Euronav has used its healthy balance sheet to purchase three VLCCs currently under construction at DSME for an aggregate purchase price of US$280.5M
Euronav has stated that the three VLCC newbuildings will be financed by existing borrowing facilities and debt capacity. There will be an increase in leverage but the company feels this will be in line with corporate policy.
Euronav chief executive Hugo De Stoop said “The large tanker fundamentals remain constructive despite substantial headwinds surrounding economic activity linked to the novel coronavirus [Covid-19] that we believe and hope will be temporary. Current disruptions to the freight market have provided an opening for Euronav to be opportunistic and deliver what we believe will be long-term value for our stakeholders. This transaction demonstrates our flexibility and our capacity to seize opportunities thanks to a strong balance sheet and a robust liquidity position.”
Some observers might see the acquisition of scrubber-equipped VLCCs as going against reported Euronav philosophy but the company has been clear that it would purchase scrubber technology if there was a business case. Also, it would be difficult to purchase ECO VLCCs off-the-blocks that were not already equipped with scrubbers. Euronav stated the purchase would lower the average age of the fleet and the company recently sold and lease-backed three older tankers.
Euronav has not identified the specific VLCCs other than to report delivery will be in Q4 2020 and in January and February 2021 respectively and will therefore have exposure to the key winter freight markets in 2020/2021.
DSME currently has 14 VLCCs on order or recently launched (2020 and 2021), according to VesselsValue. Four VLCCs are allocated to the Hunter Group, three to Oman Shipping Company, four to Sinokor, two to Maran Tankers and one to an undisclosed contractor.
Are the tanker market fundamentals aligned for a VLCC bonanza? Hear the opinions of the experts on the tanker trade at the inaugural Tanker Shipping & Trade Conference, Americas on 15-16 April 2020 in Houston, Texas, USA