Q3 2020 Frontline Ltd Earnings Call
[music].
And gentlemen, thank you for standing by and welcome to the Q Free 2020 Frontline Limited earnings conference call. At this time all participants are in non leasing only mode.
After the speaker presentations that will be a question and answer session to ask a question. During the session you need to press star one on your telephone. We are also taking questions from the wet I must advise you that this conference is being recorded the today on I liked your hand, the conference over to the speakers Mr.
Gosh Boston. Please go ahead Sir.
Hi, good morning, good afternoon.
Welcome to the from third quarter earnings call.
This is Mike so called on the whole.
Hi, good on the to several companies in the in the city.
From a long term strategic strategies are welcome him to the by the board and were on the very professional organization the testing.
For the up to this decision.
This has been a book on quota on extraordinary yet today.
Some of the to bring in Black Swan the didn't seem to have the cool come on to the shipping industry.
The global cooling the ninth 10th on the make up the fact that as all on even though we still need to ensure the situation on a bit longer there was no would be helpful. In the world.
That's the.
On slide three.
From I came into Q3 two of the couldn't come on.
For the quarter per Rep freight train the started to correct yes.
Still we still out of the quarter of good returns on the low to the source basis earnings of $49200 today on the real.
Sees.
$25100 per day on our Suezmaxes on telecom from 800 Boes per day almost from our two.
True stuff.
This yielded the net income of $6 million to $7.1 million for twin pillars on some according to the share.
Our adjusted net income came and obviously the 6.4 million handle the rounded to the Twentynine sales conducted such.
The I'm very happy to report on from fund has entered into three term loan facilities the of up to $495.2 million in.
Here is with me here today will elaborate more on our furnace financing activities nature in the presentation.
So for the fourth quarter, the 74% of for available to be able to see day of $22600 per day.
61 of the Socofar available Suezmax day of 12 comes from $600 per day of six.
The five per cent for I love to Slash Aframax days on.
The team.
Sales and $800 per day.
On the books owning our reflection of the challenges the smoking the faces on.
Although we want to beef up the it's on the future there are uncertainties going forward.
From one of the therefore decided to refrain from paying the dividend this quarter to per se the companies the cash position.
I'll now, let you take you through frontline phenomenal on it.
The [laughter].
Good morning.
Ladies and gentlemen.
The center.
For.
And.
Uh huh.
Oh Jeez cold rainy River.
Net income.
Census.
On Sunday begins on the <unk>.
In the third quarter.
Also on an adjusted EBITDA of one hundreds of millions.
End of the water.
Net income on.
That's on the NIM for.
The non sense the share.
And then there's nothing going on.
On the 4 million.
The 29 cents per se in the.
Hello.
Yes, just it depending on the quarter decreased about $150 million.
Compared to the previous quarter.
The on many of them by the.
The commensurately.
Due to the low for.
Right.
Not true.
And the third for group, but also from more by then.
This quarter.
Due to tighter for for this.
We also recorded.
It was 9 million increase.
The census.
That's mainly due to increased antidumping.
Well for one thing million.
Well for increased.
The main for them for.
2.1 million and the.
On the hot for implementation of again at the.
First of all critical due to call the 19.
In addition, we also had the reduction of 12.4 million.
The increase in the second quarter so the.
Lets them for Insulates us.
Slide five.
The.
We have completed the citizen.
No amount of.
So for like in items and $20 million.
During 2020.
Well at the moment.
On defining the them off of that.
A response of the fund on for existing non facility.
Let's review some of which is often training and the for Paul on the 2021.
But also we have competed.
Financings over on.
The Canadian dollar.
To finance new debt.
Well the non facilities for go on the interest it's true.
[music].
With lots and lots of the 190 day, one for even the third maintaining articles on the.
The cost structure.
In November.
Other than.
The company incident free.
In terms of 50.
No problem on we're on but the thing on the handler limb two of the businesses.
At a weighted to refinance existing turn on the citizen maturing in the second quarter of 2021.
And then the third facility within the mouth the longer than the legacy media.
On on for two times on.
Yes.
The details on the the financing of the to the kit sales.
For the <unk> we.
We had the bomb the New York Jim on facility.
With the strong banking group of the thing on the dog of the global shipping back in the mouth.
Just on the 50.7 million.
On on the court the 6.5 million for the deepest retorts for hearing in April 2020 low.
The need to see the debt matures in May 2000 for anyone I.
Hi, Jason on the face some coal fire losses.
