![Wellard executive chairman, John Klepec, with what will be the shipping company's last remaining vessel after September. Photo supplied. Wellard executive chairman, John Klepec, with what will be the shipping company's last remaining vessel after September. Photo supplied.](/images/transform/v1/crop/frm/32XghFRykTWK8psrWNhdBMC/654b80dd-c5a0-45e1-b1e2-17e84aaef8f6.JPG/r287_125_4032_2481_w1200_h678_fmax.jpg)
The one-time big shipping name in Australia's live animal export trade, Wellard Limited, has shrunk its fleet to just one ship.
Subscribe now for unlimited access to all our agricultural news
across the nation
or signup to continue reading
Even ownership of that remaining vessel, the Ocean Drover, is technically in dispute as it plies ocean waters between South America and the Middle East doing charter work for overseas live cattle traders.
The West Australian-based export carrier has just sold its 30-year-old workhorse, the Ocean Ute, for $18.1 million, generating some fresh cash to reward Wellard's long-suffering shareholders.
Wellard's share price spiked, slightly, on news of the sale to the Marshall Islands registered livestock carrier and meat processor, Bassem Dabbah, lifting to three cents from June lows around 1.5c/share.
In port at Townsville in North Queensland this week, the 5000-head capacity MV Ocean Ute will make its final voyage under Wellard's flag in September.
What was once a fleet of six ships after the then 35-year-old company listed on the Australian Securities Exchange in 2015, now comes down to the Ocean Drover, built for Wellard in 2002.
Executive chairman, John Klepec, said while the 140 metre-long MV Ocean Ute had been a good vessel for Wellard it was getting old.
The Ocean Ute is about to reach its tipping point with respect to market value, maintenance costs and profitability
- John Klepec, Wellard Limited
The decision to sell it at higher than book value had produced a good outcome for Wellard and its shareholders.
"The Ocean Ute is about to reach its tipping point with respect to market value, maintenance costs, future cash generation and profitability," Mr Klepec said.
"The board took the decision to crystalise its value now."
The Ute has been Wellard's only ship operating from Australia in recent times, transporting export beef cattle from Townsville and Darwin to Indonesia and Vietnam, although it had a slow start to 2024, sitting idle until February.
It was then fully booked until June 30, with more bookings for coming months.
Big player
A decade ago Wellard shipped about 27 per cent of Australia's live cattle exports, while also operating three pre-export quarantine properties in WA and two in Brazil, plus a livestock feed milling business.
It marketed and transported beef and dairy cattle and sheep.
The company also owned WA's Beaufort River Meats abattoir with capacity to process about 2500 sheep daily.
Since then its market capitalisation has withered in value from about $556 million to just under $20m.
Ships and property assets were sold off to pay down debt and simplify the business as earnings were buffeted by various headwinds, including Australia's recent post-drought record cattle prices which made stock too expensive for Indonesian and Vietnamese buyers.
Sheep shipments to the Middle East stopped about six years ago.
In 2019 the four-year-old Ocean Shearer, the world's largest purpose-built livestock vessel, was sold to Kuwaiti owners for $77m as part of Wellard's financial remediation efforts.
That deal followed the sale of its Ocean Swagman to major shareholder and Perth businessman, Paul Holmes a Court's Heytesbury pastoral and investment business, which then leased the vessel back to Wellard until that arrangement ended six months ago.
In addition to selling its ships, one vessel, the Ocean Kelpie, was abandoned while still under construction in Croatia because the shipyard bankrupted.
Another on the drawing board, a new generation, wind-assisted Ocean Jillaroo, never made it to the shipyard before Wellard discarded those plans in 2022.
It said soaring steel prices and congested shipyard order books were causing too many delays and budgeting problems while its cash flow was tight.
Sale dividend
Mr Klepek said assuming sale terms and conditions went ahead as expected, most proceeds from the Ocean Ute's sale (about $17m after fees and commissions) should be available to shareholders, and options to pay out the funds were now being considered.
Wellard's major shareholder is the Chinese group, Hongkong Fulida International Trading Company, which holds about 25pc of the stock.
Heytesbury, which also owns cattle stations in northern Australia and shares in the historic beef giant, Australian Agricultural Company, has an 11.4pc stake in Wellard.
When listed by its then majority owner, Mauro Balzarini, Wellard's share price was at $1.30, but sank to about 20c within a year and continued to lose ground, despite a late 2021 rally above 12c.
Meanwhile, the remaining Wellard ship the Ocean Drover is still not officially owned by the company, despite a lease-to-buy agreement concluding with Singapore-based financier, Ruchira Ships, last year.
Who owns what?
Ruchira previously bought the Ocean Drover from Wellard six years ago as part of a sale and leaseback deal.
The leaseback period was to end in June 2023 when Wellard's commitment, including a final balloon payment, entitled it to reclaim ownership.
However, Ruchira's own lender, United Overseas Bank, took receivership action last year and claimed possession of the vessel.
Although still not the registered owner, Wellard has been engaging with Ruchira's liquidators, KPMG, to regain its legal title and continues to operate the Ocean Drover under a long-term charter contract at no cost, which runs until 2032, if necessary.
"Importantly we have charters for the Ocean Drover committed right through to the end of the year, ensuring its utilisation rates will remain very high," Mr Klepec said.
The ship had been fully utilised shuttling between South America and Turkey.
Mr Klepec expected to update shareholders about the progress of the KPMG negotiations when Wellard's full year financial results were released in late August.