Torm Orders LR2 Newbuilds from GSI

Danish product tanker company TORM announced on Thursday it has entered into a deal to purchase a pair of LR2 tankers from Chinese state-owned builder Guangzhou Shipyard International (GSI) for expected delivery in the fourth quarter of 2021.

TORM, which currently has 29 GSI vessels in its fleet, said the newbuilds will be constructed "to optimize trading and fuel- efficiency" and will be equipped with scrubbers. The vessels will also be prepared for a potential later dual-fuel installation.

TORM Executive Director Jacob Meldgaard said the company utilized its long-term relationship with GSI to enter into an agreement to purchase the vessels.

"These newbuildings will be financed through a flexible and attractive sale and leaseback structure including a repurchase option at the end of the lease period,” Meldgaard said.

TORM said it expects to have total capex relating to the two vessels of $95 million including extra costs related to its design requirements and scrubber installations.

The company said it has secured financing of $76 million with an international financial institution, to be structured as a 10-year sale and leaseback agreement with purchase options during the lease period and at maturity providing TORM with maximum capital commitment flexibility.

In addition, TORM noted it has recently entered into an agreement to sell an older Handy vessel, TORM Loire (built in 2004), for a consideration of $9 million. The vessel was delivered to the new owner in late December 2019, and in connection with the transaction $4 million of debt was repaid.