Merger of Vela’s Fleet and Operations with Bahri On November 4, 2012, the Company signed the final binding agreements with Saudi Aramco and Vela, International Marine Ltd.,, a totally owned subsidiary of Saudi Aramco, to merge Vela’s fleet and operations with Bahri. Pursuant to the agreements, Bahri would pay SAR 4.9 billion to Vela, including SAR 3.12 billion in cash and issuance of 78.75 million new shares in Bahri. This deal and related decisions proved to be beneficial for the Company and its shareholders and will contribute to the Company’s future by enhancing its financial and commercial position, realizing growth and expansion strategies, and bringing in an added value to the shareholders on the long run. Accordingly, the Bahri extraordinary General Assembly meeting held on June 19, 2014, , approved finalizing the merger as stated in the prospectus of capital increase published by Bahri and approved by the board of Capital Market Authority on May 25, 2014. This merger is considered a milestone in the history of maritime transportation in Saudi Arabia and the emergence of a prominent company in the field of maritime in the world. The process resulted in the formation of a large, multiple purpose fleet of 72 vessels, making Bahri the third largest company in the world represented in the large number of VLCCs. Moreover, this merger will provide significant competitiveness in the international markets, increase operational efficiency, and reduce overhead costs. The merger deal included a full transfer of Vela’s fleet comprising of 14 double-hull VLCCs, one floating storage carrier, and 5 tankers for refined oil products. It also included embedding entire crew of Vela’s carriers, some office staff, and part of its systems within Bahri’s organizational structure. In accordance with the referenced deal, Bahri will be the exclusive provider of VLCC crude oil shipping services sold by Saudi Aramco on the basis of delivery including using VLCCs under a long-term shipping contract. According to the agreed conditions, Bahri will be protected in case the freight rates drop below the agreed minimum rate. However, in case freight rates exceed the agreed maximum rate (compensation threshold), Bahri shall compensate Saudi Aramco for the amounts it had paid to Bahri when freight rates were below the minimum rate. In this respect, the first VLLC was received from Vela on July 21, 2014, marking the effective date of the long-term Contract of Affreightment. The remaining Vela’s tankers were received according to the agreed schedule in a smooth and professional manner, ensuring integrating the transferred tankers directly into the commercial business of Bahri. The last of Vela’s tanker was transferred on December 15, 2014.
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The National Shipping Company of Saudi Arabia ( )
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