Torm hunts waiver

Torm has expressed confidence at achieving a waiver on debt of over $1.6bn from its traditional bank and hedge fund lenders.

Copenhagen-listed Torm says it is expected to breach covenants on its single debt bundle come the close of the second quarter.

“Torm has already approached the lenders and expects to obtain a covenant waiver in advance of the test,” it said in its first quarter report.

Torm has total debt of $1.66bn at the end of March, of which around one third now sits in the hands of hedge funds following purchases in the secondary loan market.

Its confident stance on the covenants negotiations came as it reported a heavy first quarter loss stemming from previously announced impairments on the sale of 13 tankers to Oaktree Capital.

Torm recorded a pre-tax loss of $222m for the first quarter, of which $195m resulted from the non-cash charge on the Oaktree sale.

Oaktree has purchased 22 Torm vessels since its 2012 restructuring after lenders exercised options to sell those ships.

All remain under technical and commercial management of the Copenhagen-based company. Torm manages 25 Oaktree MRs in total.

Core operating profit for the quarter reached $21m, down from the $36m of a year ago as the seasonal first quarter spike disappointed this time.

Torm’s non-eco MRs earned $15,207 per day in the quarter, which is only just shy of the $15,522 daily collected by Ardmore’s eco vessels in the same period.

For the full year Torm is predicting core operating profit of $70m to $100m with a pre-tax loss of $260m to $290m.

The forecasts mark a deterioration from the company’s previous guidance.

When the Oaktree sale was announced a couple of months ago, Torm projected pre-tax losses of $230m to $280m.