Live exporter Wellard to sell world's largest livestock vessel for $US53m ABC Rural
/ By Daniel Fitzgerald
Posted2 hours ago
The Ocean Shearer is the world's largest purpose-built livestock vessel.(Supplied)
Live export company Wellard has struck a deal to sell the world's largest purpose-built livestock vessel, the MV Ocean Shearer, for US$53 million (A$77.05m), in a bid to remedy the company's finances.
Key points:
Live exporter Wellard says it will use the proceeds from a $77m ship sale to square up its finances
The company's share price has been boosted by the announcement that a Kuwaiti trader will buy the MV Ocean Shearer
The vessel is en route to Darwin, and is set to make a voyage to Indonesia
The ship will be bought by one of the largest exporters of sheep from Australia to the Middle East, Kuwaiti company Al Mawashi Limited, which trades in Australia as Kuwait Livestock Transport and Trading Company (KLTT).
Wellard executive chairman John Klepec said the Ocean Shearer was costing the company US$8m annually in principal and interest costs.
"Given our comparable-sized vessel, the Ocean Drover, has completed three times the number of voyages as the Ocean Shearer in 2019, it makes financial sense to release value and reduce debt from an under-utilised asset, adding A$15.8 million to our cash reserves," Mr Klepec said.
Wellard shares lift
News of the sale had an immediate impact on Wellard's share price.
In the first two hours of trade on Thursday, Wellard shares were up more than 26 per cent to $0.058.
Built in 2016, the nine-deck, 189.5 metre-long Ocean Shearer has the capacity to carry 20,000 cattle or 75,000 sheep, or a combination of both.
KLTT said it intends to deploy the vessel to transport sheep from Australia to the Middle East — a trade which has come under increasing scrutiny in the last 18 months.
$US38.4 million from the ship's sale to repay the vessel's financier and $US3.9 million to repay debt, while $US10.7 million will be retained as cash reserves and working capital.
"KLTT's purchase offer of $US53 million represents a significant de-risking of Wellard's business, and allows the company to concentrate on the three remaining more economically attractive vessels, being the Ocean Drover, the Ocean Ute and the Ocean Swagman," Mr Klepec said.
The Ocean Shearer is currently on its way to Darwin, where it will be loaded with cattle bound for Indonesia.
The Ocean Shearer has 23,500 square metres of carrying capacity.(Supplied) Live export price ending 2019 on the up
The live export price for cattle exported to Indonesia has jumped in the last few weeks, with feeder steers exported from Darwin now fetching around $3.30 a kilogram, which is up 15 cents on what has been paid for several months.
Territory Rural livestock agent Andy Gray said supply in the north was becoming tight.
"A lot of cattle have gone from the Northern Territory this year," he told ABC Rural.
"Everybody knows a lot of cattle have gone off the Barkly and the Victoria River District.
"Will the price spike again? Quite likely," Mr Gray said.
"I mean, history shows us that [the price] will kick in [during] those January and February months as cattle become more and more difficult to obtain.
"Traditionally that's been because of the weather (monsoonal rains), but this year, because it's been drier and more cattle have moved earlier, the supply of cattle is diminished already."
There are three livestock ships getting loaded in Darwin in the next three days.
