Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — Debt Investor Presentation (August 2021)
58 slides from Cmb.tech Nv's debt investor presentation, Aug 30, 2021
Slide 1: Credit Presentation
CREDIT PRESENTATION 30 AUGUST 2021
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events
Slide 3: Disclaimer and Selling Restrictions (1:3)
DISCLAIMER AND SELLING RESTRICTIONS (1:3) ABOUT THIS PRESENTATION By reading this presentation (the "Presentation") or attending any meeting or oral presentation held in relation thereto, you (the "Recipient") will be deemed to have (i) agreed to all of the following restrictions and made the follow
Slide 4: Disclaimer and Selling Restrictions (2:3)
DISCLAIMER AND SELLING RESTRICTIONS (2:3) U.S. Selling Restrictions The offer of the bonds to which this presentation relates have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state of the United States or ot
Slide 5: Disclaimer and Selling Restrictions (3:3)
DISCLAIMER AND SELLING RESTRICTIONS (3:3) Neither the Company nor the Arrangers have authorised any offer of securities to the public, or has undertaken or plans to undertake any action to make an offer of securities to the public requiring the publication of an offering prospectus in any member sta
Slide 6: Risk Factors Summary
RISK FACTORS SUMMARY Investing in bonds and other securities issued by the Company involves inherent risks. As the Company is a subsidiary of Euronav NV, the risk factors for the Company and the Group (including Euronav NV) are deemed to be equal for the purpose of this Presentation. Prospective inv
Slide 7: Presenting Team
PRESENTING TEAM Hugo De Stoop Brian Gallagher Head of Investor Relations, Research CEO and Communications 7
Slide 8: Agenda
AGENDA 1. Transaction summary 2. Company overview 3. Financials 4. Market outlook 5. Sustainability at Euronav 6. Summary 7. Risk factors 8
Slide 9: Transaction Summary
TRANSACTION SUMMARY 9
Slide 10: Transaction Summary
TRANSACTION SUMMARY Transaction overview Pro forma capital structure2 • Euronav Luxembourg SA (the “Issuer”) is contemplating to $m June 30, 2021 Bond issue Pro forma issue $150-200 million of Senior Unsecured Bonds (the “Bonds”) Bank loans 1,115 1,115 • The Issuer is a 100% subsidiary of Euronav NV
Slide 11: Main Terms and Conditions
MAIN TERMS AND CONDITIONS Issuer: Euronav Luxembourg SA, 100% owned by the Parent Parent: Euronav NV (Belgium) Guarantee: Irrevocable Norwegian Law Corporate Guarantee (“Selvskyldnergaranti”) from the Parent Initial Issue Amount: $[150 - 200] million Maximum Issue Amount: $[●] million Type: Senior U
Slide 12: Key Credit Highlights
KEY CREDIT HIGHLIGHTS World’s largest ▪ Largest public tanker company with interest in 72 vessels and 8 due for delivery publicly listed ▪ Listed on NYSE with a market capitalisation of $~1.75 bn1 tanker platform ▪ Best in class operating integrated platform with 97% utilization2 and excellent safet
Slide 13: Company Overview
ALICE ANTWERPFrL__ COMPANY OVERVIEW © EuRONay.