The facility for the drawn down in November 2020, it's around the 56.8 million.
The refinancing and the team has been the corporate that's the box term debt.
On the 32020.
Further even anthony on the one.
The chairman of the team.
Okay.
Yeah, the amounts of up to $190 million.
The finance the one on the 9.2 million of Citi. Please.
In June 2021.
This is the synergy Mr. Now in November 2025.
On the station profile of seven yeah.
The city. It will also for the total debt in November.
On 27th or eighth.
8.6 million over the finance the safety has been recorded ethanol term debt.
The tender.
As often kind of.
The site so the maturities per year to refinancing in the day call.
And following the refinancing in the column.
You will notice.
Following the refinancing we had no no material on the securities.
2020 day.
And the debt maturities from 2000.
And Tony on the one.
Hi of increase essentially.
Now the also entered into the senior secured term of facilities Sixtym and simple for.
Amounts of the young going on that on that.
The balance and the million dollar the cost for the finance the main call for 142 blessing the union for the for the that two centers on the construction.
The facility will have the 10 or 12 net.
On the decision process one of the sentence.
Unfolding the way the Newbuilding program for them.
Let them pay.
Hey.
Balance sheet.
Thanks.
The main happening in the third.
Couple of during the second thing the balance sheet.
Thus we entered in the June.
For the new non facilities the recent wins.
To refinance the to the citizens we told the balance.
On the on the zone 4.1, the NIM, which were due in April two questions for you.
Wall and June 2000 for anyone.
This led to the us to work on debt and Kevin Force on long term debt.
<unk>.
The other than $11 million and low.
Long term debt free.
On the thank you.
Further we paid on the 7 million in dividends on the.
Adjusted net income.
One for their net.
At the end of the office.
Of this 10 bucks at the.
Does on 20 from Manhattan for on the.
Moving to Megan incessantly cleaner.
Moving on the on.
On the number of senior secured loans.
Most of the Securities and then the test.
On the.
Then, let vincent the components of the cash price.
On the Opex on slide seven.
We estimate that the average cash cost breakeven day for the fourth quarter 2020.
The current partly $21900 per day for the the Tony.
On the $400 per day for the Suezmax tankers and assistance on the $700 for them over the next year.
The feed the average net.
About $90500 per day.
The Andrei.
On the old Navy for some of it.
Mclaren cover the purchases of Reagan culbertson brighter than a dozen credit expenses.
The unfavorable credit installments on low NTN items.
The next time, good cash cost for the based on the fourth quarter for 2020 is impacted by that we want to buy the force two cents per bankers in the fourth quarter.
All for Drydock wall and on to time here in the fourth quarter.
Asked already discussed the Q. The Opex was affected by increase in geography. The call. Please in the Pearson methanol and additional of crude costs due to call the 19.
After the show we would like to draw your attention to process the cash flow generation for pension income.
In the graph on the right on size of we.
We have shown increments of cash flow at the debt service per year and for the share assuming 10000 20030.
For $40000 per day in the.
Good day and expense on the cash breakeven rate.
The numbers include the vessels on time shopper on the looking at the period of the five day from a couple of the Sir.
Great.
The next on with a fleet average cash cost breakeven of eight on $19500 per day, and assuming that the thoughts on on top of the average gross.
Since the BDC with the $49500 per day, and sometimes we generate the cash flow per share at the service.
Dollars for Q.
Sir.
With this idea of demand for non linear.
Thank you Dan.
So let's move over to slide eight.
The recap of the third quarter.
In the talking about the kits.
So lot of the Hmong bottomed in May and June.
Given the we're already in recovery on the mall Circus Circus Circus supplement amid the cups by OPEC on all the key produces.
The other market switched from inventory build to inventory controls.
This can be seen on the slide on the bottom left us with the yellow bars.
Subsequent the Opex from increased production slightly the kept the cash significantly below John twins levels on the drill cycle continues.
When the Groenewald its normally the expensive barrel. The gross first on this is typically floating storage.
The majority of OPEC cuts have been geographically some to the rest of the middle income. This has led to recovering economies in particularly in Asia sourcing their oil from further of for this.
Net income longer ton miles.
In the end of this I'd say that the deals with the markets of these losses offer the best the economies of scale.
We also saw continued the momentum for the product stores during the quarter of specifically the jet fuel storage, keeping a lot to markets relative.
This development is well reflected in our results for the quarter.
Let's move to the next slide slide margin under the.
Free from order books.
