The last few years have been hectic for chemical tanker carrier Team Tankers, formerly Eitzen Chemical, which in late January completed its debt restructuring. A process that was launched in January 2012 when Aage Figenskov was appointed CEO of the Eitzen Group, and which Jens Grønning became part of in the winter 2013 when he returned to the carrier as CEO.
In July, Grønning’s designated tasks at the carrier came to an end, as Team Tankers opted to part ways with him, a move that according to ShippingWatch’s sources was not his own wish. On September 1st, Dutch Hans Feringa will take over as CEO of Team Tankers, and chairman and interim CEO Morten Arntzen stresses to ShippingWatch that this replacement has nothing to do with Jens Grønning doing anything wrong. On the contrary, he has elevated the carrier through a comprehensive restructuring:
"I feel that Jens has done a good job. He is a highly skilled shipping man. The company has been through a long restructuring period and is now fully recapitalized. The company has new owners, a new board of directors, new opportunities, and it was time for a change, but only if we could the right person for the job," he says.
The best man for the job
According to Morten Arntzen, who was appointed chairman of Team Tankers in April, Hans Feringa is the best suited man to drive the carrier forward after spending decades with “the biggest job in the chemical tanker industry” as head of Stolt-Nielsen’s chemical fleet. Furthermore, it is not a rare occurrence that CEOs are replaced when a company welcomes new investors and a new board.
In relation to the restructuring, the carrier got a series of new major stakeholders, including especially British and US-based investment group such as Barclays Bank, Angelo Gordon & Company, Solus Alternative Asset Management, GLG Partners and Cerebrus European Investments. A source of good stability for the carrier, says Morten Arntzen.
"Our current group of investors are private equity funds with deep pockets and with the ability and willingness to stick with the investment for the time it takes to produce returns. If we find solid opportunities for the company, we now have new stakeholders with capacity to help the company," he says.
The financial restructuring of the new Team Tankers International was finalized in early 2015, transforming a negative equity base of USD 295.4 million in late 2014 into a new share capital of USD 475.8 million in March this year. And the carrier’s long-term debt has been reduced from close to USD 770 million to around USD 66 million. This means that the carrier now has one of the lowest debt levels in the industry, stated the company when announcing the completed deal.
It was high time to settle a deal for the carrier, and the long streak of deficits was broken in the first three months of 2015, when Team Tankers delivered a modest net profit of USD 1.7 million and an operating profit (EBITDA) of USD 14.3 million.
"The numbers weren’t great, but they were good. That was the first quarter after the company was restructured. Even though the company has been through a very long restructuring period, it’s been managed well. The company is fairly efficient, doesn't have a large and expensive operation, we’ve outsourced technical management, and we’ve managed to keep most of our commercial staff. So the result from the first quarter illustrates a company that is competitive," says Morten Arntzen.
"Do I believe that the result can be higher, and that the market can be better, yes, but it’s good to leave the red figures behind."
He believes that the timing of the restructuring was near perfect, as the carrier can start over with a transformed balance at a time when the market is showing signs of improvement.
"The timing looks good from where I’m standing. The market is somewhere between okay and good, I’d say. One should probably be cautiously optimistic about the market. A large number of new buildings are entering the market for the bigger vessels over the next few years, but the orderbook is fairly healthy compared to other sectors. Demand has been relatively sound. So we finished the restructuring at a good point in time."
In the first quarter the carrier’s fleet achieved average TCE earnings of USD 12,507 per day, a 13 percent improvement from the previous quarter. Morten Arntzen declines to comment on expectations for the full year 2015, but in the first quarter interim report the carrier projects positive developments for TCE earnings in the second quarter.
Growing through acquisitions
The carrier’s fleet currently counts 44 chemical tanker vessels in the 3,000 to 46,000 dwt range, of which Team Tankers owns 33. And the carrier is looking to grow, most likely by acquiring vessels or fleets already in the water, explains Morten Arntzen.
"Asset values for secondhand chemical tankers are reasonable. Ships on the water today are generating a positive cash flow, and prospects here are looking good. So investments i ships on the water are looking better, and newbuildings won’t be delivered until two or three years from now. We’d like to get the ships before that."
Morten Arntzen has worked in shipping for more than 30 years, and in the years 2004 to 2013 he served as CEO of tanker carrier OSG, which i 2014 exited the US Chapter 11 following a corporate restructuring. He has also served on boards of directors at various companies, including Chiquita Brands International, Royal Caribbean Cruise Line, Indian shipping company Essar Shipping and Norwegian IM Skaugen.
"So I’m very familiar with and have a solid understanding of what good management and governance entails, and I've been there good and bad markets and I’ve been involved in significant acquisition and growth activities. I’ve also spent many years in the capital markets, so I can draw on those experiences to help the company while we enter the next stage."