D’Amico mulling further leasebacks, executive says

Logistics Tankers

D’Amico International Shipping is likely to look at additional leaseback transactions that would continue an active period of deal-making for the company, its chief financial officer says.

Milan-listed D’Amico has raised cash during the past 12 months via a sale-and-leasebacks for some modern tonnage and a mixture of leasebacks and charter-backs across four older tankers.

“There was a funding need that we had to meet. We are almost there,” Carlos Balestra Di Mottola told TradeWinds during an interview in Vietnam as the company’s first three LR1s were named at Hyundai Vinashin Shipyard today.

“There is a residual funding need so we might have to pursue a few other transactions,” Di Mottola added. “We still have the fifth older vessel that we want to sell and then maybe one younger vessel.”

Monetizing younger tonnage

He explains D’Amico entered pure leasing deals for some of its younger ships, increasing leverage and generating cash up front.

“On the young vessels we could not expect traditional banks to provide us such terms,” Di Mottola said. “We are financing 100% of the vessel value with these transactions.

“It was a way of monetizing the vessel without selling out because the younger vessels we want to keep in our fleet. They are part of the newbuilding programme.”

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D’Amico International Shipping named three LR1 newbuildings at Hyundai Vinashin Shipyard.
 Photo: Andy Pierce

Three older tankers have also been sold in charter-back transactions, while a fourth was involved in a leaseback deal.

“For the older vessels the potential buyers out there probably do not have access to bank financing, therefore the only real buyers out there for these vessels are these funds now,” he said.

Taking a different path

Unlike some of its peers, D’Amico decided against entering such deals with Chinese companies, opting instead for partners in countries including Japan and Norway.

“We looked at a lot of thing before actually entering a transaction,” the executive said.

“That paid off as we managed to find the right counter-parties. The costs of funds for us were much more attractive than the first ones we looked at.

“Thanks to D’Amico’s very strong position in Japan that allowed us to secure very attractive terms that are not there for everyone.”

Discussions with Chinese leasing firms also took place, but their preference for larger transactions, in contrast to the gradual approach the Italian owner preferred, led to it looking elsewhere, Di Mottola explains.

“[The Chinese] are also slightly more expensive than the Japanese investors so the terms we managed to find were a little easier let’s say,” he added.

“And we also managed to finance 100% of the vessel value on the younger vessel and that would not have been possible with the Chinese investors. We did also talk to them but the terms were not as attractive.”

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 Photo: Andy Pierce

Di Mottola was talking to TradeWinds ahead of a naming ceremony at Hyundai Vinashin today for D’Amico’s first three LR1s, ordered for a combined $131m.

The 75,000-dwt Cielo Bianco, Cielo Rosso and Cielo di Rotterdam (pictured above) form part of a 22 vessel newbuilding project involving Hyundai yards in Korea and Vietnam.

“Vietnam is becoming the shipbuilding hub of our fleet,” said chairman Paolo D’Amico.

“Our partnership with Hyundai Vinashin allows us to work in close cooperation with the yard, adopting innovative choices to build vessels with outstanding quality, versatility and the energy-efficiency requested by our customers, including oil majors.”

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Andy Pierce