first_imgThe announced merger between Teekay Tankers and Tanker Investments Limited (TIL) comes at a crucial point of the shipping cycle, the two companies stressed while announcing net losses for the second quarter of 2017.Seasonal weakness and increasing tanker deliveries drove down tanker rates resulting in further headwinds to an already weak tanker market.Tanker Investments reported a net loss of USD 5.8 million for the second quarter of 2017, against USD 12.6 million in 2016. The company’s half year results saw a plunge to USD 2.6 million net loss from a USD 31 million profit in the first half of 2016.Teekay Tankers also swung to a loss in the second quarter posting GAAP net loss of USD 37.5 million, and adjusted net loss of USD 7.1 million in the second quarter of 2017. When compared to last year’s figures, the fall is considerable as Teekay Tankers had reported USD 31.6 million adjusted profit for the quarter.For the first half of the year, Teekay posted USD 33 million in losses against last year’s USD 63 million in income.Teekay Tankers has declared a cash dividend of USD 0.03 per share for the quarter ended June 30, 2017.“The proposed merger with Tanker Investments Ltd. is strategically very important for Teekay Tankers,” said Kevin Mackay, Teekay Tankers’ President, and Chief Executive Officer.“The 18-vessel Tanker Investments Ltd. fleet will provide Teekay Tankers with greater scale to continue servicing its customers, while also allowing us to renew our fleet on an opportunistic basis at the right point of the cycle. We believe this merger is in the best interests of Teekay Tankers’ shareholders as it is immediately accretive to the company’s earnings per share, reduces our average fleet age by one year, and reduces our cash break-even rate. Importantly, the merger is expected to increase Teekay Tankers’ liquidity and reduce our financial leverage.”As explained by TIL’s CEO William Hung, with over 35 percent of Teekay’s fleet booked on fixed-rate charters and a strong balance sheet, along with USD 200 million of pro-forma liquidity, the combined company will be well positioned during the period of weaker tanker rates.Both companies expect the tanker market to remain weak well into the third quarter before rebounding into stronger winter period. However, a strong improvement in tanker rates is not expected until the second half of 2018 following an expected slowdown in tanker fleet growth and better oil market fundamentals.In May 2017, Teekay Tankers agreed to acquire TIL and its fleet of 18 mid-sized conventional tankers in a share-for-share merger. Closing of the merger, which remains subject to various conditions, including approval from both TIL shareholders and TNK Class A common shareholders, is expected to occur in the fourth quarter of 2017.Teekay Tankers currently owns a fleet of 40 double-hull tankers, including 20 Suezmax tankers, 13 Aframax tankers, and seven Long Range 2 (LR2) product tankers, and has three contracted time charter-in vessels.World Maritime News Stafflast_img