INSW’s losses decrease in firming market

Nov 08 2019

International Seaways (INSW) recorded a net loss for the third quarter of $11.1 mill, compared to a net loss of $47.8 mill in the third quarter of 2018.

Net loss for the quarter reflected the impact of a gain on vessel sales of $1.5 mill and $0.4 mill of charges related to a $10 mill prepayment on the 2017 Term Loan Facility. 

TCE for 3Q19 were $65.8 mill, compared to $51.3 mill in 3Q18.

Adjusted EBITDA for the third quarter was $23.8 mill, compared to $6.3 mill in the same period of 2018.

The Cash position was $124.2 mill as of 30th September, 2019; total liquidity was $174.2 mill, including $50 mill undrawn revolver, compared to cash of $117.6 mill and total liquidity of $167.6 mill as of 31st December, 2018.

In October, INSW Sold 49.9% ownership interest in the LNG joint venture with Qatar Gas Transport Company (Nakilat) for $123 mill in cash.

The company also made prepayments of $10 mill in July and $100 mill in October on the 2017 Term Loan Facility using restricted cash set aside from the proceeds of vessel sales and a portion of the proceeds from the sale of the stake in the LNG joint venture.

During 3Q19, the company completed the disposal of six 2004-built MRs with the sale of the final vessel in the series, which was delivered to the buyer in July.

Subsequently, INSW agreed to sell the 2002-built Aframax ‘Seaways Portland’ and agreed to charter-in a 2006-built Panamax for two years starting in August.

“Towards the end of the third quarter, the tanker market reached an inflection point, as we realised initial benefits from the IMO2020 low sulfur regulations, which together with geopolitical and broader macro factors led to significantly higher crude tanker rates on fixtures in September and October,” said Lois Zabrocky, International Seaways’ President and CEO. “As we progress in the fourth quarter, we expect the rate environment to remain robust, supported by factors, such as seasonal demand strength, incremental IMO2020 demand, and decreased vessel supply.

“With a sizeable fleet and significant operating leverage, we expect to continue capitalising on favourable tanker prospects into 2020, as overall tanker fundamentals are anticipated to remain attractive and the impact of IMO2020 becomes more pronounced.

“We have recently completed a number of initiatives that have led to INSW unlocking significant value for shareholders and strengthening our commercial prospects. Drawing on our successful and ongoing relationship with Nakilat, we monetised our interest in our LNG joint venture. This transaction marked an important accomplishment that enabled us to significantly enhance our balance sheet and furthers our disciplined and accretive capital allocation strategy.

“We facilitated Tankers International’s expansion of its footprint with the opening of an office in our New York headquarters, which is expected to further Tankers International’s leadership and strengthen INSW’s ability to take advantage of increasing U.S. Gulf exports,” she said.

Jeff Pribor, INSW’s CFO, added, “We used a substantial portion of our LNG joint venture sale proceeds to prepay $100 mill of the 2017 Term Loan facility, which has a current interest rate in excess of 8%, enabling us to decrease interest expense on an annual basis by approximately $8.2 mill and reduce net loan to value from approximately 45% at September 30 to below 37% on a proforma basis.

“Going forward, we will continue to seek opportunities to optimise our balance sheet and lower our cost of capital. We remain well positioned to further implement our capital allocation strategy in a strengthening market,” he said.


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