Gearbulk, Grieg Star unveil plans for joint venture

VesselsValue Senior Analyst William Bennett found the companies will own 36 percent of the world’s open hatch/gantry fleet by deadweight tonnage and 30 percent by value.    Gearbulk and Grieg Star said they plan to establish a joint venture that will operate more than 130 open hatch, semi-open hatch and conventional bulk vessels.
   The U.K.-based research company VesselsValue said the joint venture “looks to be cornering the market on the open hatch/gantry market” and will have a fleet with a combined value of  $814 million.
   An analysis by William Bennett, a senior analyst at VesselsValue, found the companies will own 36 percent of the world’s open hatch/gantry fleet by deadweight tonnage and 30 percent by value.
   He said the deal includes Grieg Star’s two ultramax newbuilds at Yangzhou Dayang Shipbuilding in China, worth $37.94 million.
   VesselsValue said the average age of the combined fleet will be 12.6 years, with the Gearbulk fleet averaging 10.9 years and the Grieg Star fleet averaging 13.7 years.
   Gearbulk, headquartered in Pfäffikon, Switzerland, will own 65 percent of the joint venture, and Bergen, Norway-based Grieg Star will own 35 percent. The name of the joint venture has not yet been chosen, but it will be established as an independent Norwegian company based out of Bergen with offices around the world.
   “This agreement represents the firm intention of both companies to build an improved range of services for our customers. The combined number of vessels and trades will make it easier for our customers to find services that fit their needs,” Gearbulk Chairman and CEO Kristian Jebsen said. He will also be chairman of the joint venture, and Grieg Star will name a vice chair.
   The chief executive officer will be Rune Birkeland, who has been chief executive officer of Grieg Logistics since 2005. The chief commercial officer will be Arthur English, who has worked for Gearbulk for 22 years, holding senior and executive positions at various locations around the world.
   Subject to completion of final agreements, corporate authorizations and relevant regulatory approvals having been obtained, the joint venture is expected to be fully operational through the first half of 2017.
   “We see our two operations as complementary, making this joint venture a natural next step for our companies. In an increasingly competitive market, we believe this new entity will have the size to build and sustain a versatile and independent shipping service,” Grieg Star CEO Camilla Grieg said.
   The obligations toward existing contracts shall remain fully in force and will be fulfilled by the joint venture, under the ultimate responsibility of its shareholders.
   The companies said Grieg Star and Gearbulk will retain their independent technical ship management and ownership on the vessels in the joint venture. Further, the scope of the joint venture excludes activities and vessels operated by Gearbulk in association with other third parties, as well as terminal business, transshipment activities, operation of liquid pitch tankers and caustic bulk vessels. For Grieg Star, their terminal businesses will also remain outside the scope of the new joint venture. Grieg Star’s subsidiary in British Columbia, Squamish Terminals, began operating last month at its newly constructed East Dock, 17 months after a fire destroyed the original structure.
   In addition to conventional bulk carriers, the companies have large numbers of open hatch ships that have holds similar to shoe boxes, with no overhanging deck. This makes them attractive for the movement of unitized cargo such as wood pulp, paper, lumber, plywood, steel pipes, coiled steel and project cargo. They can also carry cargo on deck, including containers and oversize cargo, such as wind turbine blades.
   Many of the ships also have removable tweendecks, swing cranes or gantry cranes.
   Gearbulk was founded in 1968 and currently has about 500 employees ashore and 2,100 at sea on approximately 90 vessels.
   Grieg Star had revenues of $639 million, an operating profit of 14 million, and a net loss of $2.7 million in 2015. It is part of the privately owned Grieg Group, established in 1884, and is a fully integrated shipping company. Grieg Group is 75 percent owned by the Grieg family and 25 percent owned by the Grieg Foundation.
   Grieg Star operates a fleet of 42 vessels transporting parcel cargo, break bulk and drybulk cargo. Thirty-two of these vessels belong to the company’s open hatch fleet, while the additional 10 vessels are dry bulk Supramax carriers. Grieg Star has about 1,100 employees, 250 of which are shore-based and 850 of which work out at sea.