Gulf Navigation has struck a deal to charter out a new fleet of tankers, as it strives to conquer its debts by the end of the year.
In a statement to investors on Saturday, the Dubai-listed company said that under the terms of the deal it would acquire or order up to 12 new vessels of between 50,000 metric dead weight tonnes (dwt) and 120,000 dwt, which would be chartered to Mena Energy for carrying crude oil and petroleum products.
Gulf Navigation did not say how much would be paid for chartering the tankers to Mena Energy, or for how long they would be chartered.
Khamis Juma Buamim, Gulf Navigation’s managing director and group chief executive, said the deal was “another step forward in Gulf Navigation’s strategic business expansion process”.
The deal will come as a boost to Gulf Navigation, which has been struggling to cut its legacy debts and end a long-running dispute with creditors by the end of this year, while pumping more money into profitable sides of the business.
Like many UAE companies, Gulf Navigation, Dubai’s only listed crude oil shipper, expanded ambitiously in the mid to late 2000s. However, it was hit hard after the global financial downturn, when oversupply hit the chemical tanker business and transportation rates plummeted.
Last year the company said it would issue US$60 million of convertible bonds in an attempt to ease pressure from its creditors while auditor PwC warned that the group’s liabilities had cast doubt on its abilities to continue as a going concern.
However, since then the company, under new management, has been working on a turnaround strategy that includes growing its shipping services and technical services businesses.
In October, Gulf Navigation announced plans to expand its chemical tanker fleet through a strategic partnership with Chinese heavy industry giant Wuchang Group. And earlier this month Gulf Navigation said it had initiated feasibility studies to expand into new operating lines, including shipbuilding and ship repair in conjunction with two Chinese shipping companies, Wuchang Shipbuilding Industry Group and Qingdao Beihai Shipbuilding Heavy Industry.
Gulf Navigation’s shares have been one of the best performing on the Dubai Financial Market General Index this year, rising from 60 fils at the start of the year to Dh1.60 on Thursday.
In September, Mr Buamin said Gulf Navigation aimed to repay $35m in outstanding debt this year.
According to Baltic Exchange data, oil tanker rates jumped to their highest since the start of the year in December, as oil producers rushed to increase output before cuts come in and crude prices increase following last month’s Opec accord.
lbarnard@thenational.ae
Follow The National's Business section on Twitter