Norwegian shipowner Axel Eitzen is eyeing fleet renewal and expansion at Christiania Shipping after sealing a new financing deal.
The Denmark-based chemical tanker company has tapped Dutch lender NIBC Bank for a long-term loan to replace acquisition financing arranged by Eitzen and partners to buy the former Herning Shipping in 2018.
Eitzen told TradeWinds: "I think it is very exciting. We are very happy with this, as it is one of the most important factors in a long-term industrial view, where fleet renewals and expansion must come hand in hand."
He described NIBC as a professional shipping bank with a long-term strategy.
Solid return for investors
"We have secured a moderate loan to value based on the entire fleet, which is normal when we have some older vessels in our fleet," the chief executive said.
He explained that other original financial investors had eyed a three-year period of involvement alongside the loan from Herning's selling bank.
"We are also happy that we could give the initial financial investors a solid return, as we now could give them a share sale opportunity," he said.
"With regards to the new investors coming in, many are already stakeholders in our operation and thereby believe in the philosophy of the company, the industrial strategy and the market segment we are in."
Eitzen Group now has 70% of Christiania.
The fleet ranges from 3,000 dwt to 11,000 dwt and was built between 2001 and 2011.
"Our strategy will be an active one going forward, trying to adapt to the various market changes, requirements for renewals, as well as environmental focus on our operations," Eitzen said.
The company, which controls 18 ships, said it will be reporting Ebitda of more than $10m for 2020.
"This is very acceptable in this difficult Covid-19 year," Eitzen said.
Turning around losses
Herning had posted a loss of $91m in 2016 following a $55m write-down. It had been marketed for sale by investment company Triton.
Norwegian finance house Arctic Securities had been called in to handle the process.
Eitzen said that since his takeover, the company has reduced the number of employees from 38 to 19 "dedicated and hard-working professionals".
Costs cut
Administrative and financial expenses have been cut by almost $10m per year.
All IT and financial systems were changed to fit the new size of the company and insurance was moved to Norwegian protection and indemnity club Gard.
Eitzen said the technical efficiency of the fleet was increased "enormously", with unplanned off-hire reduced by more than 90%.
Technical management of the fleet was switched to chemical tanker specialists TB Marine and Suntech Ship Management, cutting daily operating expenses to a "competitive" level.
Christiania has also focused on its long-term industrial shipping strategy by increasing the share of contract of affreightment coverage.
Eitzen had teamed up with compatriots Erik Bartnes and Nicolai Heidenreich to take over Herning in 2018.
At the peak of the market in 2008, the Eitzen group controlled four publicly listed companies and a fleet of 150 ships. The financial crisis hit hard and Eitzen lost his stake in the companies.
In 2016, he returned with the purchase of a supramax bulker.
