TORM uses equity raise for some bargain basement tanker buying

Some of TORM's recent newbuild tankers have been constructed by South Korean shipyard Sungdong Some of TORM's recent newbuild tankers have been constructed by South Korean shipyard Sungdong

APRIL 8, 2018 — Publicly traded shipping company TORM recently decided to spend a good chunk the capital it raised during a recent equity offering to do a little bargain basement tanker buying.

“We are pleased to expand the fleet with the addition of three MR newbuildings,” says Executive Director Jacob Meldgaard. “The vessels are attractively priced when comparing to the current market, and we believe that now is an attractive time to secure new fuel-efficient tonnage that is compliant with the ballast water convention and ready for the IMO 2020 sulfur requirements. The vessels are already fully funded by our $100 million equity raise in January 2018 and through loan commitments from KfW and ABN AMRO.”

Listed on the NASDAQ exchanges in Copenhagen and New York, TORM exercised options to build three 183m, 50,000 dwt MR tankers at China’s Guangzhou Shipyard International (GSI) for a total commitment of $93 million. The product tankers will be delivered in 2019 through first quarter of 2020.

In connection with the acquisition, TORM has secured commitment for attractive vessel financing of up to $63 million from KfW and ABN AMRO respectively, which remains subject to loan documentation.

A pure product tanker owner, TORM carries refined oil products such as jet fuel, gasoline, naptha, and diesel oil. Since last year, TORM has committed to spend $352 million to purchase a total of nine MR vessels and two LR1 vessels. The product tankers are all fuel-efficient and high-specification product tankers that are compliant with the ballast water convention and ready for the IMO 2020 sulfur requirements.

As of April 3, TORM has CAPEX commitments of $335 million covering the remaining CAPEX on TORM's two LR2 vessels with expected delivery in 2018, two LR1 vessels and seven MR vessels with expected delivery in 2019 and first quarter of 2020. TORM's undrawn credit facilities and cash as of April 3 amount to about $526 million.

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