, confirming rumors, first reported by the shipping-industry trade journal
, which had floated around the industry for the last few weeks. General Maritime executives hadn't been shy about telling investors and analysts that they were interested in acquiring ships. As expected, the seller is
, a privately held fleet.
In the press release announcing the deal, Genmar said it has a letter of commitment to borrow about 60% of the purchase price, or $372 million, from a pair of Scandinavian firms:
Nordea Bank Finland
For the rest of the sum, Genmar said it will "explore various alternatives," though it's widely believed that the company will issue stock to raise the money.
Investors may have reacted to the possibility of dilution. Shares of Genmar were falling 5.3% to $6.10 Wednesday morning on robust volume. Other tanker names were in the green:
stock was up 3.2%, for example, while shares of
, another large VLCC operator, were rising 1.7%.
The seven new ships include five "very large crude carriers," or VLCCs, one of the largest tanker classes -- the first VLCCs for General Maritime. The deal represents a bold move by Genmar founder and CEO Peter Georgiopoulos as he looks to build his company into a more serious global rival to the tanker industry's largest players, such as Frontline and the privately held
With the new ships, Genmar's fleet will include seven VLCCs and 31 smaller ships, with total cargo capacity of 6 million deadweight tons. Several of the vessels in the deal are "newbuildings" -- that is, they're still being constructed at shipyards. The company said delivery of last of these new vessels is scheduled for April 2011.
-- Written by Scott Eden in New York
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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.