RIYADH – Bahri (National Shipping Company of Saudi Arabia) and Saudi Aramco have reached an agreement on the terms and conditions of Bahri's merger with Aramco's wholly-owned subsidiary Vela International Marine Limited, the firm said in a statement Saturday. Earlier this year, Saudi Aramco signed an agreement to sell Vela International Marine to Bahri for $1.3 billion in cash and shares, a merger that would make Bahri the world's fourth largest owner of very large crude carriers (VLCCs). “Pursuant to the terms of a long-term shipping contract, which has an initial term of 10 years, Bahri will become the exclusive provider of VLCC crude oil shipping services to Saudi Aramco for crude oil sold by Saudi Aramco on a delivered basis," the statement said. Bahri will pay Vela $1.3 billion in total, including $832.75 million in cash and 78.75 million in new Bahri shares at a price of SR22.25 ($5.93). Vela will transfer to Bahri ownership of its entire fleet, consisting of 14 VLCCs, a floating storage VLCC, one Aframax tanker, and four product tankers, the statement said. The merger of ships, staff and business systems would leave Bahri with 77 vessels in its fleet, including 32 VLCCs. The execution of the agreement governing the transaction is expected to take place next month. The transaction represents a transformational step for Bahri that significantly expands its business, provides it with a stronger financial and commercial position and enhances its position as a global marine transport leader. The TRANSACTION enables Bahri to become a national shipping champion that can achieve Bahri and Saudi Aramco's aspirations to localize and develop a strong national maritime industry and will put Bahri in a position to support the Kingdom's growing petroleum, chemical and manufacturing industries, and provide greater security in marine transportation. The transaction is subject to a number of conditions, including the approval of the transaction and the related capital increase by Bahri's shareholders at an extraordinary general assembly and obtaining the aforementioned regulatory approvals including, without limitation, the approval of the Capital Market Authority. JP Morgan is advising the shipping firm while HSBC's Saudi arm is acting for Aramco. – SG
