The sale, which has been ongoing since 2019, completes the company’s recapitalisation program and strengthens its working capital position.
The recent devaluation of the Australian dollar has the increased the amount received from the sale by AUS$12.0m from AUS$77.8m at the time the term sheet was signed in December 2019 to approximately AUS$89.8m at the current exchange rate.
While this does not impact the Company’s debt repayments, which are also in US$, it does significantly increase the A$ value of the cash retained from the sale.
Wellard paid approximately US$40.8 million (approx. AUS$69.1m) of the sale proceeds to reduce its financial debt to just US$16.9m (approx. AUS$28.7m).
The remaining US$12.2m (approx. AUS$20.7m) will be retained as cash for operations.
Wellard will focus exclusively on maximising earnings and profits from the MV Ocean Drover and MV Ocean Ute, and the long-term chartered MV Ocean Swagman, explained executive chairman John Klepec.
“The sale of the MV Ocean Shearer reduces Wellard’s debt to very manageable levels, crystallises value from an under-utilised vessel in our fleet, and significantly de-risks the business providing working capital for the Company in the present circumstances,”
Klepec added that the company’s remaining vessels were in demand due to the coronavirus situation. “We are noticing that countries with food security concerns or fresh meat requirements are becoming increasingly reliant and/or focussed on livestock imports as global airlines shut down operations, delaying imports of chilled meat.
“While COVID-19 travel restrictions are creating some logistics issues with respect to stockmen/women, crew and veterinarians, we have been able to manage these to date. At present, all of our fleet are in demand by Australian exporters.”
