Aramco, Bahri reach agreement on merger terms
Riyadh, October 20, 2012
The National Shipping Company of Saudi Arabia (Bahri) and state oil giant Saudi Aramco have reached an agreement on the terms and conditions of Bahri's merger with Aramco's Vela International Marine unit, the firm said in a bourse statement on Saturday.
Earlier this year, Saudi Aramco signed an agreement to sell Vela International Marine to Bahri for $1.3 billion in cash and shares, a merger that would make Bahri the world's fourth largest owner of very large crude carriers (VLCCs).
"Pursuant to the terms of a long-term shipping contract, which has an initial term of 10 years, Bahri will become the exclusive provider of VLCC crude oil shipping services to Saudi Aramco for crude oil sold by Saudi Aramco on a delivered basis," the statement said.
Bahri will pay Vela $1.3 billion in total, including $832.75 million in cash and 78.75 million in new Bahri shares at a price of 22.25 riyals ($5.93).
Vela will transfer to Bahri ownership of its entire fleet, consisting of 14 VLCCs, a floating storage VLCC, one Aframax tanker, and four product tankers, the statement said. The merger of ships, staff and business systems would leave Bahri with 77 vessels in its fleet, including 32 VLCCs.
The execution of the agreement governing the transaction is expected to take place next month.
JP Morgan is advising the shipping firm while HSBC's Saudi arm is acting for Aramco.-Reuters
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