Chemical Tanker Owner To Exit Fleet Within Eighteen Months

An Oslo-listed owner of stainless steel chemical tankers intends to sell its remaining six vessels within eighteen months, winding down a fleet valued at 101.8 million dollars against net debt of 35.5 million, leaving net assets of 70.5 million or about 5.22 dollars per share. The ships are 20,000 deadweight tonne units built to the international standard for carrying the more hazardous categories of chemical cargo.

Stainless steel chemical tankers are a specialised and expensive form of tonnage. Cargo tanks built from stainless steel rather than coated mild steel can carry aggressive chemicals that would destroy a coating, and they can be cleaned between cargoes to a standard that permits rapid switching between products. That capability costs substantially more to build and commands a premium in the freight market, but it narrows the pool of buyers when the time comes to sell.

An announced wind-down over a defined period is an unusual way to run a shipping company, and it amounts to a statement that the shares are worth less than the ships. When a listed owner trades below the net asset value of its fleet, management faces a choice between persuading the market otherwise and simply realising the assets and returning the proceeds. Choosing the second is a concession that the first is not achievable, at least at the scale the company operates.

Six vessels is close to the minimum viable size for a listed shipowner. The fixed costs of a stock market listing, audit, reporting and governance fall on a small revenue base, and the company lacks the scale to spread commercial and technical management efficiently. Chemical shipping in particular rewards size, because customers are industrial producers who prefer to contract with operators able to cover their whole trading pattern rather than assemble it from several small owners.

The timing of a disposal programme announced in advance is the awkward part. Buyers now know the seller is committed to exiting within a fixed window, which weakens the negotiating position on every subsequent sale. That cost is presumably judged acceptable against the benefit of telling shareholders exactly what will happen and when, but it means the realised proceeds may fall short of the stated fleet valuation, and the per-share figure should be read as an opening position rather than a promise.