Of the vessels under those fixed contracts, 40% have the ability to capture market upswings through pre-agreed profit sharing provisions which together with the vessels operating in pure spot contracts, empower the Company with significant cash generating muscle when rates firm, expected in mid to late 2018.
TEN continues to position its fleet to safeguard cashflows to meet all 65 vessels’ costs and expenses, while having a large enough complement of spot and profit-share chartered vessels have the flexibility to take advantage of rate changes and evolving trading patterns.
Management will continue to adapt its chartering policy to conform to these norms and adjust the fleet’s employment profile accordingly, but always cognizant of its stated strategy of smoothing market cyclicality while offering visibility to its investors.
On December 21, 2017 TEN sold the 2005-built suezmax tankers, Euronike and Eurochampion 2004 to third-party entities, for $65.2 million and chartered them back on a bareboat basis for five years as part of a sale and leaseback deal. The sale resulted in a non-cash loss of $3.9 million, but related debt of $36.0 million was prepaid leaving $15.6 million of free cash immediately available.
Following internal impairment tests, our oldest vessels, the 1998-built VLCC Millennium and the 2002-built suezmax Silia T, were determined to have carrying values in excess of fair value as assessed by independent brokers. Consequently, an impairment charge of $8.9 million was incurred.
TEN generated gross revenues of $134.5 million in the fourth quarter of 2017, a 2.9% increase over the $130.7 million revenue earned in the fourth quarter of 2016, the increase being mainly due to the addition of 7.4 modern vessels, on average, between the two fourth quarters.
Revenues net of voyage expenses (bunker, port expenses and commissions) for the same period were $106.6 million, a 7.6% increase from the same quarter of 2016 while total voyage expenses declined by 11.8% as more of the fleet’s vessels were placed under time-charters.