Why Sale and Leaseback Deals Prove Popular?


  • Two Ardmore Shipping transactions expected to be finalized this month with expected aggregate cash proceeds of $13 mill.
  • d’Amico Tankers entered a bareboat charter contract for the sale and leaseback of the 2015-built MR ‘High Trader’.
  • TOP Ships concluded the $92.5 mill financial deal for two Suezmax newbuilds under construction at Hyundai Samho Heavy Industries.

At least three sales and leaseback deals have been confirmed by quoted tanker companies in recent weeks, reports the Tanker Operator

What is in the first transaction?

In one transaction, Ardmore Shipping has refinanced the ‘Ardmore Exporter’ and‘Ardmore Seavanguard’, two 2014-built, 50,000 dwt Eco-design MRs. Signed with an undisclosed financier in China, the lease agreements are for seven years, with options to repurchase each vessel at various stages prior to maturity.

What is in the second transaction?

In addition, the company has entered into an agreement for the sale and leaseback, under a finance lease arrangement, of the similar MR ‘Ardmore Engineer’ with a Japanese financier. This agreement is for 11 years, and again the company has options to repurchase the vessel at various stages prior to maturity.

Expected Result

Both transactions are expected to be finalized this month and will result in aggregate cash proceeds of around $13 mill, net of fees and the prepayment of senior debt secured by the vessels.

“We are once again pleased to have concluded these refinancings on very favorable terms, completing our current phase of sale-leasebacks and thus enhancing our financial flexibility. We are also encouraged by the significant improvement in MR charter rates over the past several weeks,” Anthony Gurnee, Ardmore’s CEO, commented. With the conservative balance sheet, strong liquidity position and improving market conditions, they believe Ardmore is well positioned to create significant shareholder value in the anticipated cyclical recovery

The d’Amico Tankers bareboat charter

Another transaction, d’Amico Tankers signed a memorandum of agreement and bareboat charter contract for the sale and leaseback of the 2015-built MR ‘High Trader’. The vessel will be sold for $27 mill to an unnamed Japanese company. d’Amico Tankers said that this deal allows the company to generate around $8.6 mill in cash, net of commissions and the reimbursement of the tanker’s existing loan.

Contract Details

Through this transaction, d’Amico Tankers will maintain full control of the vessel, since a 10-year bareboat charter agreement was also concluded with the buyer, with a purchase obligation at the end of the charter period.

Furthermore, d’Amico Tankers has the option to repurchase the vessel, at any time starting from the second anniversary of the sale with three months notice and at a competitive cost.

TOP Ships Suezmax newbuilds deal

Finally, TOP Ships has concluded the $92.5 mill financial deal for two Suezmax newbuilds under construction at Hyundai Samho Heavy Industries. The sale and leaseback agreements mean that the two new buildings will be sold following their deliveries in April and May 2019, respectively. The proposed financing deals include pre and post-delivery financing and have a term of seven years each.

Contract Details

TOP Ships can buy back the vessels after the three year anniversary of each vessel’s delivery up until the expiry of the agreements. Once delivered, the vessels will enter into three-year time charters with an oil major at a daily charter rate of $25,000 per vessel.

“Our Suezmax vessels, which account for the largest portion of our new building capital expenditure, are now fully funded,” Evangelos Pistiolis, the President, Chief Executive Officer and Director of the company, said. “We are now focused on arranging the finance of our newbuilding vessel that will be delivered in January following the completion of which, the company will have completely covered its capital needs in relation to its current newbuilding programme.”

The company also said that it had increased the maximum borrowing capacity of the family trading credit facility to $25 mill and that it has drawn down an additional $5 mill from the company’s outstanding loan facilities.

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Source: Tanker Operator




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