Thank you for continued to enter the market during the quarter, but many have been engaged directly from yard in product storage. This has limited the impact on crude spot markets.
The most reports for the has been the reports of the significant delivery of backlog.
Due to the core with 19 relate the disruption.
The this backlog seems stopping for that.
The recent speculation so from memory orders in clips of 510 losses being placed in Asia. These are yet to the confirmed a lot of part of the status of however, as the share indicate the risks room for fleet growth in both nice Twentytwenty two a more so in 2023, assuming 20.
Year old ships leave the competitive sports markets and oil the mom develops on trends in the us and talk for us.
One of the big ex factors for shipping going forward. This obviously propulsion technology.
For the us developments closely leveraging on our extensive business platform the.
Theres also there's still the way to go to reach any conclusions.
Let's move to slide 10 on where we tried to explain the form of this market Mr.
We have a record number of vessels.
Literally in all aspects of losses, reaching or passing the 20 of Mark.
Average for recycling age for tankage is very close to the stage, sometimes depending on the on the lack of freight rates.
We are now in the market with relatively high volume. So the inventory still in addition to a high income.
Excellent oil volume.
This seemed to have supported the demand for tankers in the tail end of tariff active lifestyle.
In the shop for low we illustrate the by comparing the average price achieved on college from sectors.
H. close to 20 years.
On the reported price achieved for restructuring.
The disconnect is paramount and low.
Let me explain the muted recycling activity.
Selling for alternative use his current did the preferred option for the on this.
It's important to note the for the competitive spoke of markets, where we operate.
We are on the strict scrutiny from watching policies. So these piece of vessels.
In the significant part of those balances.
Let's move on to the from the for our approach to the G.
The official say Central Park operations have been from clients core values for years.
Officials in order to save costs, but also fuel cost sales.
Sales in order to safeguard our sales seafarers the environment on our physical assets transparent in order for the low end community like yourself to easily understand our business model.
What we have found appear for.
Familiarize ourselves with the relevant PSG framework for the industry. The last couple of years.
The sub for US it's more about how we structure of communication on policies on routines, we already have in place rather than on for sync completely new routines.
Altering the way the conduct ourselves.
The central part of our business model is for technical management to be clustered or share of the few ish.
With other at least the the companies we are familiar with.
In this regard the economies of scale as we share knowledge on practices for more than 213 us.
This collaboration of gives us on impressive leverage to shape and the and from some of this is we expect to the mess.
Both on social aspect on on the governance. The three also share synergies when it comes to the bank technology to optimize the formal both and so the the traditional malice of since we had on consumption, but also with respect to our environmental footprint.
Yes.
Frankly.
Although kind of slow a bit on the communicate the very well positioned to comply with the stricter environmental social and governance framework. The shipping industry has to get comfortable comfortable with going for.
The.
So let's move to slide.
On the tax market outlook.
Increased oil supply is now key in order for the tanker market to balance.
We were shielded for a period of packets for employed by storage now we're dependent on volumes to come to the market on normal trading patterns resuming.
The the mall for tankers is still capped by the hope the Kevin the.
What we find is extremely encouraging to see oil prices performed strongly.
As for the volumes of effort.
Increased significantly, particularly by the Libyan exports that for assumed in October.
This in isolation of suggest oil the mom might actually be some of the on the market in general the specs.
Looking at the benchmark Brent Okay. We see the same tightness expressed in the domestic move from contango for carry if youd like to near flattening of the curve.
This signals inventory draws to accelerate.
On the oil market potentially finding a balance of the earliest stage.
It's obviously a bit early to call.
The just to explain how these mechanisms for book.
If we are drawing in the territory of three to 4 million barrels per day from inventories net.
That's the volume needed from producers won't inventory levels, Nonetheless, which in turn kind of translates into increased the tank in the mall.
Let me sum up on slide 13.
So from.
The strong we have no material debt maturities until 2023.
The company is very well positioned towards the three relate to the expectations.
The space the extended regional looked on oil demand continues to recover.
Crude oil price actions indicates the change in oil markets on Philips.
And we expect from the freight market volatility to increase going forward.
Thank you.
And then we can move on to the Q the night.
Thank you ladies and gentlemen, the will now begin the question and answer session. As a reminder, if you wish to ask a question. Please press star one on each other from and if you wish to cancel your request. Please press the hash key.
Once again, please press star one if you wish to ask a question I know for the first question comes from the line of Randy Stevens from Jefferies. Please ask your question.
How it 18 frontline and congrats again on your promotion Lars.
Thank you very much of it.
