Life under its new owners will look pretty much as it did before, Norwegian sale-and-leaseback company Ocean Yield said in its first results presentation since US private equity giant Kohlberg Kravis Roberts (KKR) formally took over.
“The strategy remains unchanged,” Ocean Yield chief executive Andreas Rode told analysts in a conference call on 14 February.
“Focus [is] on modern tonnage and long-term bareboat charters and high-quality counterparties.
“With KKR as our new and strong owner, our growth ambitions remain intact.”
KKR bought Ocean Yield late last year for NOK 7.2bn ($810m). Rode became chief executive on 4 February, replacing Lars Solbakken, who left the firm after 40 years in shipping.
Expansion steps were taken even as KKR’s takeover bid was still underway in November. Ocean Yield acquired six VLCCs then, in a $375m sale-and-leaseback deal with US-listed International Seaways.
This and other recent corporate moves pushed Ocean Yield’s Ebitda backlog to $3.1bn. According to a company presentation, one-third of that amount derives from crude tankers (see graph).
The company’s exposure to poorly performing tanker markets is limited, as almost all its vessels are on long-term employment. Long-term charters account for 96% of its portfolio, and average contract duration is 9.2 years.
Counterparties’ credit quality “remains strong”, said Rode, adding: “We are pleased to see that our counterparties in the tanker space are being cautious by taking pre-emptive measures in anticipation of a market recovery.”
Ocean Yield had a mixed fleet of 62 ships at the end of the fourth quarter. That includes wholly and partly owned vessels, as well as ships on the water and under construction.
It has 18 counterparties from seven different shipping segments, including tanker firms such as Navig8, Scorpio Tankers and Okeanis Eco Tankers.
Reporting will continue
Ocean Yield was previously controlled by Norwegian tycoon Kjell Inge Rokke. KKR’s takeover saw the company change its legal form from an Allmennaksjeselskap (ASA) to an Aksjeselskap (AS) and narrow its board to KKR representatives Vincent Policard and Bernardo Nogueira.
Ocean Yield delisted from the Oslo Stock Exchange on 20 December but said on Monday that it would continue “transparent and frequent reporting” to bondholders.
As part of that disclosure, it reported on 11 February a net income of $17.9m for the fourth quarter of 2021, up from a net loss of $51.7m in the corresponding year-ago period.
For 2021 as a whole, reported net income stood at $63m from a $141.3m loss in 2020.
Given its “strong cash position” and an extraordinary dividend from the joint venture Box Holdings, which Ocean Yield expects to receive early in the second quarter, the company declared a dividend of $0.23 per share, or $35m to $40m in total.
That is far higher than Ocean Yield’s previous dividend of $0.057 per share.
Box Holdings is a joint venture formed in 2016 by Ocean Yield and Quantum Pacific Shipping. It owns six mega-container ships on long-term charters. Box Holdings pays out the extraordinary dividend derived after refinancing its debt.
