Euronav swoops on four VLCC newbuild resales

Paddy Rodgers: "Euronav is delighted to enhance our fleet with the addition of four high specification modern VLCCs"

JUNE 16, 2015 — Antwerp, Belgium, headquartered  Euronav has entered into an agreement for the acquisition through resale of four VLCCs that are completing construction for Greece’s Metrostar Management at Hyundai Heavy Industries for an aggregate purchase price of $384 million or $96 million per unit. The vessels are due to be delivered by the South Korean shipbuilder as early as September 2015, January, March and May 2016.

In addition, and against the payment of an option fee of an aggregate amount of $8 million, the seller has also agreed to grant Euronav an option to acquire up to a further four VLCCs, sisters to those now being acquired, at a price of $98 million each.

“Euronav is delighted to enhance our fleet with the addition of four high specification modern VLCCs,” said CEO Paddy Rodgers. “The tanker sector continues to perform strongly with a positive outlook. This accretive transaction further cements Euronav’s position as the largest, independent quoted crude tanker platform.”

Euronav says the deal is consistent with three core company principles.

First, these vessels are ex-shipyard resales, which do not add supply to the market and therefore meet the company’s stated aim of only adding existing vessels to its fleet and not ordering new ships.

“Ordering new vessels only reduces the value of the existing fleet globally. In addition there is the benefit of buying such vessels in series with the synergies of sister ships,” it comments.

Second, the time lag between the purchase and the deliveries to the company will be very similar to buying a fleet on the water, therefore allowing the capital deployed to be rewarded by the freight market imminently.

Last, Euronav says it actively looks to regularly rejuvenate its fleet and enhance its operational strength. This will be achieved as these four vessels are of the latest design and similar or better those acquired by the company in July 2014.

Euronav will finance the acquisition using existing borrowing facilities. The payment profile for this transaction will mean the largest portion of each payment for each vessel will be made on delivery of each ship.

Balance sheet debt leverage will move from around 40% at the end of March 2015 to less than 50% and will, says Euronav, “continue to be appropriately levered allowing the company to retain its strength and flexibility.”