Concordia: New term sheet should solve liquidity issues - ABG

We expect Q2’21e EBITDA of SEK 9m
Tanker rates continue to remain under pressure
Debt amortisation and divestments ahead

Suezmax spot rates in Q2’21 averaged ~USD 5.2kpd (down 43% q-o-q and down 89% y-o-y), below the CBE of ~USD 25kpd and opex of ~USD 9kpd. MR tankers were at ~USD 6.9kpd per day (up 9% q-o-q and down 74% y-o-y), beneath their CBE of ~USD 17kpd and opex of ~USD 8.5kpd. In our estimates, we have reduced our expected CCOR Suezmax tanker and product tanker Q2’21 realised rates to USD 13kpd (USD 15kpd) and USD 13kpd (USD 15kpd), respectively. This compares to Suezmax and product tanker Q2’21 bookings of USD 14.5kpd and USD 15.4kpd, respectively, for 40% and 44% of available days. The reason for our lower estimates is that while CCOR tends to outperform the market, especially at depressed levels, since the Q1’21 report in late April, Suezmax and MR spot rates have averaged USD 3.2kpd and USD 6.6kpd; our new estimates imply achieved rates of ~USD 12kpd and ~USD 11kpd for Suezmaxes and product tankers, respectively. As such, we reduce our Q2’21e EBITDA to SEK 9m (SEK 32m).

To resolve its immediate lack of liquidity, CCOR, in agreement with its main shareholder, Stena, and some of its banks, has entered into a new term sheet, which will mature in Q4’24. Initially this will consist of new covenant waivers and part deferments of amortisation until the loans from the banks are finalised, whilst Stena will TC-in the entire 10-ship PMAX fleet and provide a USD 10m guarantee on behalf of CCOR.

The TC rate will be USD 15.5kpd for 5yrs, enough to cover opex, dry dock, and debt service, while any earnings in excess of this will be shared 50-50 with Stena. This explains our 2022e and 2023e estimate revisions. Any additional profit can only be used for the aforementioned uses during the term sheet’s tenure; however, CCOR retains the right to divest part or all of its fleet. CCOR will therefore now focus on amortising debt, but it also says it aims to sell vessels so that it can improve its liquidity and provide strategic flexibility. Any future dividends will also be conditional on the consent of the banks.

Länk till analysen i sin helhet: https://www.introduce.se/foretag/concordia-maritime/Equity-research/2021/8/concordia-maritime---new-term-sheet-should-solve-liquidity-issues/