US-listed tanker owner International Seaways is positioning itself for a sector recovery by cutting its interest burden.
The company said in a securities filing it is redeeming the outstanding $25m of the 8.5% senior notes due in 2023.
The payment will be made on 5 August at par, plus accrued and unpaid interest.
Fearnley Securities, which has a “buy” rating on the stock, said the early redemption “takes out the most expensive piece of financing in an improving tanker market, with VLCC rates having started to gain in earnest.”
The Norwegian investment bank estimates Seaways’ gross outstanding debt at about $1.05bn following the redemption.
The “baby” bond began trading in New York in 2018.
The company has cash available after scoring a $140m windfall last month by selling its 50% share in two floating storage and offloading units (FSOs) to long-time partner Euronav.
The Manhattan-based owner wasted no time in doubling its quarterly cash dividend to $0.12 as a result of this transaction.
The long-speculated deal was concluded at $300m, with $140m being Seaways’ take, net of working capital and expenses.
Seaways has been questioned about a possible sale for years, particularly since it unloaded a half share in four non-core LNG vessels for a $123m fee in October 2019.
Savings from refinancing
In May, the crude and product tanker company said it was saving $60m this year through a big new refinancing agreement.
The owner closed on a $750m facility that expires in 2027, pushing out maturity by two years.
Three earlier loan packages worth $575m were cleared away in the deal.
The new facility is made up of a term loan worth $530m and a revolving credit tranche of $220m.