Key Highlights from Euronav’s Balance sheet
Crude (DBO) tanker companies such as Euronav (EURN), Frontline (FRO), Nordic American Tankers (NAT), Teekay Tankers (TNK), and DHT Holdings (DHT) are highly leveraged—a term that refers to a company’s fixed obligations. For such companies, managing the balance sheet is a crucial task.
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Managing balance sheet
In May, Euronav issued $150 million of unsecured bonds. The company believes that this strengthens its liquidity by $150 million and diversifies it into a new source of capital. It also believes the coupon of 7.5% is very favorable for this amount.
Below are some other key highlights from Euronav’s balance sheet:
- Euronav has signed 12-year ECA financing with commercial banks and Ksure of Korea. Euronav will finance two VLCC (very large crude carrier) newbuilds to deliver in January with this.
- In June 2017, Euronav initiated a treasury note (also known as commercial paper) program. The company has placed 50 million euros on the market with various short-term maturities and believes this is an opportunity to decrease the cost of borrowing by repaying part its revolving loan with proceeds from the Treasury notes issued.
As of June 30, 2017, Euronav had total bank loans of $915 million—$867 million as the long-term loan and remaining as the short-term loan. The long-term loan is lower than $913 million as of March 31, 2017. Since 2010, the company’s debt has always been below $1.2 billion. The company’s leverage was 39% of the book value and 44% of the market value.
The company has worked to strengthen its liquidity position. Euronav had a liquidity of $800 million at the end of the second quarter.
The company’s current assets of $393 million are well above its current liabilities of $170 million. The company’s current ratio is ~2.3x—up from ~2.0x at the beginning of the year.