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Concordia Maritime Cuts Fleet to Three Tankers Selling its Eighth Ship

Concordia tanker sold
Stena Penguin is the eighth vessel sold by financially troubled Concordia Maritime (J. Atkin photo courtesy of Concordia Maritime)

Published May 3, 2023 8:43 PM by The Maritime Executive

Concordia Maritime, which had once been a leader in product tankers, continues to sell off its fleet as management reports they continue to explore options for new business. The company went public 39 years ago but was hard hit by the downturn in the tanker markets leading to a sale program that has seen now its eighth tanker sold in less than 18 months.

The company reports it has entered into an agreement for the sale of the product tanker Stena Penguin to an unnamed European buyer. Built in 2010, the tanker is 65,200 dwt typical of Concordia’s focus on mid-range tankers. Stena Penguin had been on a five-year charter, including profit-sharing, to Concordia’s parent company Stena Bulk since a financial bailout in 2021. Stena Bulk in turn had chartered out the vessel on a combination of short and medium-term contracts. The vessel had recently been redelivered to Stena Bulk after a 12-month time charter contract with Exxon.

“We are now divesting another vessel with a good margin,” said Erik Lewenhaupt, CEO of Concordia Maritime. “The sale is being made primarily in the context of the current record strong market for second-hand tonnage.”

The sale process began at the beginning of 2022, seeing two vessels sold in the first quarter and a third in the second quarter. Lewenhaupt explained that the first vessels were sold to avoid docking costs and to strengthen the company’s financial position. The sales were helping liquidity for the company and under the terms of its agreements with the lenders the excess was being used to accelerate amortization of the company’s debt.

Whereas the first sales were having a smaller positive effect on the finances as the market has turned in 2022 the sales changed to an opportunity to harvest value from the fleet. The first sale in January 2022 of the Stena Perros, a 15-year old vessel, was done below book value in part because the vessel was coming up on a required, costly special survey due to its age. The latest sale however is expected to have a positive effect on liquidity of approximately $21 million after the repayment of the remaining bank debt.

The company continued its sales with one additional vessel in July 2022, followed by three sales announced in September. Those vessels were due to be delivered at the end of 2022 and the beginning of 2023. The company sold a total of seven vessels in 2022. They had also explored but later dismissed in mid-2022 as not practical a plan to convert the tankers into containerships.

Concordia’s parent company Stena Bulk along with the banks had come to an agreement in July 2021 to bail out the financially troubled company after six years of mounting challenges. Stena Bulk agreed to vessel charter agreements and a financial guarantee as Concordia worked to address $114 million in outstanding bank debt due in the fourth quarter of 2024.

After the sale of Stena Penguin, which makes the eighth vessel to leave the fleet, Concordia Maritime’s fleet will consist of the three product tankers, Stena Progress, Stena Premium, and Stena Polaris. As has been the company’s market approach, the vessels operate on mid- to longer-term charters which meant Concordia Maritime realized little yield improvement as the market strengthened. 

Two of the remaining vessels, Stena Progress, Stena Premium, are currently employed on medium-term contracts under the time charter agreement with Stena Bulk. The third vessel, Stena Polaris, has been chartered out on a bareboat contract to US Crowley Government Services since early 2022. Crowley has in turn chartered the vessel to U.S. Military Sealift Command. The contract with Crowley includes extension options until the end of 2026.

Lewenhaupt reported at the end of 2022, based on high asset values, the company might sell one or more vessels in 2023 if they were able to identify attractive opportunities. He said announcing today’s sale agreement that planning for the future is continuing as they work on a number of options for new business.