Norway's Klaveness Combination Carriers (KCC) is renegotiating options for two new Cleanbu vessels in China as weak equity markets preclude fresh investment.
The Oslo-listed owner is taking delivery of three 83,500-cbm wet and dry bulk carriers from Jiangsu New Yangzijiang Shipbuilding in the first half of next year. It has options for two more expiring in late January.
"While we have a strong balance sheet, we do not have much spare investment capacity, meaning that to declare options we would need to raise additional equity," chief executive Engebret Dahm said on a conference call with analysts.
"With the current price in the market that is unlikely, so if you ask me — and of course this is up to the board of the company — I believe it is unlikely that we'll raise money in the current market and declare these options."
But Dahm said discussions have started with the shipyard to extend declaration dates.
"Hopefully we can succeed, and have options for well into the next year in a couple of months," the CEO added.
Previous Cleanbus have cost $46.5m, TradeWinds has reported.
Other options left to lapse
In May, KCC revealed it had four options remaining. Dahm confirmed to TradeWinds that the first two of these have now lapsed.
KCC has a fleet of five Cleanbus operational.
The company stresses their flexibility, and that of the caustic soda and dry cargo Cabu ships, means earnings are much less volatile than for conventional tanker and bulker companies.
The shipowner has 35% of tanker voyage exposure covered at fixed rates in the first half of 2021, with 16% in the second half.
There is also another 16% of floating rate coverage in the first six months, and 15% in the second period of next year.
"We expect that we will over the next month increase the contract coverage for the tanker capacity further," said Dahm.
Dry coverage stands at 22% for fixed-rate contracts, and 20% at floating levels in the first half. In the second six months these figures are 14% and 12%.
"We expect to also increase this over the next month or two," the CEO added.
Forward rates look strong
He described forward rates as "very strong".
KCC has guided for fourth quarter time-charter equivalent earnings of between $18,500 and $19,500 for the Cabus, 3.6 times current conventional tanker rates.
Cleanbus have attracted more customers, and the company carried out a first combination voyage from the Middle East to Australia in October, carrying gasoil after transporting aluminium from Australia on the first leg.
For the fourth quarter, KCC is guiding for average Cleanbu rates at between $19,000 and $20,000, twice conventional tanker numbers.
In its third quarter results, KCC revealed the Cleanbu vessels outstripped LR1 tanker earnings by 140%.
Costs and lost earnings from Covid-19 disruption totalled $2.5m in the third quarter.
But Dahm said: "2020 will be a strong year for KCC in very difficult circumstances."