So first question are on the dividend you bought back last year paid of 10 cents dividend. Despite the loss falling three to 19 results.
You increased debt to 40 or sorry, 70% of net income following the first quarter down on the second quarter and now you credit to zero. Despite a 29% gain so I guess why has the dividend payment bounced around so much of the last year and what would cause you to reintroduce the dividends the clearly it's not just.
Positive net income.
Oh, yes, yes, the Darius is not only of positive net.
Net income.
We we were kind of an extremely volatile markets on the we also normally have quite a good visibility on our earnings going forward.
For Q3, you know the earnings for the goods, but the visit our visibility or when the look into Q4, it doesn't look to range.
We are in the middle of the global pandemic on the.
Uncertainties are quite the great going forward so.
So we decided to.
Keep the cash.
On the but we'll obviously return.
Paying dividends the minute, we see that the the market the plot on.
Potentially is ready to to to return to levels, where where we see the suit.
Suited.
Got it okay. So more of just a subjective outlook for the market.
Well start of the act.
Yes.
Our on dividend policies state the in such amount on that we like to use our discretion when we deem is needed.
This is this particular case, we found the up to be prudent.
Got it all right.
And then I guess, one more question for your quarter to date rates the vs.
Ccs Suezmaxes down from the third quarter for the fourth quarter on which makes sense.
For your LR to rates are ticking up being on the higher so maybe what caused this and how many of your L.R. two product tankers are operating in the crude trade.
Well, we have eight of.
I love to use our operating on the crude trade.
We have the 10 operating on the clean of which Ron is on pumps on the.
The estimate the.
Kind of talk for a term for Q4 is probably listen some more color on the returns we've seen on the inside.
Okay, and then do you have an outlook for current first products here in the next six to 12 months, which kind of sector or do you see.
For the most of our more attractive and I think you mentioned neither are very.
Attractive.
Well if it's a very good question. The thing is that Weve come through seven.
Seven quarters.
The kind of the crude part of the equation of form of the clean trade.
So on the the last quarter of the half where the clean product batches have actually outperformed.
Significantly so it's really difficult to call. The Dutch Aframaxes are obviously now being penalized by the fact that the Russia.
The quite severely.
Yeah, the with the Opex.
Yup.
The the north sea barrel of the Baltic barrels coming out of Russia.
I think on our the.
The way to make the call until the phase flows of.
More of a best.
Got it.
Well I'll, let you go thanks, so much.
Good day.
Thank you and the next question comes from the line of Chris.
Sunk from Weber Research. Please go ahead ask the question.
Hi losses hiding the how are you.
Very good thank you.
Great the tier I wanted to ask about.
The decision to sales see team.
Could you expand on that a little bit more and.
Would you guys also look to divest the other.
Two of these like for.
In addition in clean marine.
Well first of all to to the to take the CGM.
Okay.
Kind of CGM has not been a really kind of get the company for us to to have.
More or less.
In the house for a period of time, it's always the non core business.
<unk> business model is outsourcing.
Services like likes the team we're offering.
But it's obviously given us great knowledge on on the.
It's also made us understand.
The markets.
Or the the technical management market quite well.
Of the sliding to divest from that was more related to an opportunity to the obtainment rather than something that we will strategically wants to do quickly so sort of an opportunity arise on we found a solution where our Sam will.
The continued to run the CGM almost in its original form on tape.
Take care of harvest will kind of the that are on the management with them.
With with the same mindset that the.
The wherever already inside sales team. So so it's more like kind of keeping to our strategies.
Keeping to our original sensitive.
With regards to clean the region.
Clean Marine this is.
An investment we're still holding.
We're not kind of.
The owner in that range.
For more like having a listening post.
Sorry, I think I will leave the the.
The scope of the markets are easier.
Yes, the market is the.
Low the dormant.
Those are probably on the stop.
For the company is still working on.
And we were just basically looking at the more on the passive investments.
Okay. Thanks, Yeah that makes sense and just looking at the net net so much guidance for the six years to date from Q for the other twos or little bit higher than Suezmaxes hasn't typically end of this happened this way and I guess, how much of it is driven by the.
Some of those clean tankers vs Dirty.
I guess.
What factors are allowing the suezmax usage of trade below other two or other to see trade above the suezmaxes for Q4.
Well the.
In the.
As I indicated some the Q3 Q3 was the good of an atypical quarter when it comes to two to how freight train develop because in the normal markets.
Suezmaxes will perform a little bit kind of.