Slide 14: World's Largest Publicly Listed Tanker Platform
WORLD’S LARGEST PUBLICLY LISTED TANKER PLATFORM Euronav at a glance Diversified and attractive fleet • Founded in 1995, Euronav is the largest publicly Type # of vessels1 Avg. age listed tanker platform globally VLCC 48 6.6 years • Diversified fleet of 48 VLCCs1, 30 suezmaxes1, 2 FSOs3 and 2 ULCCs S
Slide 15: Recent Developments
RECENT DEVELOPMENTS Fleet renewal (from 2019 onwards) ESG initiatives SELL BUY Joint Development Program with Hyundai Heavy Industries and classification societies Lloyd’s Register and DNV, to help VLCC 6 7 accelerate the development of dual fuel Ammonia (NH3) fitted Suezmax 5 7 VLCC and Suezmax ves
Slide 16: History of Fleet Expansion
HISTORY OF FLEET EXPANSION December 2020 Lists on Euronext January 2014 CDP1 “B” Rating Brussels Acquisition of 15 VLCCs & 10 Year FSO Euronav becomes extension tanker division of CMB January 2015 Euronav IPO on NYSE December 2017 Q1 2021 Luxembourg FSO Conversion Acquisition of 15 5x eco-Suezmax &
Slide 17: High Quality Tanker Fleet
HIGH QUALITY TANKER FLEET Consistent high fleet utilization High quality customers • Euronav’s customers include energy majors, 98.7% 97.6% 96.0% 96.1% 96.6% trading houses and refineries globally • Strong counterparties, typically investment grade rated 2016 2017 2018 2019 2020 8 eco-newbuilds on o
Slide 18: Contracted Revenue Creates Operational Flexibility
CONTRACTED REVENUE CREATES OPERATIONAL FLEXIBILITY Total FSO & TC revenue backlog of $640m Reducing cash flow breakeven for total fleet Illustrative cash flow breakeven FSO Contracted 16,250 11 years remaining contract1 with North Oil Company2 $/day income Benefit from 13,900 ~$270m EBITDA backlog /
Slide 19: FSOs Operating on Long-Term Contract to 2032
FSO’S OPERATING ON LONG-TERM CONTRACT FOR QP & TOTALENERGIES TO 2032 Background Contract structure and economics • TI Africa and TI Asia are ULCCs originally built in • Vessels have been on contract since 2010 with 2002, and converted to FSOs between 2008-2010 100% uptime • Sophisticated oil process
Slide 20: Role of Tankers International Pool
ROLE OF TANKERS INTERNATIONAL POOL Independent entity created to offer owners and customers the advantages of a large-scale operation • Tankers International Pools provide a physical hedge for owners by ensuring stable and regular cash flow during volatile market conditions whilst still being able t
Slide 21: Strong Operational Platform with Excellent Track Record
STRONG OPERATIONAL PLATFORM WITH EXCELLENT TRACK RECORD Robust operational platform Key figures1 Best in class operational platform LTIR2 0.6 SAFETY • High vetting/safety ratings from classification societies • Full cargo access to all oil groups TRCF - 17% (2018 – 2020) • Focus on in-house integrat
Slide 22: Actively Managed Fleet
ACTIVELY MANAGED FLEET PROVEN TRACK RECORD IN COUNTER CYCLICAL INVESTMENT 1-year VLCC TC, $/day Newbuild prices, $m 80,000 Investment in new 108 technology +20% 106 to fleet size 70,000 Maersk deal Gener8 deal 104 +50% to fleet size +50% to fleet size 102 60,000 100 98 50,000 96 94 40,000 92 90 30,0
Slide 23: Business Strategy Focused on Disciplined Capital Allocation
