Indonesia's Soechi Lines has added to its VLCC fleet as it launches a bond buyback.
Deal Tracker reported the company has paid $23.5m for the 300,700-dwt Selene Trader (built 2003), sold last month by Japan's Mitsui OSK Lines.
TradeWinds had pegged the price at between $23.5m and $24.4m in November, but the buyer was not then known. VesselsValue assesses the tanker as worth just over $24m.
Soechi has 56 other ships, including two VLCCs and four aframaxes.
Concerns over bonds
Meanwhile, ratings agency Fitch has placed the company's $200m, 8.375% bond issue due in 2023 on negative watch.
Soechi has launched a cash tender to buy back a portion of the notes using proceeds from a secured loan facility.
The shipowner is offering 70 cents per dollar, against a trading price of around 60 cents.
Soechi is planning to use $100m from the loan, which will also provide $77m to refinance a syndicated loan maturity in 2021.
The negative watch reflects the likelihood of below-average recoveries (less than 31%) and of the bonds' B rating being downgraded if Soechi replaces the majority of the notes with proceeds from loan, Fitch said.
The agency does not consider the offer as a distressed debt exchange, however.
"The new loan facility will allow Soechi to address its 2021 maturities, irrespective of the result of the tender process," Fitch added.
Management backed to take steps
"The next major maturity is in January 2023 for the US dollar notes and we believe management will take steps, such as seeking refinancing over the next 12-18 months, to address it."
The company reaffirmed Soechi's long-term issuer default rating at B with a stable outlook.
The shipowner has a healthy shipping profile characterised by protection from foreign competition and steady demand from key customer Pertamina, Fitch said.
This gives Soechi revenue visibility and should support the company's refinancing efforts, Fitch analysts believe.
The amount of the fleet capacity under time-charter contracts was sustained at a high level of 98% as of the end of June.
Soechi is the one of the largest independent tanker operators in a fragmented domestic shipping industry with many small players.
Domestic tanker demand is likely to continue growing over the longer term driven by increasing fuel consumption, Fitch added.
Shipyard a drain
Soechi has invested around $200m in its own shipyard, which began operations in 2012.
"Weak newbuilding order flow and construction delays have affected shipyard performance and we estimate that the shipyard incurred an Ebitda loss of around $2m in 2019," Fitch said.
The yard has only one shipbuilding order worth less than $3m, for delivery in 2021.
"We have assumed more shipbuilding orders from 2021, likely to be granted by the government, and a gradual increase in ship-repair revenue," Fitch added.
"However, the shipyard may continue to be unprofitable for the next two to three years without substantial revenue growth."
In January, Fitch had also held the long-term issuer default rating at B, with a stable outlook.
The year before Fitch had cut its rating to B from B+ as leverage rose.
