TORM acquires Team Tankers’ MR fleet

Danish shipping company TORM has entered into an agreement to buy eight MR product tankers from Bermuda-based Team Tankers Deep Sea Ltd. for a total cash consideration of $82.5 million and the issuance of 5.97 million shares.

Built at the Croatian shipyard Brodotrogir between 2007 and 2012, the vessels in question are TEAM Amorina, TEAM Allegro, TEAM Corrido, TEAM Cavatina, TEAM Leader, TEAM Discoverer, TEAM Voyager and TEAM Adventurer.

As explained, the tankers have high technical specifications with six of the vessels having specialized cargo tank configurations and extended tank segregations (IMO 2), allowing for enhanced trading flexibility through chemical trading options, while still being able to work integrated into the existing One TORM operational platform.

Scheduled to be delivered during the second and third quarter of 2021, the ships have a market value of about $148 million.

The company said it had obtained attractive terms on the financing with maturities in 2026. Specifically, the 2009-2012 built vessels will be financed by increasing TORM’s existing syndicated term facility with a new revolving facility of up to $67 million provided pro rata by the existing syndicate banks, and the 2007-2008 built vessels will be financed through a new term facility with Hamburg Commercial Bank amounting up to $28 million. The financing is subject to the finalization of the documentation.

The transaction will increase TORM’s total fleet to 83 vessels on a fully delivered basis.

In 2020, TORM realized an EBITDA of $272 million, compared to $202 million in 2019.

The 2020 profit before tax amounted to $90 million, against $167 million in 2019. The net profit adjusted for non-recurring items rose to $122 million in 2020 from $51 million in 2019. What is more, Adjusted Return on Invested Capital (RoIC) was a very strong 9.3%.

“I am very pleased that our integrated One TORM platform enabled us to deliver a solid EBITDA of USD 272m,” Jacob Meldgaard, Executive Director of TORM, commented.

“I am further pleased that our commitment to minimize environmental impact has enabled us to reduce greenhouse gas emissions by 22% since 2008, showing a clear path towards our ambitious target of 40% reduction by 2030.”

For the full-year 2020, TORM achieved TCE rates of $/day 19,800 (2019: $/day 16,526). In the first half of the year, product tanker rates reached all-time-high levels following the significant market disruption caused by the COVID-19 outbreak and OPEC+ oil price war. In the second half of the year, the product tanker market went into a downturn and together with substantial draws on global oil stocks, the product tanker rates declined as product stocks normalized.

TORM has refinanced debt of $602 million extending all material debt maturities to 2026 or later.

In the fourth quarter, TORM refinanced its existing facility with Danish Ship Finance with a new facility of $180 million in senior secured debt, covering ten vessels including the two MR vessels purchased in the fourth quarter.

Lastly, TORM has obtained financing of $12 million related to the installation of scrubbers and ballast water treatment systems on four vessels.

The tanker shipping company has committed to install 50 scrubbers. As of 1 March 2021, TORM has installed 46 scrubbers. The remaining four are expected to be installed in 2021 and in the first quarter of 2022, including the two scrubbers for the LR2 newbuildings, the company revealed.

In connection with the refinancing, a CO2 emission-linked pricing mechanism was included in the Danish Ship Finance facility. Accordingly, the pricing is linked to the reductions in CO2 emissions year-on-year, aligning it with TORM’s and the International Maritime Organization’s industry target of a 40% reduction in greenhouse gas emissions by 2030. The key performance indicator and the decarbonization target are consistent with the Poseidon Principles.

The agreement is TORM’s first loan agreement that includes a CO2 emission-linked price adjustment mechanism.