General Maritime Corp., the second-largest U.S. owner of oil tankers, may be forced to sell one or more of its vessels to pay $22.8 million of debt due Jan. 18, according to a person with knowledge of the company’s plans.
The New York-based company may sell a supertanker or three smaller oil-product carriers to raise funds to meet outstanding obligations to Nordea Bank Finland Plc of Helsinki and DnB Nor Bank ASA of Oslo, said the person, who declined to be named because the plans haven’t been made public.
The two lenders agreed on Dec. 14 to extend the due date, originally set for Dec. 15, to Jan. 15, according to a General Maritime filing with the Securities and Exchange Commission. As Jan. 15 falls on a weekend, the debt will be due on Jan. 18, the day after the Martin Luther King Jr. holiday, the person said.
General Maritime’s total debt was $1.4 billion at the end of September, or about 74 percent of its total assets, according to Bloomberg data.
Without a rebound in ship prices, the company “could remain under pressure until a longer-term liquidity solution is reached,” Michael Webber, senior analyst at Wells Fargo Securities LLC in New York, wrote in a report to clients last month.
The “logical candidates” for sale are tankers without mortgages or debt, the person said. The Genmar Vision, a supertanker built in 2001, currently has no mortgage, according to the company.
General Maritime might request another debt extension if it fails to sell a vessel by Jan. 18, the person said.
“As we have previously disclosed, the company is considering potential asset disposition,” said Chief Financial Officer Jeffrey Pribor. “However we won’t comment on any particular potential transaction.”
Prices of five-year-old supertankers averaged $85.3 million in the week ended Jan. 10, according to the London-based Baltic Exchange. That’s down 47 percent from a 2008 high of $162 million. The ships, also known as very large crude carriers, can carry about 2 million barrels of oil.
An 11-year-old VLCC was sold for $55 million in December, according to Wells Fargo’s Webber.
“Asset prices are going south,” said Basil Karatzas, managing director at ship sale and purchase broker Compass Maritime Services in Fort Lee, New Jersey. “There are not many drivers for now, and supply keeps increasing. Likely more tanker owners will have problems.”
General Maritime owns 38 tankers, including seven VLCCs, according to the company. New York-based Overseas Shipholding Group, which operates about 110 ships, is the biggest U.S. tanker owner.
General Maritime fell 5 cents to $3.34, or 1.5 percent, at 11:53 a.m. in the New York Stock Exchange composite trading. Earlier it rose as much as 7 cents to $3.46. The shares have declined 60 percent over the last year.