New York-listed tanker company Frontline Ltd. (FRO) is backing its 20% acquisition of scrubber manufacturer Feen Marine Scrubbers Inc. (FMSI).
The development allows the company to secure building capacity for scrubbers, while positioning itself ahead of IMO 2020, a period when the 0.5% sulphur cap for marine fuel takes effect.
FRO, meanwhile, posted adjusted net loss of USD $28 million in the second quarter (Q2) of 2018 representing a 100% increase from adjusted net loss of USD $14 million in Q1 2018.
Total operating revenues in Q2 2018 was USD $73 million, a 9.9% decrease from revenue of USD $81 million in the similar quarter last year.
“Despite the current weak rate environment, we believe cyclical changes are underway and as a result we are more optimistic on tanker rates,” says Robert Hvide Macleod, CEO of Frontline Management AS.
“The factors supporting our expectation include continued scrapping ahead of 2020 offsetting new deliveries and increased demand for seaborne trade as a result of expected growth in both US exports and OPEC production of crude oil.
Additionally, crude oil demand remains strong, and the end of the inventory draw cycle seems increasingly inevitable.
“We are actively positioning for IMO 2020 and we are pleased that we have been able to secure ownership in a scrubber producer and capacity to buy a large volume of scrubbers at a very competitive price.
“We will continue to look for the right investment opportunities to further position the Company for the expected recovery.”
FRO in late July entered into an Equity Distribution Agreement with Morgan Stanley & Co. LLC for the offer and sale of up to $100.0 million of common shares of Frontline to support purchase of scrubbers.
Related: Frontline acquires 20% stake in Feen Marine Scrubbers
Related: World’s largest tanker company sells shares to fund scrubber ambition
Photo credit: Feen Marine Scrubbers
Published: 23 August, 2018
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