Denmark-based Torm has emerged as the buyer of three large product carriers sold by Okeanis Eco Tankers.
The shipowner announced on Wednesday that it had acquired the 114,300-dwt LR2s Nissos Therassia, Nissos Heraclea and Nissos Schinoussa (all built 2015), which all have exhaust gas scrubbers, for $120.8m.
“We are a believer in a bigger presence in the LR2 segment,” Torm chief executive Jacob Meldgaard told TradeWinds.
“We think the long-term trend is for more East-West, West-East long-haul trades, where larger vessels will benefit.”
The sisterships are due to be delivered during the remainder of the second quarter and the third quarter of 2021.
Brokers earlier reported that State Oil Company of the Azerbaijan Republic (Socar) was buying the vessels for a similar price tag.
When asked whether Socar was involved in the deal, Meldgaard said the LR2s will enter Torm’s fleet without prior charter commitments. He declined to comment further.
Rebuilding fleet
In 2020, Torm sold at least six MRs and two LR2s that were some of the oldest vessels in its fleet.
The tanker owner sold the 46,200-dwt MR Torm Carina (built 2003) to generate $6m in liquidity earlier this quarter.
But Torm also acquired eight MR product tankers from Team Tankers before the latest purchase.
“In the first half of this year, we feel it is a good time to buy, getting back some of the capacity we sold,” Meldgaard said.
“This is an interesting time to expand the capacity in anticipation of stronger markets, once oil demand ultimately recovers in parallel with the normalisation of the mobility in the society.
“There will be higher demand for all products in general.”
First-quarter loss
The LR2 deal was revealed as Torm reported a net loss of $21.3m in the first quarter versus a profit of $56.4m in the same period of last year.
Revenue dropped to $124.1m from $242.6m, mainly due to lower spot earnings.
“The weak conditions in the product tanker market continued from the end of 2020 into the start of 2021,” Torm said in its quarterly report.
“Global oil demand recovery was negatively affected by increasing Covid-19 cases in many regions and the Opec+ quota regime continued to suppress the tanker market.”
Its fleet achieved an average time charter equivalent rate of $13,493 per day between January and March, down from $23,642 in the first quarter of 2020.
As of 7 May, 78% of its second-quarter revenue days were fixed at $14,821 per day.
Financing efforts
The company’s cash reserves amounted to about $117m as of 31 March, down from $136m at end-2020.
Torm has secured $60m from Danish Ship Finance to fund the acquisition of two of the Okeanis vessels, subject to finalisation of the documentation.
The company expects to finance the third ship via a sale and leaseback agreement with an unnamed Chinese financial institution for proceeds of $32.2m.
The same lessor will acquire two more vessels from Torm in leaseback arrangements that will boost the seller’s net liquidity by $24m.
“We feel very comfortable with liquidity situation with the commitments from certain lenders,” Meldgaard said.
