26 - The signed agreements with Aramco and Vela A- Overview of the agreements
On November 4, 2012 the Company signed an agreement with Saudi Aramco whereby the ownership of all Vela International Marine Ltd.’s fleet. (Vela) will be transferred to the Company after obtaining required regulatory approvals. The Vela’s fleet consists of twenty oil tankers as follows:
Fourteen VLCCs.
One VLCC for floating storage.
Five refined petroleum product tankers.
Pursuant to the merger agreement, Bahri will pay to Vela a total consideration of approximately SR 4.88 billion (equivalent to US$1.3 billion). The consideration will comprise a cash payment amounting to SR 3.12 billion (equivalent to US$ 832.75 million) in addition to 78.75 million new Bahri shares to be issued to Vela at an agreed price of SR 22.25 per share. The Company’s post merger issued number of shares will be 393.75 million shares and the new shares issued to Saudi Aramco Developing Company (which is wholly owned by Saudi Aramco) will equal 20% of Bahri’s share capital and it will have a fair representation in Bahri’s Board. According to the terms of a long-term shipping contract with a minimum period of 10 years, the Company will be the exclusive carrier to Saudi Aramco for the transportation of crude oil sold by Saudi Aramco on the FOB basis. According to this contract and to meet Saudi Aramco’s demand which is estimated to be 50 VLCCs, the Company plans to best optimize the utilization of its post-merger fleet which will total 32 VLCCs in addition to charter VLCC’s when necessary. The long-term shipping contract includes an agreed upon terms to protect the Company when freight rates falls below the minimum agreed limit. On the other hand, if freight rates increased above specific limit agreed on (compensation limit) the Company will compensate Saudi Aramco for the amounts previously paid to the company upon the decline of freight rates below the minimum limit. Bahri and Vela have also agreed on temporary arrangements for the operation of the VLCCs owned currently by Bahri within Saudi Aramco’s program to transport oil via VLCC’s. The temporary arrangement started on January 1, 2013 until the long-term shipping contract became effective on the 21st of July, 2014 according to the terms of the merger agreement. B- Launching the transfer phase The company received the first VLCC from Vela fleet on the 21st July 2014, i.e. this date is the date of the commencement of the long-term shipping contract with Saudi Aramco. The company has received all twenty oil tankers from Vela during the second half of 2014. C- Increasing share capital The share capital of the company has been increased by the value of six oil tankers received from Vela and its ownership has been legally transferred to the company on 8 September, 2014. On 15 September 2014, the underlying legal formalities are completed to effect the capital increase at 20% for Saudi Aramco Developing Company (including the amendment of the com- pany’s commercial registration) have been completed. The capital has been increased from SR 3.150 billion to SR 3.938 billion
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Annual Report 2014
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