Higher foreign ownership threshold to boost Gulf Navigation profits

Gulf Navigation had formally raised its threshold for foreign ownership of its shares to 49 per cent after receiving approval for the move from the Securities and Commodities Authority.

Gulf Navigation earlier sold its oil tanker Gulf Sheba, above, and another tanker to DHT Holdings of Bermuda. Courtesy Rob Hendriks

Gulf Navigation said yesterday that it expects to report a rise in net profits for the second quarter of the year as it courts international investors by raising its foreign ownership threshold to 49 per cent.

"Things are coming under control, we've travelled a lot of distance from last year to now," said Sandeep Kadwe, Gulf Navigation's managing director.

“We expect the last quarter to be profitable, more so than the first quarter when our [tankers] dragged on net income. Of course we don’t have that same drag now for the second quarter.”

The company signed an agreement in February to sell its two oil tankers, which had been seized by creditors in Rotterdam and Bermuda, for a total consideration of US$98 million.

Second-quarter revenues are expected to be in line with those of the first quarter, Mr Kadwe said.

In the first quarter, Gulf Navigation posted a profit for the first time since 2011, with net income of Dh539,000.

However the company’s shares remain depressed, down 42.3 per cent since the start of the year. Yesterday they fell 1.5 per cent to close at 25 fils each.

Mr Kadwe also confirmed yesterday that Gulf Navigation had formally raised its threshold for foreign ownership of its shares to 49 per cent yesterday, after receiving formal approval for the move from the Securities and Commodities Authority earlier this week.

The company’s former limit on foreign ownership was 20 per cent.

Mr Kadwe said Gulf Navigation has held discussions with a number of international investors about taking a stake in the company either via a direct stake acquisition or a possible $130m convertible bond.

The company held discussions with National Bank of Abu Dhabi on the bond, approved by shareholders in January, but is now in discussions with an undisclosed international investment bank, which it hopes will help it to tap international funds, he said.

Mt Kadwe declined to comment on suggestions that interest in the convertible bond had not been forthcoming from local investors.

“There is more capital available internationally. International markets understand shipping better than the local markets,” he said.

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