AMSC is ready to move on from the Jones Act tanker business, inking a $747m deal to sell its fleet to New Orleans-based Maritime Partners.
The two sides announced the deal on Tuesday, which sees the US outfit take control of the Oslo-traded company’s 10 US-flagged product tankers upon closing of the deal in October.
“The timing was good,” AMSC chief executive Pal Lothe Magnussen told TradeWinds. “We’ve had these [ships] for 15 years, they still have, call it 25 years remaining, economic life. I think the backdrop for the market is good, as well, there’s good bareboat contract cover.
Seven of the ships are on bareboat charter to Tampa-based Overseas Shipholding Group and three to Pennsylvania-based Keystone Shipping.
The ships were built between 2007 and 2011 and all operate in US domestic trades.
Magnussen said the ships still have a long commercial life, as Jones Act ships typically operate for longer than tankers in international trades given the expense of building ships in the US, and strong contract cover making now “a good opportunity and point in time for us to reconsider capital allocation for AMSC and strategy going forward”.
“This transaction is a natural step in this process,” he said.
The deal will provide AMSC with nearly $250m in cash and implies an enterprise value of $747m for its subsidiary American Tanker Holding Co, which through its own set of subsidiaries owns the tankers.
“We had a pragmatic approach to ownership,” Magnussen said.
“We have been very open about the fact we’re happy owners, but we’re also happy to exit if there’s someone there to have a serious discussion about it. We had this approach for a number of years.”
Those discussions came and went over the last decade, he said, as the Jones Act tanker market ebbed and flowed.
Magnussen said most of those potential buyers were financial funds, but Maritime Partners was different as they have both financial and shipping experience.
In a statement announcing the agreement, Maritime Partners chief executive Bick Brooks said AMSC’s business was a natural fit for the company.
As it stands, Maritime Partners primarily finances and bareboat charters out more than 40,000 barges and towboats.
“The acquired vessels are critical long-lived assets engaged in the transportation of non-discretionary cargo throughout the United States,” Brooks said.
“The vessels are employed on long-term bareboat charters with two strong counterparties. This acquisition will nicely complement our existing lease portfolio by diversifying lessee exposure, asset exposure and end-market exposure within the protected Jones Act markets.”
The deal leaves AMSC with a single vessel, the 178-loa offshore construction vessel Normand Maximus (built 2016), which it bought from, and chartered back to, Solstad Offshore in May 2022.
Solstad Offshore has been looking to subcharter the vessel since, while AMSC has explored refinancing the debt used to purchase the vessel.
Magnussen said the company would now be more active in sourcing transactions.
He insisted AMSC was sector agnostic in acquiring new ships but implied the company was leaning towards the offshore space.
“I think the offshore sector ... is promising,” he said. “Shipping has been difficult, we think for a while because everything has become expensive, but I think that’s also changing somewhat in some of the shipping segments.
“I think there could be transactions [in shipping], too, going forward, but probably more opportunity in the offshore space right now.”
