The Saverys family’s US and Brussels-listed vehicle CMB.Tech is plotting ship sales to avoid breaching its bond terms, analysts believe.
Clarksons Securities said the former Euronav’s equity ratio stood at 30.4% as of 30 September, close to the bond covenant minimum of 30%.
The figure is arrived at by dividing shareholder equity by the total assets of the company.
The investment bank noted CMB.Tech could face a covenant breach if no action is taken.
To address this, bosses are exploring asset sales as market values are significantly higher than book values, it added.
Analysts led by Frode Morkedal said: “Given anticipated high yard instalments totalling $445m in the coming quarter and a weaker-than-expected fourth quarter, asset growth could result in a breach of the covenant.
“Management is fully aware of the situation and views asset sales as the preferred solution.”
Morkedal and his team view the most straightforward approach as selling older assets with low book values, thereby recognising significant gains on disposal.
The analysts said: “While we expect the situation to be manageable, current market conditions make it less than ideal for selling older assets.
“We anticipate that the company could sell two VLCCs and two suezmaxes in the fourth quarter to address the equity ratio requirement.”
Clarksons noted that CMB.Tech has seen a significant decline in its stock price over the past month, falling nearly 24%.
Rate softness
While the company is expanding into new shipping segments, tankers and dry bulk comprise 87% of its asset value.
The recent decline is largely attributed to freight rate softness, particularly impacting its 14 VLCCs and 21 suezmaxes, Clarksons said.
Diversification efforts for earnings are ongoing, with eight newbuildings delivered this quarter.
On 30 September, CMB.Tech had $2.4bn in debt, $2.5bn in remaining capital expenditure commitments and a cash balance of $48m.
The investment bank has maintained its “buy” rating on the shares.
