NEW YORK (TheStreet) -- Knightsbridge Tankers (VLCCF) surged to a one-year high of $13.22 as of 3:06 p.m. on Tuesday after the company announced it would purchase six Capesize bulk carriers and would issue shares to two other companies.
Knightsbridge announced Monday that it would five fuel efficient 180,000 DWT Capesize bulk carrier newbuildings from Frontline 2012 and one Capesize bulk carrier built in 2013 from Karpasia Shipping. Knightsbridge will pay $61 million for each of the five Capesize newbuildings and $55 million for the Capesize built in 2013. Of the $360 million total, $186 million will be paid in shares of Knightsbridge at $10 per share, $150 million in absorption of remaining newbuilding capex and $24 million in cash.
As part of the deal, Knightsbridge will issue 15.5 million shares to Frontline 2012 and 3.1 million shares to Karpasia.
TheStreet Ratings team rates KNIGHTSBRIDGE TANKERS LTD as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate KNIGHTSBRIDGE TANKERS LTD (VLCCF) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."