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Baltic Oil Terminals, a UK public company listed on the AIM market in London, has announced that it has entered into an agreement for the acquisition of Petroval Bunker International B.V., a fuel oil storage and bunker supply business based in Rotterdam, from Petroval Pte. Ltd. for US$10.8 million in cash.

The acquisition is to be funded through the placing, also announced today, of 16,769,500 new ordinary shares at 25 pence per share to raise GBP4.2 million before expenses, with the balance coming from the company’s own resources, including the proceeds from the recent sale of shares in Shelton Petroleum, which realised approximately GBP2.8 million (net of expenses).

The agreed price of US$10.8 million will be payable upon completion of the acquisition. The purchase price is subject to a dollar-for-dollar post-closing adjustment based on Petroval’s net asset value at the time of completion. It is expected that completion of the acquisition will take place on 22 December 2010.

Petroval operates two heated fuel oil tanks with a total capacity of 120,000 cubic metres, in Europoort Rotterdam, which it leases from Vopak. The current leases expire in April 2014. In a statement released to shareholders today, Baltic said it was confident that lease extensions could be negotiated 'on equitable terms'.

Commenting on the financial position of the company, Baltic said: "Petroval benefits from low operating costs and is currently net cash flow positive, with all storage fully let until mid-2011. The acquisition will be on a debt-free basis."

Unaudited profit before tax of Petroval for the ten months ended 31 October 2009 was approximately US$3.5 million and unaudited net assets at 31 October were approximately US$10.0 million. Net assets of Petroval at completion are expected to be approximately US$2.3 million.

"By acquiring Petroval, the company will gain access to an important new market, with opportunities to trade and trans-ship significant volumes of oil product out of a major global shipping hub. The addition of Petroval to the group’s existing operations will also provide an additional immediate source of free cashflow for the group, estimated to be approximately US$0.5 million per month," Baltic said.

"The company intends to take full advantage of the experienced management team within Petroval to establish a single management team, responsible for managing all of the group’s trading and terminal activities both in Kaliningrad and Rotterdam. In particular, Ben Haargort, the General Manager of Petroval, who has over twenty years’ experience in the terminal and trading market, will assist Simon Escott in further developing the company’s operations," Baltic commented.