The Endo Group, a new bond-financed venture based in Malta, has acquired its first tanker and is looking to expand further.
Set up by the local Frendo family, Endo offers a rare example of an operation that beneficially owns, manages and commercially operates vessels out of the Mediterranean island. Malta’s primary role in the industry so far has been as one of the world’s biggest ship registration hubs.
Group subsidiary Endo Tankers has emerged as the buyer of the 46,800-dwt MR product tanker Team Tapatio (built 2003), which has been renamed Endo Breeze.
The ship was sold last month, when Team Tankers announced it had received $12.5m for the Brodotrogir-built vessel from a party it did not identify. The acquisition price included a three-year time charter back to Team Tankers, reportedly at $13,900 per day.
Endo Tankers raised the funds to purchase the Team Tapatio through a €13.5m ($15.3m) bond sale completed in April. The unsecured, 10-year bonds carry a 4.5% coupon, payable in annual instalments. They are trading on the Malta Stock Exchange.
According to the bond sale prospectus published in March, Endo said it was planning to spend about €8.4m on an MR tanker. The remaining €4.2m was earmarked for the acquisition of a smaller oil carrier with a capacity of between 5,000 dwt and 8,000 dwt.
Bond sale proceeds would be augmented by about €2.7m of its own funds, Endo added in the prospectus. In a statement after the acquisition of the Team Tapatio, the company said it remained committed to its plans to acquire the smaller tanker.
Endo’s bond listing reflects the upbeat mood in the tanker market, especially for product carriers, which are expected to find better markets as IMO sulphur cap regulations kick in next year.
“The projection for 2019 onwards is a significant increase in tanker freight market followed by increased asset prices,” Endo said in the prospectus.
“This point in the cycle is traditionally the point at which secondhand tonnage is purchased, which becomes available as larger owners also take advantage of relatively low newbuilding costs to renew their fleets.”
Endo Group was set up in 2018 after the Palm Group, the Frendo family’s original venture, restructured.
The Palm Group has been active in shipping for several years, albeit with smaller tankers than the Team Tapatio. In 2016, it bought the 599-dwt Mumtaz (built 2002), which it passed on to Endo Tankers in an internal group deal last November valued at €1.8m.
Before that, from 2004 to 2013, the Palm Group co-owned several vessels alongside third parties.
In 2014, it became directly involved in the chartering of bunkering vessels through Malta and Cyprus-based International Fuel Suppliers.
The Palm Group was set up in 1984 by Frederick Frendo. His sons, Christopher and Nicholas, now serve as Endo executive directors after joining him in the late 1990s.