NEW YORK, July 30 - The Jones Act tanker that set records
for day rates may now be refinanced, as its private equity owner
seeks to profit after an unexpected jump in rates for
U.S.-flagged ships that could be reaching a plateau, market
The American Phoenix has been inspected and valued since
late last year by interested parties, including several American
banks and the shipping arms of major oil companies, said people
familiar with the discussions.
Alterna Capital Partners, the Connecticut-based majority
owner of the American Phoenix, is seeking to refinance at a time
when the ship's valuation has climbed thanks to record rates for
Jones Act tankers because of the shale boom. Ships moving
between U.S. ports are required to be Jones Act compliant -
U.S.-flagged, U.S.-built, and U.S.-crewed - making them three
times more expensive than international vessels.
The banks are considering financing for the vessel, which
could take the form of a leasing arrangement, equity or debt.
Alterna is also seeking at least $150 million to sell the
350,000-barrel vessel, sources said.
That price tag represents a premium of $25 million over the
purchase price of a dozen or so recently ordered new-build
tankers set to be delivered starting in 2015.
The owners of the Phoenix may be exiting just as easing of
the export ban, a flood of new Jones Act tonnage, and investment
in alternative transport like railcars could soften rates in the
The surge in oil production has led to increased scrutiny of
a 40-year-old law banning the export of crude. This year, U.S.
officials told energy companies that they may export a variety
of ultra-light oil known as condensate if it has been minimally
refined, in an apparent marginal loosening of the ban.
Jones-Act tankers would not be needed for these
Several industry executives cautioned that Alterna's
investigating options could be a function of the private equity
investment cycle, rather than a call on the Jones Act market.
"It's the big home run they have in their fund, and they're
trying to raise another fund, so they're trying to liquidate
it," said one Jones Act investor.
The Phoenix rose under unusual circumstances. Mid Ocean
Tanker Company, a partnership between Alterna and minority owner
and operator Mid Ocean Marine rescued the partially built hull
from the scrapyard, buying it out of bankruptcy in Louisiana
court proceedings for $12.65 million. The owners poured an
additional $60 million to $80 million into its construction,
according to shipping industry sources.
Alterna leased the American Phoenix to Koch Shipping and
Supply in July 2012 for $55,000 per day, at a time when daily
U.S. crude oil production stood at 6.3 million barrels. Since
then, it has been watching skyrocketing Jones Act rates from the
Less than two years later, U.S. crude production rose to 8.4
million barrels per day, and rates in the Jones Act spot market
had nearly doubled.
The ship set a record in June 2013 when it was leased to
Exxon Mobil Corp. from Koch Shipping and Supply for
$100,000 a day. In May, Exxon renewed its lease
for another year, this time at $120,000 a day, shipping sources
Any sale or refinancing would transfer Koch's existing
contract to the buyer, as well as a subsequent five-year charter
to a major U.S. oil company, said a source familiar with the
Representatives from Exxon and Alterna declined to comment.
A representative of Mid Ocean Marine could not be reached for
(Reporting by Anna Louie Sussman; Editing by Jessica
Resnick-Ault and Gunna Dickson)