ah, so you finally have seen the light. I'm not attacking TNK, I'm simply pointing out the facts. NAT too is vulnerable. FRO is vulnerable. What TNK has been doing, if you haven't noticed, is putting on quite dog & pony show to keep investors in the game, but they are horribly managed. It was sheer luck they got out of the VLCC event whole, they should never had made a mortgage to TMT - TMT is widely known as weak. The fact that the minds at TNK decided to make a loan to TMT should raise eyebrows about their ability to think correctly.
Recall how exciting you felt the days heading into earnings would be? You're fooled yourself into thinking this company has a future. It doesn't. There is nothing TNK can do but hope for a recovery in rates. This will only occur if there are fewer ships, worldwide. How does that occur? Scrapping and order slippage. Both beyond TNK's reach. By the way, I made 5 cents for this post. such an easy way to build wealth.
For all the b.s about "global rates", a cross Med voyage at $1,500 per day is pathetic. When shippers see $1,500 in the Med, any idea how they react? Full steam to the MEG, or anywhere else, to grab a more lucrative cargo. When when the arrive in port, guess what it does to "global rates"
SP went down because the forward freight agreements look ill. Evercore has nothing to lose in upgrading, they can just as easily reverse it in 90 days and nobody will care. The two downgrades were based on horrible spot rates. Everyone knows the duration of TNK's fixed charters. TNK is claiming they will let the charters roll off, which sounds like bravado, but the truth is they have no choice. And of those charters roll off with suez at 10K and afra at 7K, then they will not make enough to support the petty 3 cent dividend. TNK is actively seeking more ships. No sooner had they paid down their line of credit than they went ship hunting. Ridiculous, and ultimately, fatal.
Intertanko is reporting VLCC rates, if under full steam, below zero. That is not a typo. If slow steaming, 8,800 per day which of course is about 12,000 below operating cost. So why even sail? Because the shippers have no choice. These ships cannot sit idle because it creates a new maintenance cost. It will never happen, but just as FRO had suggested last year, if all shippers would scrap a few vessels, and not cheat, the entire sector would rebalance and they'd all have pricing power. You have to winder about TIL and those two gently used VLCCs.
No, a shipper cannot do it that quickly. And if spot rates are low, so will be the fixed charters. TNK is swinging for the fences, it's their only hope, and it's precisely why the parent pushed down all of the ships and the related debt bomb. TNK ran the variable dividend for a while, allowing shareholders a way out, and then they killed the dividend.
add to your proprietary research TNK sucking down a large chunk of their liquidity. They will access the line to buy at least two more ships, check the conf call. Also factor in they are sitting on nearly zero LIBOR.
Of the three options they laid out, I think selling assets, i.e. 2 suezmax ships, is the most likely event. This the this is the first time I have heard FRO discuss any type of plan to address their debt. I doubt they will go BK, because it will allow for distressed asset sales, and therefore depress rates as the new owners have the pricing advantage. This in turn would hurt would hurt the spin-off.
Unfortunately yes, and it's recorded in print, 4/17/2012. He used to talk of quarterly ticks to the dividend of 7.5 cents to the upside should spot rates move a mere 1,000 per day. Wow ... how far out of touch was he? At the time he suggested a 16% (!) dividend accretion, the annual dividend exceeded 60 (sixty) cents per share. At present, the dividend is 3 cents per quarter.
Again for illustrative purposes only, we have calculated cash available for distribution and dividend accretion on a per share basis based on a hypothetical 12-month average Suezmax and Aframax spot rates of $20,000 and $15,000 per day respectively. Based on the Pro Forma Teekay tankers employment, debt repayment, and dry-dock reserve pro funds, at these spot rates we would expect the transaction to be an illustrated 58% accretive to cash available to distribution per share and 16% accretive to dividends per share for the 12-month period ending June 30, 2013.
And for every $1,000 per day increase, to the average spot tanker rate for this period, we would expect our cash available for distribution and dividend to both increase by another approximately 7.5 cents per share.
