EURONAV Resumes Its Shopping Spree

Crude tanker company EURONAV is further strengthening its fleet capacity and this time with a deal to purchase four modern Japanese built VLCC vessels worth USD 342 million.

 
The vessels are on average 3 years old. As explained by the company, the transaction allows EURONAV to expand its existing fleet with an ‘en bloc’ acquisition of 4 of the best vessels that can be found in today’s second hand market.

Three vessels are expected to be delivered in the course of the third and fourth quarter of this year and the last vessel in the course of the second quarter of 2015.

The acquisition of the vessels will be partly financed with funds raised through a private placement of new shares
within the authorised capital which will be launched today.

The new shares will be offered to institutional investors selected through an accelerated book
build offering.

EURONAV intends to raise USD 100 million in this private placement, while a further USD 200 million will be raised in bank debt.

Market update

Speaking about the ongoing situation in the market, EURONAV said that during the second quarter, the VLCC fleet which operates in the Tankers International pool has earned on average USD 19,150 per day whilst the company’s Suezmax fleet trading on the spot market has earned on average USD 20,500 per day.

The fourth quarter of 2013 and the first quarter of 2014 saw tanker freight rates moving significantly up thanks to increased demand for crude oil combined with longer distance over which it was shipped.

This trend halted with the longest and deepest turnaround season for refineries in the second quarter which slashed demand for crude oil.

However, the underlying picture of a more balanced market had not changed and once refineries were back up towards the end of the second quarter, positive pressure started to build on freight rates.

Euronav and more particularly TI (VLCC Pool) were observing this and pressing the market for higher rates to reflect the tight balance.

Initially the freight market showed plenty of resistance as smaller ship owners who could not benefit from the flow of information only major players have access to, were persuaded by charterers that there were more competing ships than was really the case. This was eventually overcome and rates moved up significantly on both the VLCC and Suezmax segments.

As there is very limited tonnage increase forecast, the market is expected to be volatile and if current momentum maintains through the third quarter, then the winter (in the northern hemisphere) will get off to a strong start.

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Press Release, July 9th, 2014