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ATHENS - Performance Shipping Inc. (NASDAQ: PSHG), a global shipping company specializing in tanker vessels, has completed the sale of its Aframax tanker vessel, M/T P. Yanbu, to an unaffiliated third party for a gross sale price of $39 million. The sale represents a significant transaction for the company, which currently maintains a market capitalization of approximately $19 million. According to InvestingPro analysis, the company appears undervalued based on its Fair Value assessment. The transaction, which was finalized today, is expected to yield a gain of approximately $21.5 million for the first quarter of 2025, before accounting for commissions and transaction-related expenses.
The M/T P. Yanbu, a 105,400 dwt vessel built in 2011, was acquired by Performance Shipping in the fourth quarter of 2020 for $22 million. At the time of sale, the vessel was debt-free. Andreas Michalopoulos, Chief Executive Officer of Performance Shipping, commented on the sale as a significant step in the company’s strategy to modernize and expand its fleet.
The company’s cash balance is projected to exceed $105 million following the sale, which is more than double its year-end debt balance of $47.7 million. This strong financial position is reflected in InvestingPro data, which shows impressive gross profit margins of 72.5% and highlights that the company holds more cash than debt on its balance sheet. For investors seeking deeper insights into shipping companies’ valuations, InvestingPro offers additional financial health metrics and analysis tools. The sale is part of a broader fleet renewal initiative that includes the delivery of three newbuild LR2 Aframax tankers and a newbuild LR1 chemical/product oil tanker. The first of the new LR2 tankers is expected to be delivered around August 2025. Once the new vessels are integrated into the fleet, the average age of the company’s vessels will decrease from 14 to 10 years.
Performance Shipping operates its fleet on spot voyages, through pool arrangements, and on time charters. The company’s future plans include a focus on LNG-ready vessels, aligning with industry trends towards more environmentally friendly shipping options. Analyst targets for the stock range from $5 to $6.50, suggesting potential upside from current levels. Discover more detailed analysis and 5 additional ProTips about PSHG with an InvestingPro subscription.
This news is based on a press release statement from Performance Shipping Inc. The company has cautioned that forward-looking statements are subject to various uncertainties, including market conditions and regulatory changes, which may impact the actual results of the transactions and future operations.
In other recent news, Performance Shipping Inc. has finalized a significant financing agreement for its fleet renewal strategy. The company secured a sale and leaseback agreement for a new LR2 Aframax tanker vessel, marking the completion of financing for three new LNG-ready, scrubber-fitted tankers. The financing arrangement amounts to $45 million per vessel, with deliveries scheduled for August and September 2025, and January 2026. The vessels will be sold to a third party and chartered back to Performance Shipping for eight years at a fixed bareboat charter rate of $6,850 per day, with a variable rate based on the SOFR plus 2.05% per annum. Additionally, the company has secured a five-year charter agreement with Clearlake Shipping Pte Ltd. for all three newbuild tankers at a rate of $31,000 per day, which exceeds the estimated daily breakeven rate of $25,000 per vessel. Performance Shipping also retains the option to repurchase the vessels at predetermined rates after the second year of the charter. CEO Andreas Michalopoulos highlighted the attractive financial terms secured ahead of the vessels’ delivery. The total bareboat financing of $134.6 million covers nearly all of the $138.4 million remaining payments to the shipyard.
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