BUSINESS STRATEGY FOCUSED ON DISCIPLINED CAPITAL ALLOCATION Well-defined business strategy… …And conservative capital allocation… Liquidity Q2 2021 ($m) ▪ Low cost/high quality spot oriented fleet 905 ▪ Fuel procurement program decrease input cost Policy to retain at least two years of operational ▪
Slide 24: ~50% of VLCC Fleet Controlled by Top Owners
~50% OF VLCC FLEET CONTROLLED BY TOP 15 OWNERS STILL ROOM FOR CONSOLIDATION Top 10 independent tanker platforms globally Fragmented market # of UL/VLCC tankers (including newbuilds) UL/VLCC market share 50 50% of the Angelicoussis Group 40 fleet controlled by top 15 Others ~50%1 ~50% Top 15 DHT Hold
Slide 25: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM SUPERVISORY BOARD MANAGEMENT BOARD First Name Position History Name Type of mandate appointed Joined Euronav in 2004; CFO Hugo de CHAIRMAN and CEO between 2008-19; CEO since March Carl Steen 2015 Stoop Independent member 2019 Anne-Hélène At ArcelorMittal for 25 years in I
Slide 26: Financials
FINANCIALS | @euronav. 26
Slide 27: Strong Credit Profile Through the Cycles
STRONG CREDIT PROFILE THROUGH THE CYCLES Equity ratio (%) Available liquidity $m1 63% 66% 63% 1,100 62% 55% 56% 56% 905 858 754 674 597 433 2015 2016 2017 2018 2019 2020 Q2-21 2015 2016 2017 2018 2019 2020 Q2-21 Free Cash Flow from fixed rate contracts $m2 Net debt $m 39 1,595 35 1,447 1,375 26 26 1
Slide 28: Financial Highlights
FINANCIAL HIGHLIGHTS Summary of key financials Highlights $ million 2019 2020 LTM Q2-21 • Favourable tanker market and strong earnings Total shipping income 932 1,264 616 during first half 2020 EBITDA 541 864 227 • Challenging market conditions and the lowest Net profit 112 473 -173 rates seen in de
Slide 29: Attractive Cash Break-Evens Offset Cyclicality
ATTRACTIVE CASH BREAK-EVENS AND STRONG FINANCIAL PROFILE OFFSETS CYCLICALITY Weekly 1-yr VLCC TC vs Euronav breakeven rates Seasonality – avg. qtr. VLCC rate 1990-2020 $k/day $k/day 100 46 45 90 80 44 70 42 41 60 40 50 40 38 30 36 35 20 34 10 32 0 32 2002 2005 2008 2011 2014 2017 2020 30 1Y TC VLCC
Slide 30: Strong Access to Financing at Attractive Terms
STRONG ACCESS TO FINANCING AT ATTRACTIVE TERMS Repayment schedule and RCF reductions $m Highlights 450 • Credit margins between 1.50% and 2.35% Bond repayment 400 Scheduled repayments • Most of the bank debt is revolving, and secured 350 within comfortable LTV levels RCF reductions 300 250 • Strong
Slide 31: Strategy to Increase Sustainability-Linked Financing
STRATEGY TO INCREASE SUSTAINABILITY-LINKED FINANCING Ship financing – The future Emission targets All banks to > IMO agree • Early adoption of sustainability-linked loans – one of the first in the industry with $713m sustainability-linked loan announced in September 2020 • AER (annual efficiency rat
Slide 32: Capex Overview
CAPEX OVERVIEW Capex schedule ($m) and newbuild deliveries Comments Suezmax Daehan Suezmax HHI VLCC HHI Deliveries • 8x eco-vessels on order with the latest available design • LNG and ammonia readiness for 2 1 2 potential retrofit – additional pipework and deck strengthening 3 • Advanced financing d
Slide 33: Prudent Capital Allocation Strategy
