Shipowner Evangelos Pistiolis has had a busy start to 2019, with his Top Ships taking delivery of four vessels in as many months.
The last two vessels were handed over to the Nasdaq-listed company by Hyundai Samho Heavy Industries in April and May, to give it a fleet of 14 tankers on the water.
Both the 157,000-dwt Eco Bel Air and Eco Beverly Hills have gone directly into three-year charters with BP, completing a comeback to the suezmax market after more than a decade away.
Right prices
“It was long-awaited before the order as we waited to get the right prices at what we thought would be a good time to enter,” the Top Ships chief executive explains.
“We got there a year and a half ago and now they are in the water, which is a very important milestone for us to get back to where we were before — but with vastly superior assets and far better specification.”
Like the suezmaxes, the company’s 12 product tankers have contract coverage in place and were built at Hyundai Heavy Industries-controlled yards, having first been ordered by Central Group to an ultra-high specification.
“As far as Top Ships is concerned, on our palette we have the best of the best, and I mean that, there is nothing better on this planet — equal maybe, but not better,” Pistiolis says.
“We have the best shipyard, the best charters, using only top-tier banks and all of the ships are chartered at profitable rates.”
Private Pistiolis vehicle Central Group has four further MRs on order for delivery in the first quarter of 2020, the first two of which have contracts in place.
Including the charters on the two private ships, the group has about $242m in fixed income over the next three years, which Pistiolis says will mean a smooth start for all the tankers.
With both suezmaxes and MRs on the water today, Top Ships is active in the same two markets it was at the peak of the last shipping cycle before the financial crisis. It had 13 of the crude and 14 of the product tankers at the close of 2016.
Pistiolis believes there are key differences between Top Ships then and the company today.
“The expansion we have done now has been far more dramatic than what we have done before, especially from a capital point of view,” he says. “We went from a $30m orderbook in 2014 to over $800m just four years later in 2018.
Dramatic expansion
“Companies are measured by asset value and, from that point of view, it’s far more dramatic what we have done now than before.”
The full contract coverage is also more conservative than the Top Ships of the 2000s.
“I did not want any negative surprises during the build-up period,” Pistiolis says.
“I knew there would be enough challenges in the normal course of business building up such a fleet in such a short period of time. I said everything that goes in the water should have a good and lengthy charter.”
While Pistiolis is not opposed to taking on spot exposure in the future, he says he will always favour time charter if he can “get a great number”.
He points to two private MR newbuildings fixed to Trafigura at $17,500 per day to illustrate the point.
“I think it was a very healthy number, not seen for some years,” he says. “Having such an offer on the table, strategies change.”
This flexibility was also on display last year when Pistiolis opted to sell two other suezmaxes in the Hyundai Samho series to fellow Greek owner Spiros Polemis in a private deal.
Chasing vessels
Pistiolis says charterers were chasing the vessels and the sales had nothing to do with the limited appetite for the crude market or the dynamics of the suezmax space.
The tankers were ordered at less than $60m each by Central Group and sold for approximately $65m apiece, TradeWinds reported at the time.
“The case was totally, purely a financial decision as a businessman,” Pistiolis says, noting he may have accepted a similar offer for MRs had it been on the table.
“They were never marketed for sale. At that point, you remember, everybody wanted large tankers with scrubbers because Q1 2020 was, and is, the hottest delivery period you can have.
Mutually beneficial
“It was a decision to do a nice deal as I had been only ordering for the past years. It was a good opportunity and both parties were very happy with the deal. They got excellent ships and we got a good deal from our big orderbook.”
Pistiolis has placed orders worth more than $800m at Hyundai yards to rebuild his fleet, and further newbuildings in both products and crude are possible. However, the shipowner stresses a desire for scale is not driving his activity.
“We could have 50 ships easily with the $800m of investment we have made in the last few years,” he says. “I chose to have a boutique company rather than a super large company of medium quality. I’m more than happy with the choices we have made and the outcome.”
One decision Pistiolis highlights during that period is ordering all of the vessels at Hyundai yards.
“I think we share an amazing relationship and a true relationship, not just business,” he says. “It started as a business relationship of course, but very quickly it became a friendship, which went a very long way in a very short period of time.
More than money
“That is maybe one of the greatest things that happened [in] the last five years. Life is not only about money. It’s what you build around it.
"Having a great relationship with Hyundai, with the charterers, these are things I enjoy and appreciate.”
HHI is set to merge with DSME, a deal on which Pistiolis says his views are indifferent to good.
"For me, it’s the right way around, since Hyundai Group will be running the show,” he says.
“It’s positive as our friends and partners will have a larger palette of options and a larger number of docks.
"We could do different and more things from that point of view. And they will become stronger and control a larger part of the market. I think it’s a good thing overall.”
He says the dynamic where Hyundai was surviving on its own activities while DSME was receiving subsidies could not have gone on forever.
“It was not fair,” he says. “Eventually something should give — and should have some time ago. The development is definitely towards the right direction for the country and for the industry.”
