Performance Shipping Inc. Announces Agreement to Sell Aframax Tanker M/T P. Sophia for $35.65 Million
Performance Shipping, a global shipping company focused on the ownership and operation of tanker vessels, has entered into a Memorandum of Agreement through a separate wholly owned subsidiary for the sale of its oldest vessel, the 2009-built 105,071 dwt Aframax tanker M/T P. Sophia, to an unaffiliated third party for a gross consideration of US$35.65 million, marking a significant milestone in the Company’s ongoing fleet optimization and capital allocation strategy and reinforcing its disciplined approach to asset management in a dynamic tanker market environment
Transaction Overview and Expected Delivery Timeline
Under the terms of the signed Memorandum of Agreement, the M/T P. Sophia is expected to be delivered to her new owners in mid-2026, subject to customary closing conditions typically associated with maritime asset transactions, including satisfactory inspections, documentation, and settlement procedures, while the agreed gross sale price of US$35.65 million reflects prevailing strength in the Aframax tanker segment and favorable asset valuations supported by sustained charter rates and continued demand for crude oil transportation capacity across key global trade routes
Strategic Rationale Behind the Divestment
The divestment of the M/T P. Sophia represents a deliberate and strategic decision by the Company to capitalize on elevated Aframax tanker asset values while simultaneously advancing its fleet renewal objectives, as the vessel, constructed in 2009 with a deadweight tonnage of 105,071 dwt, stands as the oldest ship within the Company’s fleet portfolio, and its sale enables Performance Shipping to further modernize its fleet composition, enhance overall operational metrics, and maintain a competitive positioning within the tanker sector through a younger and more efficient asset base
Financial Performance and Capital Appreciation Since Acquisition
Performance Shipping originally acquired the M/T P. Sophia in the third quarter of 2022 at a gross purchase price of US$27,577,320, and the current agreed sale price of US$35.65 million reflects an approximate gain of US$8 million relative to the acquisition cost paid three years earlier, underscoring the Company’s ability to identify attractive entry points in the asset cycle and execute timely exits that unlock capital appreciation and generate shareholder value in alignment with prudent market timing and risk management principles
Application of Proceeds Under Nordic Bond Framework
The M/T P. Sophia presently serves as part of the collateral securing the Company’s outstanding Nordic bond, and consistent with the terms and covenants of the bond agreement, the net proceeds derived from the sale will be applied in accordance with the bond’s stipulated provisions, thereby supporting the Company’s financial structure, maintaining compliance with debt obligations, and potentially improving leverage metrics while reinforcing balance sheet resilience amid ongoing market volatility and evolving macroeconomic conditions
Continued Charter Employment Through Expiration of Existing Contract
Despite the agreed sale, Performance Shipping will continue to operate the M/T P. Sophia under her existing time charter contract at a rate of US$43,000 per day until the expiration of the charter period, which is anticipated to conclude in or around late May 2026, thereby allowing the Company to capture sustained cash flow from the vessel prior to delivery to her new owners and ensuring revenue continuity that supports near-term earnings visibility and liquidity generation
Market Context Supporting the Sale Decision
The Aframax tanker segment has experienced continued strength in vessel valuations supported by healthy crude oil trade flows, supply-side discipline within the global tanker fleet, and resilient charter markets, and although forward market indicators suggest a constructive outlook for the sector, Performance Shipping has determined that the present transaction constitutes a compelling opportunity to crystallize gains at attractive pricing levels while maintaining exposure to the tanker market through its remaining fleet assets, reflecting a balanced approach to risk management and asset rotation
Enhancement of Fleet Profile and Operational Efficiency
With the removal of the M/T P. Sophia from its fleet upon delivery in mid-2026, the Company will reduce the overall average age of its vessels, a factor that plays a critical role in charter attractiveness, fuel efficiency, regulatory compliance, and environmental performance, and by focusing on a modern fleet profile, Performance Shipping aims to improve commercial competitiveness, reduce maintenance intensity, optimize operating costs, and strengthen its ability to secure premium employment opportunities in both spot and time charter markets
Executive Commentary on the Transaction
Commenting on the transaction, Chief Executive Officer Andreas Michalopoulos emphasized that the Company has successfully capitalized on continued strength in Aframax tanker values through the sale of the M/T P. Sophia at a gross price of US$35.65 million, highlighting that while the sector’s outlook remains positive, the transaction represents a timely and opportunistic decision aligned with the Company’s disciplined fleet renewal strategy and long-term value creation objectives, demonstrating management’s proactive stance in navigating market cycles and optimizing portfolio composition
Liquidity Enhancement and Balance Sheet Impact
The expected gain of approximately US$8 million compared to the vessel’s acquisition price is anticipated to materially strengthen the Company’s liquidity position, enabling greater financial flexibility to pursue strategic initiatives, evaluate selective investment opportunities, manage debt obligations, and support shareholder interests, while the application of proceeds in line with bond agreement requirements will further reinforce financial stability and underpin prudent capital structure management
Commitment to Disciplined Asset Management
Performance Shipping’s approach to fleet management emphasizes opportunistic acquisitions during favorable market conditions and disciplined divestments when asset values present compelling monetization opportunities, and the sale of the M/T P. Sophia exemplifies this philosophy by combining realized capital gains, liquidity enhancement, fleet rejuvenation, and continued revenue generation through the vessel’s existing charter prior to transfer, thereby integrating operational, financial, and strategic considerations into a cohesive value-driven transaction
Alignment With Long-Term Corporate Strategy
The Company remains committed to executing a strategy centered on maintaining a high-quality tanker fleet, optimizing capital deployment, enhancing earnings visibility, and safeguarding balance sheet strength, and the announced sale aligns with these priorities by reducing fleet age, monetizing appreciated assets, supporting debt obligations under the Nordic bond framework, and preserving market exposure through its remaining vessels, ensuring that Performance Shipping remains well positioned to respond to evolving tanker market dynamics and regulatory developments
Outlook Following the Transaction
Looking ahead, Performance Shipping intends to continue monitoring tanker market conditions, asset pricing trends, charter rate developments, and broader macroeconomic indicators in order to identify further opportunities to enhance shareholder value through disciplined fleet management actions, and the sale of the M/T P. Sophia reinforces the Company’s demonstrated ability to navigate asset cycles effectively while sustaining operational performance and financial strength, positioning the organization to pursue growth initiatives and strategic investments consistent with its long-term objectives
The agreement to sell the 2009-built Aframax tanker M/T P. Sophia for US$35.65 million represents a significant strategic and financial milestone for Performance Shipping Inc., delivering an estimated US$8 million gain relative to its 2022 acquisition price, strengthening liquidity, enhancing fleet age profile, and reinforcing disciplined capital allocation under the Company’s fleet renewal strategy, while continued operation of the vessel under a US$43,000 per day charter through late May 2026 ensures sustained earnings contribution ahead of delivery, collectively underscoring the Company’s proactive, opportunistic, and strategically aligned approach to value creation within the global tanker shipping sector.
Source Link:https://pshipping.com/