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Tanker Investments switches strategy away from asset sales

Tanker Investments switches strategy away from asset sales
Teekay’s Tanker Investment Ltd is switching its strategy from asset play and selling its vessels to a longer term operating one due to current low values for tankers.

Reporting a fall in Q2 net income to $12.6m compared to $16.7m in the same period a year earlier Tanker Investments ceo William Hung noted that tanker rates had been strong for the first half of 2016 but had weakened into the summer months. The softening of the market had combined with tighter availability of credit in shipping to reduce vessel values by around 20% year-to-date.

The result is that Tanker Investments is switching its strategy away from asset sales. “We do not believe the current market value of our fleet, or our equity value, is representative of future cash flows we expect to generate by trading our vessels, and with this in mind, Tanker Investments’ is now pivoting from a strategy focused on selling our fleet, to an operating strategy as we ride out the softer part of this market cycle,” Hung said.

The company plans to return to an asset sale strategy when tanker values improve but in the meantime will pursue a time charter out strategy.

“We believe Tanker Investments is well-positioned to weather what we expect to be a period of weaker rates than what we have seen in the past 24 months and move forward as a tanker company with a strong financial position and competitive break-even levels, and we remain committed to returning excess capital to shareholders via share repurchases and/or dividends,” Hung added.

Tanker Investments sold two vessels in the first quarter of the year the Hemsedal Spirit and Voss Spirit.

The company has fleet of 10 suezmaxes and eight aframaxes.