Below the sales some of them illustrious for us will will follow suit little bit below that but this year for this quarter Suezmaxes I'm actually on underperform, the ulccs by more than 50% on this is the market.
Kind of look it's not the.
For us in particular.
With the.
The OPEC cuts.
We've seen that for the longer term mouse hub.
Been prioritized or for grow on this.
Yup.
Good to be able to seize in the in a much greater position due to their economies of scale.
This is penalized suezmaxes in particular.
So I think the the rates as the reflection of how severe the situation has been in the suezmax market, where the kind of little opportunity to trade during the quarter on on the.
Quite quiet.
Kind of the harshly markets.
The losses have throughout the quarter outperform.
Literally all the the other segments the apart from the Vlccs on this is over the due to their ability to store same product on in particular.
Okay to search for credit trade, Okay, and just one last quick question on Drydockings and non.
For your prepared remarks, you talked about the chart on schedule for sales and one for our two in Q4 can you tell me the number of Suezmaxes Q for that or the dried up.
The number in Q4.
For the.
Yes for.
Okay, Great and will military sales.
Okay of course to us for another two in Q4, thanks, guys have a great day.
Thank you.
Thank you and your next question comes from the line of John Chappell from Evercore ISI. Please ask the question.
Thank you good afternoon I was in the year.
Good afternoon.
Your first question for you.
Quickly on the dividends so completely prudent given your fourth quarter rates to date that you guys were also able to refinance a lot of debt at very good terms at a very difficult time of the market are there any restrictions on the dividend payouts or payout ratios as part of those new facilities that may have played a role in the decision.
Just on this quarter.
No.
We don't have any of the section then I'll turn it on the back.
The.
Good day.
Great. Okay, and then larger joining at an interesting time and frontline has the legacy of being aggressive on others can't be.
So the retaining cash through no dividend you interest done a great job shoring up the balance sheet.
But you've mentioned the uncertainty and other as of the pandemic asset values dropping pretty aggressively how do you kind of view 2021 in your role and in frontline his role in the industry as far as acquiring assets chartering in assets, just adding more leverage on others are just worried about survival.
Okay.
The us is.
That is.
It's our in art, the kind of DNA to to to be aggressive when the of the comps. We also have very strong shareholder.
Yes, so so it's obviously well of.
So this is something we're very excited.
Looking forward.
Cut on right now.
I think the uncertainties are a little bit too great to the quite honest.
Although we are upbeat.
There there are some risks kind of.
Looking into the next couple of quarters.
We think opportunities, we'll probably arise.
On the churn on the of these levels particular credit side on the.
And I think where the people find the.
The the frontline DNA hasn't really changed even if.
Hi, minimal seats for the.
[music].
Okay. Appreciate it thanks, a lot of strengthening.
Thank you.
Q on your next question comes from the line of John Riyadh.
We are at the from he's done on the Investor. Please ask the question.
Hi, Thanks for taking my call.
Things one you mentioned the unwind from the contango storage situation.
Could you tell us what you think the percentage of that has occurred.
And then secondly, low.
Libya has gone from.
Basically not ex sporting much of the anything for I read the other day, it's over a million barrels a day it's that.
Providing.
Some support.
For rate wise for the Suezmax Max market in the eastern Mediterranean.
Thank you for the two really great questions.
The the the floating storage.
On my day in our presentation on the but a suite of some day for that from from clip of.
Okay the data.
The way I look at the or we look at the storage is we look at the vessel storing for an extended period of time. So we've put the bar on 21 day.
On the dose levels peak north of a 100 million barrels now with the out to 60 million barrels. So there is the 40% decrease.
You know how much oil.
When kind of that is finished its difficult to tell because if it is theres.
Theres also something about the structure of not only of the crude but.
But also of the market itself has also I think I mentioned, we have like a record amount of sanction barrels or sanction production in the world, which probably calls for a bit more floating inventory of for inventory.
On the normally with of sub debt.
The it's on its way down on I think we of at least taken off for the 42, maybe even 50% of of.
The the floating storage with regards to Libya, the Libya has been really exciting.
The pricing actually so them on is to ramp up on I think the last number of size for most of two the theyve been able to 1.2 million barrels per day.
This high in the <unk>.
Made it far more interesting to be.
On the Suezmax structure that the have been for that of the couple of months. So so we do see a lot more cargoes of parity in the markets. We also see opportunities arising lot of the barrels are.
Or half of them for a while actually been going east the.
On that the is like.
The perfect fit for the Suezmax on us.
