With the strong rebound in the tanker markets further enhanced by the disruptions in the Red Sea, Danish operator TORM is moving to further strengthen its position and continue the consolidation of the market. The company has been working aggressively using a unique structure for the deals combining cash and stock to grow its fleet.
TORM, which traces its origins to 1889, reports with the newest acquisition it will grow its fleet to 96 vessels by the end of 2024. The company calls itself one of the world’s largest owners and operators of product tankers that transport refined oil products and chemicals and operates a fleet specifically configured to move energy and clean petroleum products from refineries to their customers. With a focus on the LR2, LR1, and MR vessel classes, the fleet ranges in size between 45,000 – 114,000 dwt.
The company has agreed to acquire eight second-hand MR vessels from unnamed sellers. The vessels were built at Hyundai Mipo Dockyard in 2014-2015. Six of the vessels have been fitted with scrubbers. The total consideration is approximately $340 million with the vessels expected to be delivered during Q3 2024 and Q4 2024.
TORM will pay $238 million in cash for the acquisition through traditional bank financing. The other portion of the transaction is 2.65 million shares. The stock closed today at $34.74 per share giving the cash portion a value of just over $92 million based on today’s stock price.
“We are pleased to once more announce a partially share-based transaction to acquire vessels,” said Jacob Meldgaard, Executive Director and CEO of TORM. “Since 2021, TORM has utilized partially share-based transactions to expand the fleet, even before the product tankers market took off.”
During 2023 TORM acquired 22 newer eco vessels and divested 11 of its oldest vessels, and in the first quarter of 2024, TORM acquired one additional LR2 vessel. TORM acquired nine LR2, seven LR1 vessels, and seven MR vessels, although it recently sold one MR vessel (TORM Eric, built in 2006 and 49,999 dwt) which is now the Elim Grace.
TORM is benefiting from the strength of the market. The company has forecast earnings between $800 million and $1 billion for 2024 (EBITDA). In 2023, the company realized a historically high EBITDA of $848 million, an increase of 14 percent.
