The mystery private investor behind International Seaways’ rescue of a six-VLCC purchase from Euronav has been unmasked.
The backer is New York-based BlackRock, the world’s largest asset manager.
BlackRock provided Seaways with gross proceeds of $30m on 13 June that enabled the New York owner to purchase six VLCCs from Euronav, rather than four, as a side deal to the Belgian company’s takeover of Gener8 Maritime, according to a public filing.
BlackRock was paid handsomely for the lifeline, with an initial interest rate of 10.75% on the unsecured 2023 notes, which are subordinated to Seaways’ other debt facilities, the filing shows. The deal came through a private placement.
The interest rate could grow to 13% by December 2020 if Seaways has not been able to redeem the notes.
Seaways turned to BlackRock after it tried to raise $50m in May through a sale of 8.5% senior unsecured bonds, but came away with only $25m in proceeds.
That left Lois Zabrocky-led Seaways lacking adequate funding to win a consent from its lenders under its main Term Loan B credit facility.
As TradeWinds reported at the time, the shortfall led sources to conclude that Seaways would only be able to take four of the VLCCs Euronav was acquiring from Gener8 under terms that outlined the option for a smaller deal.
But Zabrocky and chief financial officer Jeffrey Pribor skipped this year’s Posidonia event in Greece to find an alternative, which turned out to be the BlackRock transaction.
That allowed Seaways to confirm on 15 June that it was taking six vessels: the 301,000-dwt Gener8 Miltiades, Gener8 Chiotis, Gener8 Success, Gener8 Andriotis, Gener8 Strength and Gener8 Supreme (all built 2016).
The Chinese-built VLCCs cost $434m, which included $123m in cash and $311m in debt on the ships.
Euronav agreed to buy Gener8 and its 21-unit VLCC fleet in a $504m all-shares deal in December last year.
In an attempt to “de-risk” the larger acquisition, Euronav said at the time that it had a deal in place to send six tankers to Seaways in a side transaction.
The buy became the centrepiece of Seaways’ fleet-renewal programme and the high price of BlackRock’s help in a relatively small piece of its capital structure is likely to be seen as well worth it.
This is especially so in that Seaways otherwise financed the transaction by assuming $311m in attractively priced debt at 2% over the London Interbank Offered Rate provided by Chinese Export & Credit Insurance Corp and through liquidity generated by sale of older vessels.
Seaways management did not respond to a request for comment on the BlackRock arrangement this week.
Together with the purchase of two suezmax vessels and one VLCC in 2017, Seaways has invested $600m in nine vessels with an average age of 2.3 years since it was spun off from Overseas Shipholding Group in December 2016, without issuing equity.