PRUDENT CAPITAL ALLOCATION STRATEGY KEY TO MITIGATE THE MARKET VOLATILITY Tanker shipping is cyclical hence need flexible allocation of capital • Strict policy of maintaining modest leverage (<50%) and a solid liquidity Cash Share (>2 years runway) at any time through Dividends Buy Backs cycles • Co
Slide 34: Market Outlook
MARKET OUTLOOK — 34
Slide 35: Tanker Markets Are Highly Cyclical and Seasonal
TANKER MARKETS ARE HIGHLY CYCLICAL AND SEASONAL Seasonal industry Cyclical industry $k/day $/day 45 Quarterly average 100,000 VLCC rate 1990-2020 80,000 41 60,000 35 40,000 32 20,000 0 1990 2000 2010 2020 Q1 Q2 Q3 Q4 Few customers, lots of suppliers Freight cost small as % of cargo value 30% 24% 25%
Slide 36: Tanker Market Currently Soft but Set for Recovery
OUTLOOK TANKER MARKET CURRENTLY SOFT… 3-6 months Vessel supply Supply of oil Ton miles Demand for oil Oversupply vessels OPEC+ cuts being OECD/High vaccinations Oil demand still below short term tapered leading recovery 2019 peak … BUT SET FOR RECOVERY ✓ Orderbook: ✓ Non-OPEC ✓ Emerging ✓ Peak oil 2
Slide 37: Strong Supply Dynamics with Low Orderbook
Vessel supply Supply of oil Ton miles Demand for oil STRONG SUPPLY DYNAMICS WITH LOW ORDERBOOK, AGEING FLEET AND LIMITED YARD CAPACITY Orderbook/fleet ratio Age profile Yard lead times (VLCC) Orderbook % of fleet Avg. age (years) Years 55 11.0 4 Yard lead times Fleet age at 20-year 50 high – 25%+ of
Slide 38: Recycling Candidates About 2.8x of Current Orderbook
Vessel supply Supply of oil Ton miles Demand for oil RECYCLING CANDIDATES FOR NEXT 5 YEARS ABOUT 2.8X OF CURRENT ORDERBOOK 25% VLCC fleet > 15 years Average fleet age = 10 years Orderbook 9% Back to level not seen since 2002 80 11 70 10 10 60 Average age of VLCC fleet 9 50 Few >20 year old trading N
Slide 39: Oil Supply Set to Increase Short-Medium Term
Vessel supply Supply of oil Ton miles Demand for oil OIL SUPPLY SET TO INCREASE SHORT-MEDIUM TERM Return of OPEC barrels in 2H 2021 K bpd crude production / supply 55,000 55,000 50,000 50,000 45,000 45,000 OPEC+ decided to 40,000 40,000 add 400k bpd per 35,000 35,000 month starting 30,000 September
Slide 40: Positive Ton Miles Impact Intact for Returning Barrels
Vessel supply Supply of oil Ton miles Demand for oil POSITIVE TON MILES IMPACT INTACT FOR RETURNING BARRELS 1m bpd of transit = requirement for 30 VLCC Far east will return to growth in 2022 ATLANTIC BASIN – FAR EAST ROUTE MIDDLE EAST - ASIA PACIFIC ROUTE 28 1mbpd x 365 days = 511m barrels 1mbpd x 3
Slide 41: Oil Demand to Retrace to 100 mbpd
Vessel supply Supply of oil Ton miles Demand for oil OIL DEMAND TO RETRACE TO 100 MBPD LED BY INCREASED VACCINE PENETRATION Trading VLCC fleet (# of vessels) IEA demand (mbpd) 900 Q4-19 Nov-20 105 COVID-19 Pfizer vaccine outbreak announcement 850 100 800 95 750 90 700 85 650 80 600 75 Q1 18 Q2 18 Q3
Slide 42: Signs of Market Recovery in Asset Prices
SIGNS OF MARKET RECOVERY IN ASSET PRICES Asset prices rising on expectation of soon Asset prices tend to be a lead indicator for market recovery time charter rates 120 +25% +14% +14% +21% 80,000 110 103 70,000 100 105 85 60,000 80 100 70 72 63 50,000 60 56 95 49 40,000 43 40 90 30,000 20 85 20,000 1
Slide 43: Iran – Wild Card for Tankers?
