Concordia Maritime Sells Half its Remaining Fleet
Financially troubled product tanker operator Concordia Maritime announced a further sale of vessels reducing its fleet by nearly half as they now moved to take advantage of improved vessel valuations in the strengthening market. Based in Sweden, Concordia faced with the prolonged weak market reached refinancing agreements in 2021 and since then has moved to sell vessels to strengthen its financial position.
The company confirmed market rumors announcing today that it has entered into an agreement for the sale of three of its 65,200 dwt product tankers, Stena Primorsk, Stena Performance, and Stena Provence. All the vessels were built in 2006 making them the oldest in the company’s remaining fleet and all are operating under long-term time charters. The company only said that the buyer is based in Europe and delivery is expected to take place during the fourth quarter of 2022. After the sales, the company’s fleet will have been reduced to just four similar product tankers.
"The sale of the vessels is made primarily to take advantage of the increased ship valuations,” said Erik Lewenhaupt, CEO of Concordia Maritime. The company is emphasizing that the sales are being made with the agreed price is significantly above the mid-2022 market valuations for the ships. “We are now seeing a massive interest in second-hand tonnage. The tanker market is cyclical and our business model includes both purchases and sales of vessels. Here, timing is absolutely crucial. Right now, we are getting paid very well for our oldest ships," he said.
This represents a significantly different position for Concordia versus the beginning of 2022 when they announced the sale of the Stena Perros to an African buyer. They said while the sale was improving liquidity it was below the vessel’s book value and previous valuation. Weeks later, the company said it was taking an approximately $25 million impairment charge writing down the value of its fleet to $183 million.
The sales continued in 2022 with the Stena President sold to a Greek buyer in March with the company again reporting that the low spot market continued to impact the valuation of the tankers. Despite the low valuations, they decided to sell the tanker to avoid dry-docking costs and strengthen the company's financial position. That transaction was followed by two further sales, the Stena Supreme and the Stena Paris, bringing to four the number of vessels sold previously in 2022 before the three sales announced today. Two additional vessels were also sold in 2021.
As with the previous sales, except for the Stena Supreme, the surplus from the latest sales is used to pay off bank debt under the terms of the refinancing agreements. One of the oldest shipping companies, tracing its origins to 1887, Concordia was hurt by the prolonged downturn in the market despite limiting its focus to the transportation of refined oil products, chemicals, and vegetable oils.