- Performance Shipping secured $45 million in financing through a sale and leaseback agreement for a newbuild LR2 Aframax tanker, solidifying financial stability ahead of vessel delivery.
- The company has achieved favorable financing terms covering approximately 70% of the total shipbuilding contract cost, reducing financial burden on the company.
- The fleet renewal program will reduce the average age of the fleet from 14 to 10 years, enhancing operational efficiency and modernization of assets.
Performance Shipping Inc., a global shipping company specializing in tanker vessel ownership, has entered into a sale and leaseback agreement with an unaffiliated third party for a previously announced newbuild LR2 Aframax tanker vessel through a wholly-owned subsidiary, according to the company’s release.
This agreement completes the financing for three newbuilding LNG-ready, scrubber-fitted LR2 product/crude oil tanker vessels, each approximately 114,000 dwt, scheduled for delivery in August and September 2025, and January 2026.
Sale and leaseback agreement for third newbuild
The bareboat financing totals US$45 million, with the vessel sold and chartered back to the company on a bareboat basis for an eight-year period starting at delivery, featuring 96 monthly installments at a fixed rate of US$6,850 per day, plus a variable rate based on SOFR plus 2.05% per annum, and a balloon payment of approximately US$25 million due with the final installment.
The company retains options to repurchase the vessel at predetermined rates after the second anniversary of the charter. As announced on March 12, 2024, all three tankers are chartered to Clearlake Shipping Pte Ltd. for five years at US$31,000 per day upon delivery, with an option to extend for a sixth and seventh year at a base rate plus profit sharing if declared by the charterer.
Andreas Michalopoulos, the company’s Chief Executive Officer, stated, “We have managed to secure attractive financing for all three newbuild LR2 Aframax tankers, well in advance of their respective delivery dates. The aggregate bareboat financing amount of US$134.6 million represents approximately 70% of the total shipbuilding contract cost of US$192.9 million, covering almost all of the US$138.4 million remaining installments due to the shipyard. The daily all in cashflow breakeven rate, including lease payments, is estimated at about US$25,000 per newbuild tanker, well below the US$31,000 daily charter rate secured for the first five years. We remain committed to a prudent gradual fleet renewal program that, upon delivery of all three newbuild LR2 Aframax tankers as of January 2026, will reduce the fleet average age from 14 to 10 years.”
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Source: Performance Shipping Inc.
