Nicolas Busch has stepped down as chief executive of Navig8 Chemical Tankers one day after TradeWinds reported the owner is facing behind-the-scenes turmoil.
The move comes amid investor discontent with management and the failure of Interline 9001 coatings on some vessels in its fleet.
In recent weeks, major backer Oaktree Capital Management has taken steps to replace chief executive Busch with tanker veteran Jens Gronning, who has been a member of the company’s board, sources had said.
Gronning to step in
That was confirmed on Tuesday as Navig8 Chemical Tankers said in a release that Gronning would step in as chief executive, with Torben Bager as the new chief financial officer.
We are pleased to welcome Jens Gronning as the new CEO of Navig8 Chemical Tankers.
Navig8 Chemical Tankers board
Navig8 said Busch, Paul Stevens and David Wiswell had resigned their management positions. Sources previously had indicated a struggle for power between Oaktree and Navig8, which retains management contracts on the 32-tanker fleet.
The board said: “We are pleased to welcome Jens Gronning as the new CEO of Navig8 Chemical Tankers.
"Jens brings an extensive background in the shipping industry and deep experience with chemical and product tankers."
It added: "Together with our new CFO Torben Bager, who has significant knowledge of the maritime finance space from years of working with leading product tanker companies, Jens will lead a new management team that will propel our business forward.
"We thank Nicolas, Paul and David for their many contributions to the company’s development and look forward to continuing to work together with them in their roles at Navig8, a significant shareholder in the company.”
The overall performance of the loss-making company has been an issue, and the emergence of failures of the Interline 9001 coatings on a number of tankers could make things worse, the sources indicated.
Problems first became known in the market early this year and have led some charterers to reject vessels, according to four sources in tanker and chemical markets.
The reported defects could present a major challenge, as sources indicated it could cost $2.5m to $4.5m, plus significant off-hire time, to repair each tanker.
Busch and Navig8 Group chairman Gary Brocklesby declined to comment.
US-based Oaktree has been Navig8 Chemicals main backer since the company launched in 2013 and registered on Oslo’s over-the-counter exchange in August 2014.
Another significant investor, Blue Mountain Capital, is said to have recently explored selling its stock.
The fleet includes 18 Interline 9001-coated chemical tankers of 37,295 dwt, eight stainless-steel chemical tankers of 25,000 dwt, four Interline 9001-coated chemical tankers of 49,000 dwt and two epoxy-coated chemical tankers of 49,090 dwt.
Navig8 has financed 19 of the tankers with sale-and-leaseback deals.
The company lost $25.2m, or $0.65 per share, in 2018, down from a loss of $13.4m, or $0.35 per share, in 2017.
As Navig8 was amassing its newbuilding fleet, it pitched the Interline 9001 coatings as a selling point to investors.
“We anticipate that our focus on modern, large chemical tankers with specialised Interline 9001 and stainless-steel coatings will provide a significant competitive advantage as the shift to long-haul chemical trades continues,” Busch said at the time.
In promotional materials, AkzoNobel’s Interline 9001 coatings are said to tackle absorption from aggressive cargoes, such as methanol, acetone and ethylene glycol. Absorption can result in cargo-cycling restrictions, increased risk of subsequent contamination and time-consuming washing of tanks.
Navig8 cited significant efficiencies and cost savings from the coatings.
But when coatings fail, there can be cracks or blisters that allow residual traces of a cargo to collect, thus risking the contamination of a subsequent liquid cargo.
While the number of vessels affected could not be determined, one shipbroker told TradeWinds he is familiar with charterer rejections and has discussed the issue informally with Navig8 staff, who confirmed the problem.
With an already strained financial position, the costs connected with fixing such defects are another burden on Navig8 Chemical, sources suggest.
Oaktree ultimately made the rumoured move to install Gronning, who has been a Navig8 Chemicals board member since January and has had previous stints as chief executive of Team Tankers (2013 to 2015) and United Arab Chemical Carriers (2008 to 2013).
However, with the tankers still under Navig8 management and in Navig8 pools, sources have questioned just how smooth a transition of control might be.