Haahr Tank operates a 160,000 cubic metres refined oils terminal, located at Aabenraa in Denmark.  The Acquisition is being financed through the issue by Dan-Balt Terminals Limited, a 100% subsidiary of the Company, of Secured Fixed Rate Loan Notes (“the Loan Notes”) to the value of $11.0m (approximately £7.0m).

A valuation report, commissioned by Baltic, gives a new build cost of $42m.  The purchase price reflects that, under the terms of the acquisition, the vendor Haahr Group will retain the use of 35,000 cubic meters of capacity at the terminal for the next five years.
Reasons for the Acquisition

The Board of Baltic believe that the acquisition of Haahr Tank represents a substantial step forward in the fulfillment of its strategy and that through the implementation of their operational model, already in place in Rotterdam:

• Its location, roughly midway between Baltic’s Kaliningrad and Europort businesses, will provide enormous flexibility to Baltic’s customer base
• Haahr Tank’s two berths and ability to host larger oil tankers than in Kaliningrad will facilitate large volumes through the terminal as customers seek to bulk up shipments
• Haahr Tank’s existing facilities require little or no capital expenditure
• Longer term, there is space on the site for the expansion of capacity by approximately 20%

Simon Escott, CEO of Baltic, commented:

“This acquisition, alongside our existing businesses provides tremendous opportunities for our customers and ourselves: whilst our cash position and current cashflows means that servicing the financing of the acquisition does not put any undue strain on Baltic.”

“The application of our business model, which has swiftly and substantially boosted profitability at our Rotterdam operations should equally stimulate a substantial increase in throughput at the terminal and therefore increased cashflow and profitability.” 

The Haahr Tank terminal, which will operate as Dan-Balt Tank Lager A/S, has heated and non-heated products tanks with a total capacity of 160,000 cubic metres of storage and two berths, capable of accommodating ships up to Panamax and facilitating the discharging and loading of oil products on a simultaneous basis. The terminal also has two road tanker loading and mixing bays and currently supplies heating oil loading and mixing services to several large operators as well as a heated molasses tank for product delivered in by vessel and taken out by road tanker.

The terminal is highly computerised, operates with a staff of five people and is open 24/7 by use of smart card technology.

The Loan Notes

Baltic has formed a 100% subsidiary Dan-Balt Terminals Limited and this company has issued a Eurobond of US $ 11,000,000 on the Channel Island Exchange. This Secured Fixed Rate Loan Due was admitted to the Official List of the Channel Islands Stock Exchange on 18(th) November 2011 and was fully subscribed.

The maturity date of the Notes is 17(th) May 2013 and will be automatically delisted for the Official List of the Exchange on the business day following this date. The Loan Notes may be redeemed, at the option of the Company, prior to maturity, subject to the payment of an early redemption premium to the Note holder.

The interest rate on the Loan is 15% and the Company is satisfied after extensive research into alternative and similar types of financing, is market rate.

The balance of the funds not used to fund the Acquisition will be utilised for costs associated with the Acquisition and for general working capital purposes.

Other disclosable information

As the Acquisition comprises a substantial transaction under Rule 12 of the AIM Rules, the following additional information falls is disclosable pursuant to Schedule 4: operating profit for the year ended 31(st) December 2010 was DKK 872,000 (approximately GBP100,000). Whilst the Company is required under the AIM rules to disclose the “profits attributable to the assets acquired” it should be noted that the acquired asset has been run as a service and storage component to the Haahr Group of companies. The Company is acquiring the asset for its infra-structure (tanks, loading bays, jetty facilities etc.), which it intends to integrate into the Baltic business model in order to generate a significant higher return from the asset, and therefore the existing profits from the Haahr model do not bear any comparison to the Baltic business plan going into 2012 (as stated in the Reasons for the Acquisition).