Tanker Investments changes tack

Aug 05 2016

Teekay affiliate, Tanker Investments reported net income of $12.6 mill for the second quarter of 2016.

The company generated cash flow from vessel operations of $27.1 mill in the period, down from $32.8 mill generated in the previous quarter, due to lower tanker rates.

As of 30th June, 2016, the company had total liquidity of $112.7 mill, comprised of cash and undrawn credit facilities.

“During the second quarter of 2016, Tanker Investments enjoyed seasonally robust tanker rates, generating $12.6 mill of net income and over $27 mill of cash flow from vessel operations,” said CEO William Hung,“Tanker rates have been strong in the first half of 2016, however they have weakened into the summer months which, together with tight credit conditions for the shipping sector, have contributed to a decrease in the value of modern tankers by approximately 20% year-to-date.”
“We do not believe the current market value of our fleet, or our equity value, is representative of future cash flows we expect to generate by trading our vessels, and with this in mind, Tanker Investments’ is now pivoting from a strategy focused on selling our fleet, to an operating strategy, as we ride out the softer part of this market cycle. 

“We will continue to deliver shareholder value while we wait for the tanker market to firm and asset values to rise by operating our spot fleet in Teekay Tankers’ RSAs, actively pursue a timecharter-out strategy, and remain focused on safe, cost-efficient operations while continuing to build on our already strong financial position. Importantly, once asset values reflect expected cash flows, we expect our strategy will pivot back to prioritising the sale of our fleet.  
“We believe Tanker Investments is well-positioned to weather what we expect to be a period of weaker rates than what we have seen in the past 24 months and move forward as a tanker company with a strong financial position and competitive break-even levels, and we remain committed to returning excess capital to shareholders via share repurchases and/or dividends,”he concluded.


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