Saudi Gazette report RIYADH – Saudi Aramco says it has agreed to merge its maritime division with the country's state-owned shipping line to create the world's fourth-largest tanker operation. Saudi Aramco CEO Khaled Al-Faleh said the $1.3 billion merger will transfer the fleet of the company's sea-going subsidiary, Vela International, to the state shipping company Bahri. The deal announced Monday is subject to shareholder approval and nod from relevant regulatory authorities including the Capital Market Authority and Supreme Council for Petroleum and Mineral Affairs. If all the relevant resolutions are approved, the initial transfer of vessels is expected to occur in Q2 2013 and the final transfer of vessels is expected to occur early in Q3 of 2013. Under the terms of the deal, Vela will transfer its entire operations and fleet that includes 14 large crude carriers. For an initial 10-year period, Bahri will be the exclusive provider of crude shipping services for Aramco. Bahri will make a cash payment of SR 3,122,812,500 ($832.75 million) and issue 78,750,000 new Bahri shares at an agreed price of SR22.25 per share. Based on a post-transaction equity capitalization of 393,750,000 shares, the new Bahri shares held by a wholly owned Saudi Aramco subsidiary will represent a 20 percent shareholding interest in Bahri and will be appropriately represented in Bahri's board. Bahri will raise the cash consideration through Shariah-compliant debt financing. Bahri intends to satisfy Saudi Aramco's annual VLCC (Very Large Crude Carrier) transportation requirements relating to crude oil sold on a delivered basis which Bahri currently estimates to be around 50 VLCCs. This will require employing, following completion of the transaction, 31 VLCCs owned by Bahri and 19 chartered VLCCs chartered. Saudi Aramco will continue to manage all crude oil marketing and sales directly with its customers.
