Recorded adjusted net income was $38.5 mill, compared to $64.8 mill in 1Q16.
Vessel operating days increased by 24.4% to 3,510 in 1Q17, compared to 2,822 in 1Q16.
The company took delivery of two ‘ECO’ newbuilding VLCCs, ‘Gener8 Hector’ and ‘Gener8 Ethos’, during the three month period. Gener8 also sold the 2003-built VLCC ‘Gener8 Ulysses’ in February, 2017 for net proceeds of $10.2 mill after prepaying $20 mill of associated debt.
Subsequent to the end of the quarter, the company entered into a series of transactions that are expected to increase cash on the balance sheet by more than $82 mill.
These include:
- Modified the company’s interest rate swap agreements, which resulted in aggregate net cash proceeds of $18.2 mill in April 2017.
- Entered into agreements to sell two 2016-built VLCCs, ‘Gener8 Noble’ and ‘Gener8 Theseus’, for expected combined gross proceeds of $162 mill and expected net cash increase of $61.5 mill, following prepayment of debt and the release of working capital from the pool.
- Entered into agreement to sell the 2002-built Aframax ‘Gener8 Daphne’ prior to the vessel’s special survey.
“We are pleased that our ‘ECO’ vessels continue to earn a demonstrable premium. This is a significant competitive advantage for us, particularly as the market enters a somewhat weaker rate environment amplified by growth in the size of the global fleet,” said Peter Georgiopoulos, chairman and CEO. “Subsequent to the end of the quarter, we made a series of important decisions to provide us significant flexibility to manage our business.
“The resulting stronger financial platform will serve as a buffer through any extended market downturn and also allow us to be opportunistic going forward. Importantly, we were able to improve our financial profile without diluting our shareholders.
“In the meantime, following the completion of our newbuilding programme expected in the third quarter and assuming no further changes to our fleet, the dwt-weighted average age of our fleet will be 4.9 years and our VLCCs will have an average age of just 2.7 years, giving us the youngest and most modern VLCC fleet among our public company peers. This is significant as we believe the modernity of our fleet will contribute to competitive operating expenses and ultimately to our profitability,” he said.
CFO, Leo Vrondissis, added, “Our balance sheet was strengthened during the first quarter, primarily as a result of solid operating results and the sale of the 2003-built ‘Gener8 Ulysses’, which resulted in net proceeds of $10.2 mill. Subsequent to the first quarter, we are expecting to add cash to the balance sheet through a series of transactions, which include the re-couponing of our interest rate swaps and entering into agreements to sell three of our vessels which are expected to, on a combined basis, add more than $82 mill of cash to our balance sheet.”