Diana Shipping Buys Sea Trade’s Fleet in Bulker Consolidation

Greek bulker owner Diana Shipping has made a bold statement in its efforts to both grow and modernize its operations. The company, which primarily employs its fleet on short to medium-term time charters and transport a range of dry bulk cargoes, reached an agreement to buy nine bulkers currently owned by Sea Trade Holdings which will increase Diana’s capacity by more than 10 percent. The vessels, which make up Sea Trade’s entire fleet are also about half the average age of Diana’s current fleet.

Diana agreed to acquire the vessels for an aggregate price of $330 million of which $220 million will be paid in cash and $110 million will be paid in the form of shares. The company said it intends to fund the cash portion of the acquisition with available cash on hand and is currently negotiating terms of a new credit facility with a major European lender.

Diana Shipping, which generated revenues of $140.5 million for the six months ended June 30, 2022, has been working to expand its operations through a disciplined strategy to take advantage of market opportunities. Revenues were up nearly 60 percent in the first half of 2022 despite the disruptions in the bulker markets due to the war in Ukraine and another economic factors. 

During the company’s second quarter conference call for investors in July, CEO Semiramis Paliou said the company’s strategy calls for remaining disciplined and focused on taking advantage of favorable market conditions for securing positive free cash flows. President, Anastasios Margaronis pointed to the changing factors in the market while saying they believed dry bulk capacity “appears to be quite manageable.” 

While the company highlighted the near-term uncertainties due to the war and economic conditions, they also pointed to limited capacity growth in the sector. They said that congestion was declining freeing up capacity but at the same time highlighted the slowdown in new orders of dry bulk carriers. They cited figures showing that the orderbook in the dry bulk sector now stands at just 7.2 percent of fleet capacity, while there continues to be a need to modernize ships and address the emerging environmental regulations.

The nine vessels being acquired, STH Athens, London, New York, Sydney, Tokyo, Kure, Chiba, Oslo and Montreal, will be the first Ultramaxs in the company fleet. Built in Japan between 2015 and 2018, each is approximately 60,300 dwt or adding a combined tonnage of 483,103 dwt to the company’s existing fleet. After the transaction closes, Diana fleet will grow from the current 34 dry bulk carriers to 43 vessels consisting of four Newcastlemax, 11 Capesize, five Post-Panamax, six Kamsarmax, and eight Panamax in addition to the nine Ultramax.

Being newer vessels, they also are outfitted with technologies, including a main engine exhaust gas economizer, as well as a bulb and fins system on the rudder to assist in offering the best fuel efficiency. The vessels are also equipped with ballast water treatment systems to address the emerging BWTS requirements.

Critically, the vessels will also help to lower the average age of Diana’s fleet. The ships being acquired have an average age of under six years, compared with a weighted average age of 10.53 years for the fleet as of August.