Teekay Tankers - Strengthening the balance sheet is priority
Aims to strengthen balance sheetTeekay Tankers (NYSE: TNK) balance sheet has improved dramatically in the past three quarters. Not only did the company reduce the balance sheet debt from USD 1,080mn in 3Q19 to USD 725mn in 2Q20 but the management also intends to improve the company’s balance sheet for the remainder of 2020. Over the past 12 months, the company generated USD 350mn in free cash flow and received
USD 109mn in proceeds from asset sales, which have transformed TNK’s balance sheet and created a strong financial platform for the company. Currently the company has nearly 23% (compared to 2% in 2Q19) of the fleet on fixed rate contracts at an average rate of USD 39,100pd. The increase in fixed rate contracts at levels well above the current spot market coupled with the substantial decline in debt will
lower the free cash flow breakeven of TNK’s spot fleet over the next 12 months to ~USD 12,700pd. Even if the spot rates reach this level, which is highly unlikely in the current environment, TNK will be able to generate positive free cash flow. Given the company’s sole focus on improving the balance sheet it should improve even further in the coming quarters. In addition, we expect the company to continue to
focus on debt repayments to eliminate expensive debt at least in 2020 which will further enhance TNK’s long-term financial flexibility and will increase its resilience to any potential medium-term market weakness in the backdrop of the COVID-19 pandemic.
Drewry, since 1970, has been providing research and advisory services on the global Maritime and Shipping industries and has established itself as a firm with long history of credibility and expertise on various aspects of the maritime industry. Leveraging this in-depth market knowledge and understanding, we have extended our offering to deliver a unique, independent investment research service on globally listed companies operating in the maritime industry. Under the brand Drewry Maritime Equity Research and in accordance with the FCA, DMER led by Rahul Kapoor and his team, offers fundamental analysis on listed companies. DMER analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. By combining these market-leading resources with seasoned sector expertise and commercial awareness, we are able to offer a highly differentiated and comprehensive investment research service to prospective investors in listed maritime companies. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.