IRAN – WILD CARD FOR TANKERS? Illicit trade 8% VLCC & 5% Suexmax fleet Older tonnage – illicit trade not recycled 70 9 38 40 No of illegitimate vessels 8 % of respective fleet 60 35 2019 2020 7 30 50 30 28 6 25 40 25 23 54 5 30 4 20 15 3 15 20 20 10 2 10 7 8 10 1 12 9 5 0 0 0 VLCC Suezmax VLCC Suezm
Slide 44: Sustainability at Euronav
SUSTAINABILITY AT EURONAV 44
Slide 45: Sustainability Matters at Euronav
SUSTAINABILITY MATTERS AT EURONAV Tanker sector leading ESG foundations established Next stage ACCOMPLISHMENTS TARGETS & DECARBONISATION Environmental Social Governance Architecture & framework to Emissions data since ‘17 Consistent survey top 10 be rolled out during 2021 2021: 2nd position “Good st
Slide 46: Sustainability Matters at Euronav
SUSTAINABILITY MATTERS AT EURONAV Alignment with UN Sustainable Development Goals Dedicated Sustainability Manager appointed To develop a decarbonisation roadmap for Euronav. To develop the sustainability and cross-functional operating model to support implementation of the strategy. The strategy in
Slide 47: Shipping's Positioning on Emissions
SHIPPING’S POSITIONING ON EMISSIONS IN STRONG RELATIVE POSITION SHIPPING – LOW RELATIVE EMISSIONS Air 425 Road 80 2.7% of global CO2 emissions Rail 35 Shipping 5 0 100 200 300 400 500 gCO2/ton-km(1,2,3) Source: IMO GHG study 2009. Notes: 1) Energy-efficient transport is much dependent on the load fa
Slide 48: Investing in Latest Technology for Tomorrow
INVESTING IN LATEST TECHNOLOGY FOR TOMORROW Regulatory & commercial landscape demands investment now Transition Long Term Solution • Transition fuels available now 100% 93% 93% with gains in emissions reductions 90% Well to Propeller emission reductions 84% • However Hydrogen & Ammonia 80% feasibili
Slide 49: Demand for Emission Efficient Tankers
INVESTING IN LATEST TECHNOLOGY FOR TOMORROW Regulatory & commercial landscape demands investment now Customer demands • Incoming regulations on emissions are phased on emission compliance over the next 3-4 years Demand for emission efficient tankers • EEXI compliance will require from 2023 ALL ships
Slide 50: Framework in Place to Deliver 2030 Trajectory of 40% Emissions Cut
FRAMEWORK IN PLACE TO DELIVER 2030 TRAJECTORY OF 40% EMISSIONS CUT AER v C02 tonnes per year for different VLCCs AER – Annual Efficiency Ratio which 120,000 AER divides the annual carbon dioxide 2000 VLCC fleet 110,000 emissions of a ship distance sailed 100,000 5.43 2008 VLCC fleet C02 tonnes per y
Slide 51: Summary
SUMMARY World’s largest publicly listed tanker platform Mix of long term charter and spot market exposure Strong financial position to navigate the cycles Positive tanker market fundamentals Reputable platform and industry leader in ESG 51
Slide 52: Risk Factors
RISK FACTORS | @euranav. 52
Slide 53: Risk Factors (1:5) – General
RISK FACTORS (1:5) – GENERAL • Prior to any decision to invest in the Bonds, potential investors should carefully read and assess the following specific risks and the other information contained in this presentation. An investment in the bonds is suitable only for investors who understand the risk f
Slide 54: Risk Factors (2:5) – Industry Related Risks
RISK FACTORS (2:5) – INDUSTRY RELATED RISKS • The tanker industry is cyclical and volatile, which may lead to reductions and • Consolidation and governmental regulation of suppliers may increase the volatility in charter rates, vessel values, earnings and available cash flow. cost of obtaining suppl
Slide 55: Risk Factors (3:5) – Risk Factors Related to the Company
RISK FACTORS (3:5) – RISK FACTORS RELATED TO THE COMPANY • Dependency on spot charters • Regulations relating to ballast water discharge came into effect during September 2019 and may adversely affect our revenues and profitability. • We are subject to certain risks with respect to our counterpartie
Slide 56: Risk Factors (4:5) – Related to the Company, Cont.
RISK FACTORS (4:5) – RISK FACTORS RELATED TO THE COMPANY, CONT. • The contribution of our joint ventures to our profits and losses may fluctuate, • We depend on directors who are associated with major shareholders, which which could have a material adverse effect on our business, financial may creat
Slide 57: Risk Factors (5:5) – Related to the Bonds
RISK FACTORS (5:5) – RISK FACTORS RELATED TO THE BONDS • Under the terms of the Bond issue the Issuer is permitted to incur liabilities that • The Bonds may not be a suitable investment for all investors. will rank senior in priority to the Bonds, including, Inter Alia, Senior Secured Bank Debt. • T
Slide 58: Thank You
Brian GALLAGHER Head of Investor Relations Member of Executive Committee Phone +44 20 7870 0436 Mobile +44 77 0368 4996 THANK YOU ir@euronav.com www.euronav.com Please consider the environment before printing 58