International Seaways Makes Room for Euronav’s VLCCs

The U.S.-based tanker owner International Seaways continues to offload older tonnage from its fleet as it makes room for the anticipated closure of the acquisition of six very large crude carriers from Euronav.

The company sold four ships since the start of this year, including one VLCC in March,  a 2001-built Aframax, a 2004-built MR and a 2003-built ULCC, totaling in an average age of 15.4 years. The company also completed sale and leaseback transactions for two 2009-built Aframaxes during the quarter.

“We also have taken important steps to enhance our financial flexibility ahead of the anticipated second quarter closing of the acquisition of six VLCCS, which is expected to increase the size of the company’s fleet by 23 pct on a deadweight ton basis, following the recent sale of older vessels.

“While preparing these vessels for sale resulted in a reduction in revenue and increased costs in the near term, the sales generated substantial additional liquidity for the acquisition and balance sheet,” Lois K. Zabrocky, International Seaways’ president and CEO, said.

On April 18, 2018, the company entered into a stock purchase and sale agreement to acquire the holding companies for the six VLCCs, of which five were built in 2016 and one in 2015. The deal is part of Euronav’s acquisition of Gener8 Maritime.

The USD 434 million transaction includes assumed debt for the vessels and is subject to a number of closing conditions, including consummation of Euronav’s acquisition of Gener8 Maritime and amendment of the company’s existing credit facility.

If the company fails to receive the loan, it agreed to purchase the vessels for the same price, but potentially without the vessel debt. As informed, Euronav would then be expected to repurchase two of the 2016-built vessels from the company for USD 143 million.

During the first quarter of the year, International Seaways swung to a net loss of USD 29.3 million from last year’s profit of USD 18.1 million. The net loss for the first quarter includes a USD 6.6 million loss from the sale of the four older vessels.