Overseas Shipholding Group plans to use a war chest of $1.8bn to pounce upon ?sizeable distressed fleets?, chief executive Morten Arntzen has pledged.
Overseas Shipholding Group plans to use a war chest of $1.8bn to pounce upon ?sizeable distressed fleets?, chief executive Morten Arntzen has pledged.
Addressing the company"s second quarter conference call this morning, Mr Arntzen said the company would be ?opportunistic but cautious? in how it spends its money, but the fact that it has any money at all when most other investors do not is a big plus.
?There are a lot of owners looking for bank finance, but this demand is way in excess of what is available from the banks themselves,? Mr Arntzen said. ?Banks are cutting back on lending, and jacking up interest rates.
?The fact is that we do have money, while many other [parties talking about opportunistic acquisitions] do not. We will use this money, only we will be very careful about it.?
The last time the tanker sector had such a fundamental collapse was in the 1970s, when almost 30% of the orderbook ended up being cancelled, Mr Arntzen recalled.
This history bodes well for several of the current tankers on orders either being cancelled, or being available at steep discounts. OSG is lying in wait to jump on the latter category, Mr Arntzen said.
?We have been reviewing distressed assets that came on the market recently, and there were very few bidders,? Mr Arntzen said, without providing details.
?However, the prices we saw were very attractive, by any standard.?
He said OSG already has adequate scale in the very large crude carrier, aframax, and panamax crude tanker sizes. It needs to scale up in suezmaxes, a segment it entered only last year. Still, the decision to add to its fleet through distressed asset acquisitions would be guided by prevailing realities, Mr Arntzen said.
OSG earlier this morning unveiled a second quarter net loss of $8.8m compared with a net profit of $86.9m for the same period a year ago. A steep fall in spot market earnings caused quarterly top line group revenues to fall by 33%, to $282.7m.
However, OSG said its cash in hand of $571m and undrawn bank loans amount to $1.8bn in all, which the company is positioning as its trump card while admitting that more market turmoil lies ahead.
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