Contact Information: Contacts: Company Contact: Gregory A. McGrath Chief Financial Officer Omega Navigation Enterprises, Inc. PO Box 272 Convent Station, NJ 07961 Tel. (551) 580-0532 E-mail: gmcgrath@omeganavigation.com www.omeganavigation.com Investor Relations / Financial Media: Nicolas Bornozis President Capital Link, Inc. 230 Park Avenue, Suite 1536 New York, NY 10169 Tel. (212) 661-7566 E-mail: omeganavigation@capitallink.com www.capitallink.com
Omega Navigation Enterprises, Inc. Announces Formation of Joint Venture to Acquire of Newbuilding Vessel Omega Duke, Delivery of Omega Duke, Time Charter Agreement and Initiatives to Optimize Its Growth Plans and Manage Capital Exposure
| Source: Omega Navigation
PIRAEUS, GREECE--(Marketwire - May 19, 2009) - Omega Navigation Enterprises, Inc. (NASDAQ : ONAV ) (SGX: ONAV50), a provider of global marine transportation services
focusing on product tankers, announced today it has taken delivery of the
first of its newbuildings, the 47,000 dwt. Omega Duke. It further announced
that it has taken several measures to better position itself to fund its
newbuilding commitments from internally generated cash flow. As previously
announced, Omega has commitments from commercial banks to provide 75%
financing at delivery of all of its remaining newbuildings based on
contract prices or fair market values at the time of delivery.
Formation of Joint Venture
In May 2008, Omega announced it had entered in to an agreement with an
unrelated third party to purchase two newbuilding 47,000 dwt. coated
product / chemical tankers under construction at Hyundai Mipo Dockyard in
South Korea. Omega is pleased to announce that the Company and Glencore
International AG (through wholly owned subsidiaries) have agreed to enter
into an equal partnership joint venture for the purchase of the first of
the above vessels. Consequently, the Omega Duke was recently purchased by a
Company belonging to the joint venture at a price based on current market
valuation. The Omega Duke has been purchased by a combination of previously
secured bank financing and equity injected by both partners and will not be
consolidated in Omega's financial statements. The owning company has time
chartered the vessel to ST Shipping (Glencore International, AG) at current
market rates for a period of five years together with an excess profit
arrangement. The base time charter rate fully covers operating expenses
and debt service.
Time Charter Agreement for Omega Queen
The Company has also announced that they have entered into a time charter
agreement with ST Shipping & Transport Pte Ltd. on the Omega Queen with
profit share, on an evergreen basis subject to termination notice of two
months. The base rate fully covers operating expenses and debt service.
Temporary Suspension of Dividends
Omega's Board of Directors decided to temporarily suspend the Company's
dividends. This action will enhance the Company's liquidity and overall
financial flexibility enabling it to continue with its growth plans even in
these most uncertain times funding its newbuilding program through
internally generated funds and bank debt. Omega has commitments from
commercial banks to provide 75% financing at delivery of all of its seven
newbuildings based on contract prices or fair market values at the time of
delivery.
The decision to suspend dividends was taken independently of any loan
covenant requirements as the company was in full compliance with all
covenants at the end of the most recent quarter. The Board of Directors
will continue to monitor the shipping and capital markets and future
capital expenditures of the Company and determine when dividends may be
reinstated and the level of those dividends.
Omega President and CEO George Kassiotis commented, "We are disappointed
that the unparalleled economic conditions in which we live, have forced the
current suspension of our dividend. Through the first quarter of 2009 we
have returned over $80 million in the form of dividends to our
shareholders. The proactive initiatives we have undertaken, including the
suspension of dividends and the formation of the joint venture, will enable
us to fund our growth plans through internally generated cash flow and the
debt we already have commitments for.
Omega has always taken the position that while we believe in generating
value for shareholders through the payment of dividends, we should not do
this at the expense of growing the Company.
We seek to optimize the management of our capital exposure, deliver our
balance sheet and create synergies which will enhance our ability to
preserve our position in the product tanker industry, fund our growth plans
and take advantage of opportunities during challenging times.
We are also very pleased to enjoy such a strong business relationship with
Glencore, one of the largest commodities traders in the world. The joint
ownership of the Omega Duke is further evidence of the high standards of
operating performance that our Company offers to its customers and end
users of its vessels and also demonstrates our ability to create synergies
in a challenging environment.
We want to thank our lenders for the continuing support to our Company and
its growth initiatives especially in these current market environment."
Cautionary Statement Regarding Forward-Looking Statements
Matters discussed in this press release may constitute forward-looking
statements. The Private Securities Litigation Reform Act of 1995 provides
safe harbor protections for forward-looking statements in order to
encourage companies to provide prospective information about their
business. Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and underlying
assumptions and other statements, which are other than statements of
historical facts.
The Company desires to take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 and is including this
cautionary statement in connection with this safe harbor legislation. The
words "believe," "anticipate," "intends," "estimate," "forecast,"
"project," "plan," "potential," "will," "may," "should," "expect" "pending"
and similar expressions identify forward-looking statements.
The forward-looking statements in this press release are based upon various
assumptions, many of which are based, in turn, upon further assumptions,
including without limitation, the Company's management's examination of
historical operating trends, data contained in the Company's records and
other data available from third parties. Although the Company believes that
these assumptions were reasonable when made, because these assumptions are
inherently subject to significant uncertainties and contingencies which are
difficult or impossible to predict and are beyond the Company's control,
the Company cannot assure you that the Company will achieve or accomplish
these expectations, beliefs or projections.
In addition to these important factors other important factors that, in the
Company's view, could cause actual results to differ materially from those
discussed in the forward-looking statements include the strength of world
economies and currencies, general market conditions, including fluctuations
in charter rates and vessel values, changes in demand for product tanker
and dry bulk shipping capacity, changes in the Company's operating
expenses, including bunker prices, drydocking and insurance costs, the
market for the Company's vessels, availability of financing and
refinancing, changes in governmental rules and regulations or actions taken
by regulatory authorities, potential liability from pending or future
litigation, general domestic and international political conditions,
potential disruption of shipping routes due to accidents or political
events, vessels breakdowns and instances of off-hires and other factors.
Please see the Company's filings with the Securities and Exchange
Commission for a more complete discussion of these and other risks and
uncertainties.