Euronav, the listed Belgian tanker owner, says it has acquired four VLCCs for a total price of USD384 million in a resale deal it describes as in line with three core objectives and that includes four options.
It bought the ships, which are under construction at Hyundai Heavy Industries in South Korea, for an aggregate purchase price of USD384 million or USD96 million per unit. “The vessels are due to be delivered as early as September 2015, January, March, and May 2016,” Euronav said.
“In addition and against the payment of an option fee of an aggregate amount of USD8 million, the seller has also agreed to grant Euronav an option to acquire up to a further four VLCCs sisters of the ones acquired at a price of USD98 million each.
Paddy Rodgers, CEO, said in a statement, “Euronav is delighted to enhance our fleet with the addition of four high specification modern VLCCs. The tanker sector continues to perform strongly with a positive outlook. This accretive transaction further cements Euronav’s position as the largest, independent quoted crude tanker platform.”
As the ships are resales, the deal does not increase overall supply of tonnage. Secondly, the company can receive the ships almost as quickly as if it had acquired tonnage already in the ether and thirdly, the transaction will lower the average age of the company’s VLCC fleet.
Euronav will meet the financing of this acquisition with existing borrowing facilities. “The payment profile for this transaction will mean the largest portion of each payment for each vessel will be made on delivery of each ship. Balance sheet debt leverage will move from around 40% at the end of March 2015 to less than 50% and will therefore continue to be appropriately levered allowing the company to retain its strength and flexibility,” it said.
The deal would not alter the current dividend policy whereby at least 80% of annual net result is paid out in dividends to shareholders
Moving on to the market, Euronav said the current quarter has been very stable with owners resolute in their discipline and freight rates being consistently strong throughout the quarter. “Robust demand, growing oil supply and increased ton miles during the quarter underpin our confidence that the tanker market is at the start of a sustained multiyear recovery. The market remains dynamic with a number of new trading routes being established over the past year,” it said.
Before this acquisition, the Euronav fleet comprised of 51 ships, of which 28 are VLCCs and 23 Suezmaxes. The company will probably be best remembered as the buyer of the 15 strong VLCCs fleet of A.P. Moller-Maersk. The deal was announced in January last year.
Euronav’s VLCCs are operated by Tankers International in London, which again has a pooling arrangement with Frontline, the listed VLCC and Suezmax operator in John Fredriksen’s business empire.