The backers of Navig8 Chemical Tankers — Oaktree Capital Management and Navig8 Group — have resolved their reported differences, confirming a renewed collaboration covering at least the next two years.
Executives at both the chemical tanker venture and diversified ship operator Navig8 Group acknowledged the cooperation with Oaktree in response to queries from TradeWinds this week after rumours of the detente.
Under the deal, Navig8 will continue to manage all 24 of Navig8 Chemical's coated chemical tankers for a minimum of 24 months.
Performance issues
“We value highly our continuing relationship with Navig8 Group and continue to have full confidence in the management team and in their ability to help us drive the strategy forward,” said Jens Gronning, the recently appointed chief executive of Navig8 Chemical.
The agreement follows a 10 June TradeWinds' report of a rift between Oaktree and Navig8 Group, who jointly founded the Oslo over-the-counter (OTC)-listed company in August 2014.
According to that report, Oaktree had become disenchanted with the performance of the owner both on a financial basis and with regard to the breakdown of Interline 9001 coatings on at least some of the fleet’s tankers.
TradeWinds reported that Oaktree, a US private equity giant, had replaced Navig8 Group principal Nicolas Busch as chief executive with Gronning.
Despite rumours to the contrary, to date there have been no instances of Interline 9001 tank coating rejections, and this fleet continues to be suitable for the carriage of methanol, other organic-inorganic chemicals and clean petroleum products
Nicolas Busch
Two days later, Navig8 Chemical confirmed the change in an OTC disclosure, saying Busch, Paul Stevens and David Wiswell had resigned their management positions. Torben Bager took over as chief financial officer.
Charterer rejections
Talking to TradeWinds this week, Busch said the problems with the coatings had been overstated by market sources, particularly those who suggested they knew of charterer rejections.
“Despite rumours to the contrary, to date there have been no instances of Interline 9001 tank coating rejections, and this fleet continues to be suitable for the carriage of methanol, other organic-inorganic chemicals and clean petroleum products,” Busch said.
“As is usual, coatings require maintenance to varying degrees to ensure the fleet at all times maintains the high standards required by our customers. We do not anticipate any disruption in our ability to meet existing and future obligations to our customers.”
The fleet includes 18 Interline 9001-coated chemical tankers of 37,295 dwt, eight stainless-steel chemical tankers of 25,000 dwt, four Interline 9001-coated chemical tankers of 49,000 dwt and two epoxy-coated chemical tankers of 49,090 dwt.
Market sources had said it could cost $2.5m to $4.5m, plus significant off-hire time, to repair each tanker, placing further pressure on a financially stressed company.
This week, the companies confirmed that Navig8 Group remains a major shareholder in the OTC company, and that Busch retains a seat on the board.
Increasing exposure
“Market conditions have been difficult for all participants over recent years, but we share the widespread sense of optimism for the next few years,” Busch said, maintaining that Navig8 Group had delivered consistently above-market returns on both 37,000-dwt and 50,000-dwt tankers in recent years.
“Navig8 Group has increased its exposure to the sector considerably, and we plan to continue to add exposure to the sector via a combination of pooling, time chartering and opportunistic asset acquisitions.”
As an example, he said Navig8 Group has now committed an initial newbuilding fleet of eight MarineLine-coated MR tankers — all fitted with exhaust-gas scrubbers — to its Chronos 8 pool for a minimum of two years.
He said the vessels will be delivered throughout 2019 and trade in the same pool as Navig8 Chemical’s 50,000-dwt tankers.
Navig8 Group’s committed fleet of more than 2.25 million dwt is the largest in the crossover trade lanes of bulk organic-inorganic chemicals and clean products, the group said.
In addition to the 56 vessels that operate in its five chemicals pools, Navig8 Group owns, manages or operates 94 vessels in six tanker pools.
