OMI may use revolver borrowings to fund vessel and product carrier acquisitions

By Sara Rosenberg

New York, June 23 - OMI Corp. may draw on its existing revolving credit facilities to help fund the acquisition of four Suezmax vessels and eight product carriers under construction at Hyundai Mipo Shipyard from Athenian Sea Carriers Ltd.

The total consideration paid for the assets will be about $585 million cash, including $393 million by August and the remaining $192 million of payments to the shipyard between November 2004 and June 2006.

"We'll be able to fund a portion of the purchase price through our revolver credit facility and other bank availability," company officials said in a conference call Wednesday. "Our credit lines are certainly at very attractive rates. It's just under 100 basis points over Libor. We plan to use a variety of sources and to be optimistic in financing the sources we access. Right now we have enormously low bank rates. Having said that, we always believe in maintaining a strong balance sheet and will continue to stick to that policy."

Currently the company has about $325 million total available under its 2007 and 2010 credit facilities.

"One of the things that we have always done [is that] we've looked at all available needs to come up with a balanced strategy between whether securing our long-term charters and/or bank financing and/or bond financing or we've analyzed convertibles," officials continued in the call. "And, one of the things we don't want to do is eliminate any opportunity."

Late in the day, OMI announced that it would be selling 12 million shares of common stock, along with an option for the underwriters to purchase an additional 1.8 million shares, to partially fund the acquisition as well.

OMI is a Stamford, Conn., owner and operator of crude oil tankers and product carriers.

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