TK 'bankers' safe?

Two VLCCs in the fleet of Taiwanese shipowner Today Makes Tomorrow that received unconventional financing from Teekay Tankers three years ago are not among the 17 single-vessel-owning companies included in TMT's Chapter 11 bankruptcy filing.
Teekay chief executive Peter Evensen

Teekay chief executive Peter Evensen

The absence of the very large crude carriers A Elephant and E Elephant (both of 317,000 dwt and built 2010) from the Houston filing would appear to suggest that Teekay Tankers' security interest in the vessels will not be threatened by the reorganisation.

A request for comment to Vancouver-based Teekay was not immediately returned today.

Teekay has never officially confirmed that the Asian shipowner it had financed was Nobu Su's TMT, though the identity of its counterparty was quickly evident in the market.

However, with TMT's troubles deepening, Teekay managers were forced to confront the situation on their last quarterly earnings call as analysts pressed questions about the company's steps to protect its interests.

Teekay Tankers in 2010 took the novel approach of investing $115m in ship mortgages on the two vessels, using a revolving credit facility carrying a low interest rate of around 1.1% to get back notes with a 9% rate and 10% yield. Teekay pocketed a fat profit on the spread, saying it had made $30m as of May.

However, TMT defaulted on payments earlier this year amid mounting financial troubles. Teekay Tankers chief executive Bruce Chan said in May that the company had assumed commercial and technical management on the pair to protect its investment. Chan flagged plans to sell them, but said Teekay would be in no rush.

“By taking control of the chartering and having  Teekay crews operating these vessels, we’ll be in a better position to work with the borrower to realize the full value of our investment,” Chan said then.

Despite the stumble, Teekay Tankers projected there is sufficient value to recoup its principal plus all scheduled interest installments prior to the loans’ scheduled expiry in July, Chan said.

Chan did not use the word "foreclose," which Teekay had done in an April securities filing.

Had the vessels been included in the Chapter 11 filing, it might have raised questions whether Teekay could continue with such steps under the court's protection of the debtor.

Related
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    Several companies in the umbrella of Nobu Su-led Today Makes Tomorrow (TMT) have filed for Chapter 11 bankruptcy protection in Houston.

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