Golden Ocean Group says the company has entered into an agreement with Knightsbridge Tankers to sell the capesize vessel Golden Zhejiang for $65.5 million.

The vessel will be sold together with the existing four-year charter agreement. The completion of the transaction is subject to successful financing and equity offering in Knightsbridge Tankers. The deal is expected to be concluded during Q4 2010.

The sales proceeds will be used to pay down debt on the asset and the balance of $18.5 million will be used to acquire a number of restricted common shares in Knightsbridge. Golden Ocean will receive shares at the same price as contemplated in the public offering of shares in Knightsbridge that is launced today.

The investment in Knightsbridge is for the long term, says Golden Ocean.

“The Board sees this increased investment in Knightsbridge as a strategic holding which gives Golden Ocean the opportunity to, together with Knightsbridge, develop new dry bulk business based on mainly yield driven investment criteria. Such a position creates an additional flexibility for Golden Ocean and increases the possibilities to benefit from different pricing in the asset market, the public market and the yield security market. The strong yield supporting the Knightsbridge stock and the solid contract backlog in Knightsbridge reduces the risk in the equity investment. Knightsbridge’s quarterly dividend payments further secure a solid and predictable cash flow for Golden Ocean,” says Golden Ocean.

Herman Billung, CEO of Golden Ocean Management AS, has also taken a position at the Board of Knightsbridge as of September 24, 2010.