Consolidation hots up

WHERE ARE THEY NOW?

CONSOLIDATION • A RECENT SPATE OF M&A ACTIVITY IN THE CHEMICAL TANKER SECTOR REFLECTS THE DIFFICULTIES OF BEING A SMALL INDEPENDENT IN TODAY’S CHALLENGING MARKET

IT CANNOT BE easy being a chemical tanker operator these days. Things may be picking up in market terms, with tonne-mile demand growing steadily and the orderbook overhang beginning to wind down, but the sector still faces competition from product tankers taking chemical and vegoil cargoes. In addition, there are some additional costs coming along that will likely hamper any recovery in profitability, even if freight rates improve.

Using figures from Drewry Shipping Consultants, Team Tankers International reports that the orderbook in the deepsea coated IMO II fleet has now shrunk to 3.8 per cent of the existing fleet, and in the 10,000 to 16,000-dwt range it is a very manageable 5.5 per cent. It is only in the stainless steel sector where the orderbook is still in double digits, although the average age of this segment of the fleet is much higher so some demolition activity is likely.

But freight rates have been under pressure for so long now that it is tempting to wonder why owners stay in the game. As it happens, the past year has seen a number of owners, some of them long-term players in the chemical tanker business, selling up.

A BIGGER TEAM What has been noticeable about this year’s wave of takeovers and mergers is that the selling companies have not really been distressed – or, at least, not to the extent that Eitzen Chemical was when it was rescued from oblivion in 2015 in what was essentially a debt-for-equity swap deal.

Indeed, it is Eitzen’s successor company, Team Tankers, that kicked off 2018’s round of consolidation. Team Tankers, whose major shareholders are now JP Morgan Securities (29 per cent), Barclays Capital (28 per cent) and Euroclear Bank (13 per cent), acquired Laurin Shipping and Anglo-Atlantic Steamship in April, adding 14 medium-range (MR) tankers to its fleet.

The deal did more than expand the Team Tankers fleet; it brought Laurin’s in-house technical management capabilities and an experienced crew base. Since then, five vessels have been brought under in-house technical management, reducing costs and, Team says, this more integrated management arrangement should improve the overall technical performance of the fleet. In addition, Team Tankers has closed three offices, consolidating US chartering and operations activities in Houston and achieving annual cost savings of some $7m. This arrangement improves overhead costs per ship operating day, effectively reducing the breakeven point.

GLOBAL REACH The other major acquisition took place right at the beginning of 2019, when MOL Chemical Tankers (MOLCT) announced it had agreed to »

buy Nordic Tankers from its sole shareholder, Triton Beratungsgesellschaft. The deal, which was expected to close this month, involves two similar fleets: both operate multi-segregation stainless steel chemical tankers, with a focus on contracts of affreightment (COAs). However, while MOLCT has 56 deepsea tankers in the global trades and another six smaller tankers employed within south-east Asia, Nordic is active in transatlantic and Latin American trades.

“We are really excited to acquire Nordic Tankers, which shall create a lot of synergies with MOLCT in the chemical tanker industry,” said Tsuneo Watanabe, CEO of MOLCT, when the deal was announced. “We are confident enough that the collaboration between MOLCT and Nordic Tankers should provide better and more efficient services to all existing customers. It should also create extra values to our customers, ship owners and other stakeholders, as well as management and employees of both companies.”

Per Sylvester Jensen, CEO of Nordic Tankers, added: “We are very pleased to get MOL Chemical Tankers as our new owners. MOLCT is a well-respected company with a successful history in the chemical tanker industry and a strong customer focus that mirrors Nordic Tankers’ strategy. We expect that the new owner will enhance Nordic Tankers’ ability even further in delivering exceptional value to our customers, owners, employees and other stakeholders and are looking forward to further grow and develop Nordic Tankers in a close partnership with MOL Chemical Tankers.”

Nordic Tankers, which will be renamed MOL Nordic Tankers A/S, was acquired by Triton in 2012; since then, it has gained a new management team, more vessels and had been participating in the consolidation process through the Crystal Nordic jointventure, which was sold separately in 2018.

“We would like to thank the management team, the employees and all other stakeholders for their contributions to Nordic Tankers’ development during Triton’s ownership. We view this as an appropriate time for a long-term industrial owner to continue developing the company further,” says Peder Prahl, director of the General Partner to the Triton fund.

Regular readers may recall that MOLCT was formed in December 2016 through the amalgamation of Tokyo Marine Asia, a subsidiary of Mitsui OSK Lines, and Milestone Chemical Tankers, a pool established in 2013 by Tokyo Marine and Jo Tankers.

OTHER DEALS Late in 2018, brokers reported on two further major deals. Firstly, Chemikalien Seetransport (CST) acquired Rigel Schiffahrts in November. CST, part of the Hamburg-based Krämer Group, has 18 product tankers, three chemical tankers and one bulk carrier in its fleet. Bremen-based Rigel specialises in the technical management of product and chemical tankers and has a fleet of 11 tankers.

Speaking at the time of the deal, Chistian Krämer, CST chairman, said: “We are pleased to be able to expand our tanker fleet with the acquisition of Rigel. Rigel has an excellent reputation for the technical management of product and chemical tankers, complementing our group very well.”

Rigel will continue to operate as an independent company, CST says. The company also says that it is aiming for “a sustained expansion and continued upgrading” of its own fleet over the next few years.

The second development, so far not completed, involves the sale by BW Group of its 13-strong chemical tanker fleet to Israeli owners Eastern Pacific Shipping and XT Shipping. The deal is said to be worth around $350m. BW Group currently operates its chemical tankers in Womar’s Stainless Tankers Inc pool, which has 30 ships of around 20,000 dwt each. The transaction is expected to see the vessels transfer to their new owner over the first half of 2019, at which point they will be entered in the Ace Quantum pool, which currently includes 23 similar tankers, many from Eastern Pacific.

The BW sale comes at the same time as it has restructured its activities in the product tanker sector, with BW Tankers merging with Hafnia Tankers and being renamed Hafnia, which remains part of the BW Group. HCB

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