So so yes. It has supported the market in the Mediterranean Sigma.
Significantly.
Okay. Thank you very much.
Thank you.
Thank you and your next question comes from the the line of Craig lay waste from BT G. Please ask the questions.
Yes, hi, Thank you and good afternoon, and large stocking congrats on the on the on the position.
And I guess I just had a head of kind of a broad question.
It was kind of kind of talked about people focused on the dividend rightfully. So I guess I'll ask it a different way as I look at the front line in the car.
The need looks like it trades.
You know on that depending on what valuation metric on I know you don't like to talk about any of the but we can look like something like more wall Street, the like EBITA EBITDA and your and the companies that are premium the in the company's been able to leverage that premium.
Grow with the opportunistic over time, so so just kind of curious what do you think drives that premium.
Two.
What the relative pricing to of pets is up.
Correct, Yeah like Q1 of the ground by a company I mean, it's good to the premium if you want to do it and so I'm just kind of curious how you think about that because it definitely gives you opportunities. So just kind of curious how you think about that.
Well thank you.
For the.
On the there are many many factors that the the saw the on our pricing some are.
Of maybe not in our making it the.
For preferred stock our liquidity is high and so forth. We also have.
Extremely low cash breakeven levels, we have.
Relatively high leverage which.
The assumed relatively quickly on for the Buck one of the market moves on historically of we have proven to be quite.
Quite rewarding towards our shareholders.
I know, we've probably some of this every quarter the service since I joined frontline and the 15, but the when you invest in frontline new invest together with.
Our main shareholder you not kind of.
Yeah.
So the investor in the in the Big Corporation on the.
His history for for for the.
Being interested in the at terms on on on the not all of it.
The that's well known.
So so I think that debt.
Parts of it I would assume that is the is the difficult number to breakdown.
Okay, Great and then just as I think about that as Youre as the companies out there and clearly you kind of laid out the way to move forward on that Hey, you know that the market is not good now, but the you know there's there's reasons to be constructive in the out years is.
Is the company I mean in realizing you have the pretty track whats the way right now.
On.
Good age big.
It should we be thinking other gonna be opportunities to cut is there any M&A opportunities do you think that could develop over the next six to 12 months or it's kind of been all the same players for the last five plus years and you don't really see any potential for consolidation.
[music].
There is always the potential for consolidation, but there is always non again on the question of price on.
On the opportunity of course.
On the markets actually consolidate the the maybe not in the way that the.
The investors would want to do on Thats more like in the.
Bigger pools are being built on the.
The.
Non of trading entities are growing and so forth. So the so so the amount of.
Of sole owners trailing three or four sip of hub.
The maybe not reduced but at least there Tom there's been not consolidate the the in the way with regards to M&A.
You know on I know, the there's always kind of the usual.
Opportunities for suspects or whatever you like to call them, we are constantly monitoring them on on the wheel.
We are where we are.
We're always kind of in the markets is to look at.
Sure the sales.
But the maybe not actually on this in looking.
Looking at the.
The market is performing right now.
Okay. Thank you very much of a nice day.
Thank you.
Next question comes from the brand the Givens from Jefferies. Please ask your question.
Hey of back for more with two quick modeling questions.
The first for the loan facilities were done at LIBOR, plus 190 basis points. So.
So on the pretty impressive their anger, but following those recent revise is.
The is now the plan to maybe repaid the remaining 60 million on the Haven facility and then also with the new recent revise in place what is your weighted average interest expense and debt amort schedule through 2021.
In terms of for the payments.
The next to the Ed did you talk about the the ordinary Soma lessons on that the question.
Yes, Sir yes.
Okay.
21.
On the ordinary Goldman based on the Karen.
And on the synergies we have the prospect the $160 million the air.
Even look at the.
Between.
During the quarter.
It will be.
On slide to increase in the ordinary share.
In the 21 actually there.
The real the for and I do Thank you then drawdown on the news and fixed in on surface in English.
Retail sales.
Thanks.
Yes.
And your other question with respect to the turn of the for the ones that the other question.
Yeah, the 60 million remaining on the the Haven facility.
Uh huh.
Agreement, there and pay for that materially in the May.
2021.
Hello.
We plan to follow that the cleaner.
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And then of the pay in May.
Got it all right and then for the total weighted average interest expense I see your interest expense came down pretty meaningfully from the second quarter.
Just trying to see where is that runs up to in the third or so on the fourth quarter.
Okay, and then the third quarter I think the price cost whether from Bernstein.
