With a capital expansion securing USD 100 million in fresh equity, the acquisition opportunities are growing at carrier Torm, said the carrier's Executive Director Jacob Meldgaard in a telephone conference when explaining the details of the capital expansion which was executed Tuesday morning.
"Attracting new investors is and has been one of our strategic milestones. We want the Torm share to be more liquid while at the same time we want to maintain our strategic and financial flexibility to act in the company," Meldgaard said, adding:
I personally think that this will naturally enable us to join any discussion and enter dialogue about consolidation.
"This capital expansion means that we will have opportunities to invest in attractive new vessels while keeping ammunition for growth, if other attractive opportunities arise."
The capital expansion was settled after a sale of 11.9 million new shares which were sold to various international investors at a discount of 4.9 percent from the closing price Monday. The majority of the shares – around 69 percent of the new shares – were acquired by the main shareholder Oaktree Capital Management via company OCM Njord Holdings.
The Oaktree company bought 8.2 million of the total 11.92 million new shares.
In product tanker, there is general talks of a large-scale acquisition wave where vessels in the sector will be spread across fewer and fewer owners over coming years.
In response to the question of whether the capital injection will increase Torm's opportunities to consolidate via acquisitions, Meldgaard says:
"We would love to participate in serious discussions which will happen in the future about further consolidation. And I personally think that this will naturally enable us to join any discussion and enter dialogue about consolidation."
"Of course, capital reserves of the size we're talking here is unique in the industry, and of course we must be careful and watch out so that we can enter this type of dialogue."
Sufficient for now
The new funds at Torm secure the carrier the necesary wiggle room to carry out the plans which CEO Meldgaard is currently working on.
For this reason, there is no need at the moment for Torm to get back in the market and seek money over coming years.
"For what we have planned now, this is what we need," Meldgaard said at the teleconference Tuesday.
However, it cannot be ruled out that things will happen in the future which will require more money.
"I don't know what will happen later. Of course, more things can pop up where we'll need more capital for growth," said Meldgaard.
The plan to begin with is for the fresh capital to be spent expanding the fleet via acquisitions of new vessels as well as other corporate purposes which the Torm director says could include buying more vessels which are already in operation.
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He also mentions that it is crucial for Torm that the carrier can give the new investors – including main shareholder Oaktree Capital Management which has acquired 69 percent of the new shares – a reward for their trust in the form of a rising share price.
But this will also require positive market conditions if it is to succeed.
"Of course, we must do our part to make sure that our operational performance and capital structure is good. We must demonstrate to new investors that we are worth their trust," said Meldgaard
"But we also need a market for it. Regardless of how the market is, I naturally expect that we will do well, but it also takes a positive market if we're to make progress in the share," he continued.
After the capital expansion, Oaktree Capital now has an ownership stake in Torm of around 65 percent relative to the previous 63.5 percent.
Meldgaard declines to state how many investors and where they are from. However, he indicated that they are investors from the EU, the UK and the US.
English Edit: Gretchen Deverell Pedersen