The shares held by GO were held as a mutual investment in their own treasury. Whether they represent new shares or shares returning to market is probably irrelevant. The market will have to absorb them now. VLCCF is down about 5%in the pre-market.
The message is loud and clear. All is not well in the tanker market. The dividend has to be in doubt at this point.
<<Is the Battersea charter with Sanko 15% of Knightbridge $95M revenue?>>
VLCCF only has 8 ships, so you'd expect each one to be about 1/8 = 12.5% of revenue. The bulker contracts were signed near the peak of the bulker supercycle, so revenues are somewhat biased in their favor. It turns out the operating costs of a bulker are distinctly less than a tanker, so the profits are even further biased. They aren't breaking opex out by ship class anymore, but it used to be that the B/E was $12k/day for the VLCCs and $5k for the bulkers.
Sanko, by the way, is a nice example of counterparty risk with very lucrative charters. If the counterparty depends on re-letting the ship, and freight rates drop, then the counterparty may not be able to generate revenue to cover the sweet charter. VLCCF has already been forced to renegotiate one of the FRO charters, Sanko is in trouble, Shagang has defaulted on charter payments to other owners, and Golden Ocean is stretched thin.
These, though, are structural problems in the industry, and as I said elsewhere, I think VLCCF has little enough debt and consequently low costs to survive this period. I just don't think they can do so with $2/yr dividend.
<<WITH THEIR HISTORY OF DIV PAYOUT NOW AT 13% AND STK BOTTOMING OUT, VLCCF GREAT BUY >>
With Hampstead coming off lease next month ($37k/day, already reduced to $27k for 2012), and Camden coming off similar leas in August, VLCCF will have 3 of 4 tankers in the spot market, currently running around $27k/day with FFAs under $15k for the next two years. I'd guess that means a revenue cut of $1M/quarter for Q1-2, widening to $2M/quarter ($0.08/sh) by EoY. The bulkers are on contracts at 3-4x current market rates, now providing the lion's share of profit. Could see 30-40% div cut if they can't find above-market-rate charters for the VLCCs.