SFL Acquires Four Suexmax Tankers Saying Segment is Attractive
In a further demonstration that famed investor John Fredriksen is expecting that the tanker trade has reached the bottom of its current cycle and is poised for a rebound, his SFL Corporation announced a $222.5 million investment, purchasing four modern Suezmax tankers. The company, which was established in 2003 as a pure-play tanker owner in recent years has diversified its investments so that tankers make up just a quarter of its fleet.
“We are pleased to further expand our presence in the tanker market at what we believe is an attractive point in the cycle with historic low orderbook in the segment,” said Ole Hjertaker, CEO of SFL Management. “The transaction demonstrates our standing in the market as a high-quality provider of transportation services for industry-leading customers, and we continue building our fleet and charter backlog with accretive acquisitions.”
Few details were provided in the announcement of the acquisition including not identifying the seller or the individual vessels. The company said the four Suezmax tankers were built in 2015 and 2020. They expect to take delivery of the vessels between August and October of this year. The vessels reportedly feature a modern eco-design including exhaust gas cleaning systems.
In keeping with SFL’s strategy, the vessels are currently under long-term charters that will transfer with the vessels. The acquired vessels are operating for Koch Industries, an industrial conglomerate that has a current relationship with SFL. Koch currently has four additional Suezman tankers on charter from SFL. Describing the terms of the acquired charters, SFL reported they have a six-year duration, with the possibility to terminate the charters after three years or an option to develop a sale of one or more of the vessels from year four.
From its origins in tankers, SFL diversified with 34 containerships making up the largest segment of its portfolio. The current tanker fleet consists of nine Suezman and one VLCC as well as six product tankers and two chemical tankers. In the spring, the company reported it had sold two of its older VLCCs. The vessels were reportedly the last two remaining from the Frontline fleet that SFL acquired in 2004 and 2005.
The company also owns bulkers, car carriers as well as a single jack-up vessel and one semi-submersible drill vessel. Today, the company says its strategy focuses on a diversified fleet seeking medium to long-term charters to provide predictable cash flow and growth.
In addition to SFL, Fredriksen, of course, is also behind the fight to merge Frontline and Euronav. In April the two tanker companies announced their intent to merge and in July terms of the combination were finalized. Frontline plans to proceed with an exchange offer later this year. Like today’s acquisition, in April Fredriksen spoke of the changing outlook for the tanker sector and his belief in the coming upturn based on the current dynamics.