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TTA Adjusts Dry Bulk Shipping Strategy

Back Aug 24, 2011

Bangkok, 24 August 2011 -- Thoresen Thai Agencies PCL ("TTA") announced a number of changes at its dry bulk shipping business, Thoresen & Co. (Bangkok), Ltd. ("Thoresen"). The changes aim to create a self-sustaining and independent business designed to weather increasingly difficult market conditions and are based on three pillars that include a fleet reconfiguration, the creation of a commercial base in Singapore and a clear separation of functions between Thoresen and TTA that lays the foundation for a rational and commercially viable business.

The dry bulk business will be headed by Mr. Ian Claxton, who joined Thoresen in July 2011 as its Managing Director. Mr. Claxton brings to Thoresen 15 years of hands on management experience in a number of organisations including Neptune Orient Lines Limited, Safmarine, and Anzecs Consortium. He joined Thoresen from his most recent position as CEO and International Managing Director of a shipping and logistics company located in Mauritius, where he was responsible for 450 staff in 26 locations across six countries.

Claxton commented, "I'm thrilled to join the organisation and have the opportunity to work with the professional team at TTA. We have a difficult task ahead, as all major shipping markets, not just dry bulk, continue to be plagued by vessel oversupply, resulting in prolonged weakness in freight rates. I am confident that under the structure being announced today, we'll be able to steer Thoresen back towards operating profitability in what continues to be a difficult environment for the industry at large."

The three pillars of change announced today by TTA will focus on:

  1. Completing Thoresen's dry bulk vessel reconfiguration to ensure a modern and cost-competitive fleet:

    Thoresen will continue to push through with its fleet modernisation plans to lower vessel operating and on-shore overhead expenses. This reconfiguration is already underway, with Thoresen having sold seven aging and inefficient vessels in the previous five months. Thoresen took delivery of a new-build Supramax vessel from Oshima in June and is expecting to receive two additional new-build vessels from Vinashin in 2012. The modernisation efforts, which began in 2010, will see Thoresen's owned dry bulk fleet reduced from 27 to 15, representing a 44% decrease in the number of vessels. Since larger vessels are replacing them however, total capacity will only have been reduced by 25% in terms of deadweight tonnage as of next year.

  2. Establishing a base of operations in Singapore to capture greater commercial opportunities:

    With the emergence of Singapore as Asia's leading shipping hub, the city-state has become the base for many of the industrial customers that are at the heart of Thoresen's dry bulk shipping business. To establish closer ties with this community and its key decision makers, and to reap the full benefits from the shipping incentives provided by Singapore, Thoresen will base its chartering team and reflag all owned vessels in Singapore. The company will continue to keep a commercial presence in Thailand to maintain relationships with key Thai customers. This change will begin with immediate effect and is expected to conclude by the end of this calendar year.

  3. Creating a self-sustaining business model for the dry bulk shipping business:

    Similar to the model TTA employs for other businesses in its portfolio, Thoresen will begin its transition into a separate business unit with enhanced commercial and financial flexibility and ability to make independent investment and financing decisions. Guided by TTA's group policy, the unit will implement an improved business-specific risk management policy to guide Thoresen's exposure to spot markets while at the same time, the business will look to increase the number of chartered-in vessels it operates to compensate for the decrease in its owned fleet. This business model is expected to generate long-term value for existing shareholders and potential future partners.

"I have full confidence that under Mr. Claxton's capable and experienced leadership, this new strategy will allow us to reshape our dry bulk shipping business in line with increasingly difficult market conditions. Under his stewardship, Thoresen will focus on capturing more business from existing and potential customers while improving its cost efficiencies. We expect these initiatives to accelerate Thoresen's return to operating profitability and generate improved shareholder value," said M.L. Chandchutha Chandratat, TTA's President & CEO.

This new dry bulk shipping strategy represents a significant structural change in the organisation, and is a reflection of the market realities that underlie the dry bulk shipping business. As a result, Thoresen estimates a 20% headcount reduction in its Thailand operations.

"While the loss of any jobs is always regrettable, this difficult decision has been taken after months of careful deliberation and consideration. All affected employees have made a valuable contribution to Thoresen and will be well compensated accordingly, but current business trends dictate a different path forward. TTA will ensure that their transition is as smooth as possible under these trying circumstances," concluded M.L. Chandchutha Chandratat.