For Sam.
And I think in the.
In the.
The.
Okay.
19 other.
John.
Now the same level.
Got it sorry.
Right and then one more last modeling question before we can all get the Thanksgiving I guess you're in states for the.
Operating expenses you know they had huge tick up in the third quarter. I know you said most of that was due to some dry dockings from onetime crewing costs.
Just trying to get a sense for a good run rate there in the fourth quarter and 2021.
On the day at the fed is one of the more.
The third quarter.
However, we have the we appointed two in the printer.
Also has kind of run off in.
In the fourth quarter of the space today.
The.
In relation to on the 19 of our.
Yes.
Hi of adapting the force down from this quarter, which was 4.8 billion.
Add the also has stated that the we have.
Hi, This is John in.
In the fourth quarter. So I don't think again ex bank debt, the the cost of MACOM and it.
Down from the third quarter of adjusted to China in the portfolio.
The financial Covenant the higher.
But the otherwise.
On the line I don't think we would have any extraordinary items.
Yes in Q4.
Thanks.
To the men 20 wrong.
Hi, John.
The that of the X.
So on an annualized net add.
The only exception of 27.
Good afternoon. Thank you for that the yen elements on the call good night.
And then again the way I'd be competing for Xenapp at the second active coming in place and everything should be bidding on the line net well switch in the DNA costs related to changes in the funding going into 2021.
Sure.
So that sounds good well thanks, so much of a good day.
Thank you.
Thank you and your next question comes from the line of John George Berman.
From C.L. Securities. Please ask the question.
Good morning, John and good afternoon, Thanks for taking my call.
From I've got a few questions number one on you used to be price predominantly in the VLCC and Suezmax space recently asked for years, he moved into the add on to Aframax area.
Can you comment on the reasoning behind that number one.
Yes, it could.
For the is the the from planned for the past diversified kind of into three key all core segments.
The two from us market or rather the lot to market is like the deals the C of the clean trade.
On the have been for a long period of time being like is the development globally, where refining capacity has been growing rapidly in the middle East on also in Asia.
The cost of refining capacity in North America on the in the northwest Europe.
I would say that case.
Some of the bids on the fracking revolution, meaning that the U.S. refineries and end up having a relative to achieve the feedstock.
On the on the variable to maintain kind of run rates on.
Margin the for for for a prolonged period of time, so but the the investment. The initially was out of the the displacement between supply and the mom on the product side.
This is becoming kind of increasingly.
The current again with the MDF, claiming to two two to double the refining capacity of within a relatively short.
With the of the tremendous growth of of refining capacity in China, meaning in the China could become.
A significant exporter of petroleum products at the same type of to see now the refineries in Europe of struggle.
On the art cut off to losses based on something that so so the close.
That's the kind of it's on was the key strategy behind.
We experience obviously it was that the the Korean market didn't perform as expected.
The love to scope the engaged in the debt to trade, so drawing a little bit below half the fleet the into the zone to trade, but the ships can be cleaned up and the.
Income moving back to the to the luxury market the.
Okay, Great on the next question di di or you get a pretty big deal last year with Trafigura I believe it was quiet and net debt Suezmax tankers, we put the new one to 2019 built on.
Are there still several under a time charter the time kind of back to Kathy Gore and at what rates are those.
Theres still five of them on comp structure to try to figure out where the profit sharing agreements. So.
On the outside.
The level of $28400 per day.
So they are good earners for you at the moment, even though we don't the profit share with that Mike.
Absolutely.
Okay, and then the concerning the scrapping.
Scrapping.
You mentioned in your initial remarks on debt it looks like on.
The current rate environment debt.
On many many companies each day, so transport day would do so acute losses.
And do you see any openings in the scrap yards recently that have enabled the company to a scrap and then on you made of we mark on.
Other than scrapping what would the some company doing buying a 2025 year olds, the TCR suezmax tanker.
Well the as the firstly on on the operating.
As far as Don I believe of.
Well, we like the quote recycling.
Sorry, I understand the restructuring plan.
We're also heavily affected by the the global pandemic, meaning that the the they have to shut up.
There is on increasing activity in the restart the market right now.
And we see more and more of a flow.
Being sold for recycling, but not necessarily in our other crosses the good by the there are a couple of up from axis of have gone, but the very few deals the see census as reported.
On the.
As I mentioned in my presentation there.
Where is the disconnect between the price the.
On the vintage vessels are able to achieve for not necessarily trading but for storage.
Other activities.