In the bottom table we have also shown the cash dividend yield and total yield including debt principal repayments based on these illustrative spot rates and on our recent share price. As you can see the Pro Forma total yield is significantly higher when principal repayments are taken into consideration.
John Reardon: "Good morning, gentlemen and thanks for having the call and the great presentation. My – my questions already been answered but I wanted to stay on the call to congratulate you and tell you how pleased I am with the structure of this deal. And clearly investors are too, so congratulations and keep up the good work."
note - John's career at Dominick & Dominick was terminated soon thereafter, and TNKs stock traded sharply lower and never saw $6/share again. John was subsequently hired at a small investment advisory outside of Los Angleles, but hat too ended in a termination. John has since relocated to the SF Bay Area, and works for a boutique firm.
Ah, we're back to the secret payroll paranoia. Yeah, such a lucrative career in that. Is your eye "trained" in such things? To answer your question as to who will benefit. Parent TK certainly, they divested a bunch of debt and deteriorating ships. OK, gotta go .... have to "be careful". Yep, careful is the word.
And hey, isn't it great that Phillips66 might buy a shipping company? I mean sure, it's never happened before, but such a brilliant idea. Instead of making the shipper beg for a 12,000 Suexmax cargo, why not just buy the shipper and manage the fleet. Makes perfect sense. I will have to plug this into the proprietary research machine, but first, beer bongs for all! Go babe go, keep on chugging. Now belch. And now marry. Perfect!
didn't you refer to the beer shooting through the funnel and tube as a train when you were courting your "babe? ? You seem to like the metaphor.
Are you aware what happens to old, rusting freight trains? They end up getting cut apart with welding torches, compressed, sold as scrap, and ultimately melted. How fitting.
luke, very unlikely. Why? Because TNK's highest price was at/near $6 around the time the parent TK pushed down the ships and worse, the debt. The $12 range was achieved when TNK was much smaller, and had no such a huge debt burden. Further, shipping rates were at all time highs.
TNK is so easily analyzed in retrospect. At the time of the dropdown of ships, one of the analysts questioned the CEO, directly, on the dividend. On record, the CEO stated "up by 12%". Bear in mind the dividend was above 50 cents per year, thus 60 cents per year was the metric. It is now at 12 cents per year.
At the time of the dropdown os ships, liquidity was 400 million. Today? 300 million, and a weaker company.
Listen to the last cc, or get a transcript. The departing CEO is "cheering" for higher spot rates. TNK has zero control over its destiny, thus all that's left is "cheering". Sounds like some of the shareholders on this board.
TNK has a debt bomb, and with the parent TK, will not be able to refinance it. The debt was incurred when parent TK was backing it. That backing is now history. As far as the new CEO taking the job? No brainer, he had maxed out his career path at Phillips, and this was a bump in salary and big bump to ego. As far as choosing routes, etc.. no .... makes no difference. It's all a matter of too many ships on the water, and too many ship chasing the same cargo.
they're about to make your dream come true as they access the 300 million credit line, and push their "debt profile" into a vertical line
blue, I'm glad someone understands the nature of TNK. TK divested its fleet into daughter companies. I bought some TGP and yes, it's done very well. TNK was as you say, set up to push down the crude transport. It got an ugly piece out of TK, and got rid of some ugly debt as well. Since the dropdown, TNK has done nothing but tank. TK put a CPA at the helm to manage the bankruptcy, he mentioned himself that he was proud to have dodged BK. But, TNK is not out of the woods. We differ in that I can see TK allowing daughter TNK to default. A default would not hurt TK, and TIL will remain in the aftermath.
TNK has very little upside as long as spot rates meander along. At best, TNK is a $6-$7 stock, they simply do not have the scale to do anything more. Longs forget that TNK most important assets - the ships - rot. Once the ships get old, they require expensive surveys. The new CEO is inheriting a mess, and there is nothing he can do to influence the world market.