International Seaways Widens Loss amid Impairment Charges

Impairment charges pushed US-based tanker shipping company International Seaways further into loss in the fourth quarter of 2017.

The company’s net loss in the quarter was USD 90.7 million, compared to net loss of USD 57.8 million reported in the same period in 2016. Net loss reflects the impact of vessel impairment charges of USD 81.1 million and a decline in TCE revenues compared with the fourth quarter of 2016. Excluding vessel impairments, the company’s loss was USD 9.7 million.

The impairments recognized in the fourth quarter stemmed from a reduction in general asset values in older vessels.

Time charter equivalent (TCE) revenues for the fourth quarter were USD 65.1 million, compared to USD 81.1 million from a year earlier.

Operating loss for the quarter reached USD 79.5 million, compared to operating loss of USD 47.8 million seen in the fourth quarter of 2016, mainly due to a reduction in TCE revenues.

“During our first full year as an independent public company, we made significant progress growing and renewing the company’s fleet, strengthening our position to take advantage of a market recovery,” Lois K. Zabrocky, International Seaways’ president and CEO, said.

Including International Seaways’ deal to acquire six 300,000 dwt VLCCs from Euronav NV, the company will have invested over USD 600 million in nine vessels since completing its spinoff.

The purchase price for the six-vessel acquisition is USD 434 million, inclusive of assumed debt. The transaction is expected to close in the second quarter of 2018.

“We continue to prepare for a second quarter 2018 closing and intend to fund the six-vessel acquisition with a combination of available liquidity, the assumption of the debt currently secured by the vessels, and other debt financing sources,” Zabrocky continued.

During the fourth quarter, the company sold three older MRs which were delivered to buyers between November 2017 and February 2018. Net proceeds received from the two ships delivered to buyers in 2018 totaled USD 17.9 million.

In November 2017, the company purchased a 2010-built VLCC for USD 53 million, the Seaways Raffles, which commenced trading in the Tankers International pool.

Additionally, the Alexandros II, a chartered-in vessel, was redelivered to its head owners during the fourth quarter.

Net loss for the full year ended December 31, 2017 was USD 106.1 million, compared with net loss of USD 18.2 million for the full year 2016. The net loss for the full year  principally reflects USD 88.4 million in vessel impairment charges, USD 9.2 million of costs associated with the company’s debt refinancing, and a decline in TCE revenues compared with the full year 2016.

“As we progress through 2018, our balanced fleet deployment and a moderate level of predictable cash flows from our joint ventures and contracted fixed-rate charters will enable the Company to both optimize revenue through the current tanker cycle and benefit from a market recovery in both the product and crude tanker sectors,” Zabrocky concluded.