Oslo-listed Hunter Group has agreed a deal to buy back three VLCCs sold to John Fredriksen's SFL Corp in September.
The company, backed by investor Arne Fredly, has arranged new financing with a banking syndicate to reacquire the 300,000-dwt Hunter Atla, Hunter Saga and Hunter Laga (all built 2019).
The trio is financed through a sale and leaseback deal with SFL, which paid $60m each while chartering the DSME-built vessels back over five years, with purchase options attached.
The new facility is an accordion addition to Hunter's existing $220m loan with Danske Bank, DNB, Nordea and SEB.
This was arranged in the first quarter to finance its final four new VLCCs, and carries interest of Libor plus 275 basis points.
Hunter has already drawn $55m in connection with the March delivery of Hunter Freya.
"Following the refinancing, we expect run-rate cash breakeven to come in at $20,500 per day," Hunter said.
The company has booked 89% of vessel days in the second quarter at an average of $85,850 per day.
But the figure for spot deals alone in the second three months is $97,630 for 76% of its ship days. In the first quarter, the spot rate was $72,030.
Fearnley Securities said the refinancing deal will cut $5,000 per day from its breakeven figure.
"This would require $5m of equity per vessel, which shouldn’t be a large problem given a cash balance of $35m and remaining equity of $20m," Fearnley added.
The deal with SFL caused Hunter to cancel a $420m senior secured term loan for the ships that it announced last May.
This had financed 60% of the construction cost.
Three more VLCCs still to come
Hunter has four VLCCs in the water and three more to come from DSME this summer.
The shipowner said that as the construction phase nears completion, and capital requirements are met, the company will move into a new phase where "focus increasingly will shift towards optimising our capital structure and returning capital to shareholders".
The company added that the company expects to significantly chop its cost of capital and cash breakevens for the refinanced VLCCs, though the loan amount is smaller.
"The company is cautiously optimistic for the outlook of the tanker market going forward and expects to be able to increasingly return capital to shareholders as the investment phase draws to a close, either through dividends, share buybacks or a combination of the two," Hunter said.
The company said it made $77m of yard payments during the first quarter, leaving $192m of remaining instalments.
The company reported net profit of $11.7m for the period, while revenue was $20.78m.
The year-ago figures were close to zero as it had no ships at that time.
Hunter has fixed four of the seven vessels on five to nine-month time charters with rates ranging from $72,500 to $85,000 per day, adding a total backlog of close to $60m.
Hunter Atla and Hunter Laga started their deals in March and April, while two newbuildings, Hunter Disen and Hunter Idun, will begin their contracts on delivery.
Hunter Freya missed its time charter delivery window due to port delays and is still in the Tankers International scrubber pool.
Fearnley said first quarter Ebitda of $18m was largely in line with expectations.
Regarding its time charter coverage, it added: "We expect rates to come off significantly in the second half, and we therefore see Hunter outperforming peers meaningfully in that period."
The company added: "Despite some short-term uncertainty and potential headwinds, we continue to be fundamentally positive to the tanker market, and take comfort in the lowest orderbook for VLCCs since 1997, combined with 15% of the fleet nearing 20 years of age during the next two years."
