Euronav Sells, Leaseback 3 VLCCs

Belgium-based crude oil tanker company Euronav has entered into a sale and leaseback agreement for three very large crude carriers (VLCC) vessels with Taiping & Sinopec Financial Leasing Ltd Co.

The vessels were sold for a net en-bloc purchase price of USD 126 million.  Under the agreement, Euronav will subsequently enter into a 54-month bareboat charter contract.

The three VLCCs are the Nautica (2008 – 307,284), Nectar (2008 – 307,284) and Noble (2008 – 307,284), which were all built in the Dalian shipyard.

The transaction produced a capital gain of about USD 23.0 million and will be booked as an operating lease under IFRS. After repayment of the existing debt, the transaction generated USD 66.6 million free cash. The vessels were delivered to their new owners on 30 December 2019. Arctic acted as the sole financial advisor in this transaction.

Euronav has leased back the three vessels under a 54-months bareboat contract1 at an average rate of USD 20,681 per day per vessel. At the end of the bareboat contract, the vessels will be redelivered to their new owners. Euronav enjoys purchase options exercisable after the first year.

Euronav CEO Hugo De Stoop, said: “Euronav is pleased and honoured to have executed this transaction with a leading Chinese counterparty. Consistent with our approach on fleet renewal, we are securing an excellent price for these vessels whilst retaining the capability to recycle this cash into younger tonnage. At the same time we maintain our exposure to a freight market that is currently characterized by robust market fundamentals and which is, we believe, in the early stages of a sustained cycle of elevated cashflows.”

Euronav’s owned and operated fleet consists of 2 ULCCs, 42 VLCCs, 27 Suezmaxes (of which 2 owned in 50%-50% joint venture) and 2 FSO vessels (both owned in 50%-50% joint venture).