The than what the the recycling company is willing to pay you for the steel.
So with regards to what the stock is a use for it.
I think other be a little bit.
Could of course is to speculate but obviously the risks there is the oil that is transported kind of outside of the the normal spot market.
There is some.
As I mentioned on the rubber.
But the large amount of sanctions barrels in the world right now.
On the these needs from or to to the store.
Right.
Then lastly on maybe you couldn't comment again I leave debt you're divesting your ship management Division and you look to book about a 7 million debt again in the fourth quarter on the sale what are the reasoning behind divesting disease.
Division essentially taking your in house ship management.
Two other and outsourced version.
Is that the cost efficient for you more cost efficient.
Well, let me, let me explain a little bit on for mobile. So we do have in the house technical managers, but we do force.
The crewing.
The effectively the day to day handling of the.
The vessels. So it means that we have an organization the in house of technical management of apartments, I relatively large on actually on.
Versus the third.
Third party technical advantages.
The seem to be looked upon on the third party technical milestones.
So in directly we were opening.
Now that the.
That we normally just outsource to the bit of that way.
So on this one.
Maybe explains my comment about it not being kind of for core business.
On the on divesting it was basically due to the fact that over some of the came in on now presents an opportunity to continue to run on.
Of the company the the company will be continue to be wrong.
In the very much the same manner on too.
For the same expectations that we have when when it goes directly on by Us.
On we obviously by the services of the company.
Going forward just like any of the other third party technical losses that we input.
Okay great.
One last one if I may on what is your average interest rate on the debt you are on the.
Absorbing at this point of time, you mentioned that you had a very very good.
Debt facility the outweigh the very good in the interest rate and with the weights basically the world what goes to zero I'm wondering what kind of an advantage.
Is that for your company at the moment on how long of those weights locked in for.
Ill, let in your question.
Question on those are answer the question.
As of the of the new facilities, which we have the in pace now the man.
The tax losses.
The visibility in the call.
So as I was looking for for balance.
The margin looking for.
Five years from now the.
The tinted.
And obviously, we have the also sell on the other thing.
The security profile in the presentation to against the.
The income.
On to the material incorporated the sensor assisted.
That's the sort of the average of eight cents the I'd say.
Moving on land today in the debt.
On the Keith.
Based on thin margin on line.
On top of that which is submitted low level now the city of on average the balance.
One of the 25 basis points in that area, that's what they're looking at and in addition to the force behind the.
As there are no facility, which we talked about the middle of in the presentation of where we have the based on the 25% that you pay on that $60 million, but that the today.
While the total loan portfolio some of it doesn't really mean less for the average anyway.
So its a library for a rate rise for interest rates would you interest costs would also go up a little.
Well and we do have the interest rate swaps and pay the cloud for fight on John.
Handler.
On the second.
The higher level of the.
25, or 30 basis points, even though their income president.
And so the analyst day.
Our next fall.
The in neither of us.
Does that make sense.
Yeah.
And then maybe a one quick last one on the concerning scrubber is your entire free now out of it is with scrubbers where necessary.
Yeah.
Hello.
We have about two thirds of our fleet.
It's the fitted with the with scrubbers as it is right now.
We kind of slow on the pace of for scrubber installing.
With the the missing the.
The mission names.
Kind of for the scrubber margin to EBITDA, that's where the spread between high and low so for fuel.
The say that we won't we.
Couldn't easily re initiate the program in the future.
Do you expect a I recently heard reports about slow steaming would that be a positive effect on day weights and debt, but tanker demand.
It could be.
You know it.
Domino, so well context, you kind of.
You are thinking about but first the first on the role.
On the laden leg when we are on balance we can many times the side, they're on speeds on the in this earning environment, we will slow down as much as we come to the court on this.
But there is also the general discussion around.
When we measure our carbon footprint, how slow speeding could play a role in order for the tanker fleets to comply with the goals of IMO going forward.
So but the this is the still.
On a per bit up in the air.
John I must admit we havent really the looking deep into that as of yet.
Okay, great. Thanks, very much for your time here.
Thank you.
Thank you.
And as I remember once again, if you wish to ask the question. Please press star one on utility from.
And the tissue Council the Hush.
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Just on one Chuck's question.
And there are no further questions at this time please.
Please continue.
Okay, then I just wish to say thank you very much for this call on the thank you for listening.
Hey, Thanksgiving to the ones the joining us from the space on the.
Stay safe thank you.
That does conclude the conference for today. Thank you for participating you may now disconnect.
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