International Seaways positive on renewal after 'finding voice'

Lois Zabrocky talks to TradeWinds about acquisitions and investment on sidelines of Capital Link Forum at London International Shipping Week

Lois Zabrocky believes International Seaways has now established its own identity after separating from Overseas Shipholding Group (OSG) last year.

And the president and chief executive is confident of seeking out additional tankers to buy at a time of limited sale-and-purchase (S&P) activity.

The New York tanker owner has been targeting long-term investors while replenishing its fleet of crude and products tankers, Zabrocky told TradeWinds in an interview.

“We are feeling like International Seaways is finding its own voice and its own footing in the marketplace,” she said. “We have spent a lot of time speaking to investors and potential investors and really establishing International Seaways in the market.

“We have been successful in sitting down, relaying and getting our story understood with some longer-term value investors. That is a path that we really want to continue on.”

One of the new investors to back the company is Cobas Asset Management, which disclosed a holding of just more than 5% last month. Other major shareholders include Caxton International, Paulson & Co and Cyrus Capital Partners, according to Securities and Exchange Commission filings.

While the name is new, the fleet is familiar, with all but two of the company’s 50-plus owned tankers transferred to the International Seaways platform from OSG in December last year.

Some older ships have been sold since the division and the company’s only acquisition has been the July purchase of two 158,000-dwt tankers under construction at Hyundai Samho Heavy Industries. As TradeWinds has reported, the pair were first been ordered by Germany's Johann Blumenthal.

“In general, we would look for vessels that are on the water,” Zabrocky said.

“The vessels we bought were opportunistic,” she added, noting the deal reopened a relationship with a yard that had built up to 50 vessels for OSG in the past.

While liquidity in the S&P market for modern crude tankers has been limited this year, Zabrocky believes further opportunities will come along.

“People will still look opportunistically to sell assets for whatever reason and we will be patient,” she said.

Less well publicised has been the renewal of time charters on the products side of the business.

“We definitely like to remain diversified,” the executive said. “We think there is wisdom in that and it gives us a bit of balance and more opportunity. I think there are ships out there to be bought — quality vessels.”

The use of stock as a currency in S&P transactions has been a feature of multiple deals this year and is also an option for International Seaways.

“It’s the kind of thing we would defiantly take a look at but we don’t want to count on,” Zabrocky said.

Unlike some peers, International Seaways has additional cash flowing from its floating storage and offloading joint venture with Euronav, which provides some stability in today’s tricky market.

Zabrocky says underlying demand remains strong for tankers and rates will start to improve.

“We are still in a situation of drawing down inventories, so we are still paying the price of the run-up we enjoyed previously,” she said.

“Q4 [the fourth quarter] will, I believe, be better than Q3 — but nothing stellar. It will take us some time, on the crude side in particular, into 2018 to see a recovery.

"In the MRs [medium range tankers], I have some belief we could start to see a little bit of strengthening before then.”