Shares of Castor Maritime (CTRM 1.51%) soared 45% on Thursday after the shipping specialist announced the purchase of new vessels.
Castor Maritime agreed to buy two 2005 Aframax LR2 tankers from an undisclosed seller for a total of $27.2 million. Both ships are under time charter contracts for approximately one year. Each vessel has a minimum gross daily hire rate of $15,000 and an additional profit-sharing arrangement.
Castor Maritime expects to take delivery of the tankers in the first quarter of 2021.
"As we have communicated previously, we are a company that aims to take advantage of attractive opportunities presented to us, as the shipping cycles evolve," Castor Maritime CEO Petros Panagiotidis said in a press release. "Therefore, we are very excited to be entering the tanker market, at what we believe is an opportune time for this sector."
The coronavirus pandemic and the corresponding decline in the global economy has taken a heavy toll on the tanker market. Castor Maritime is trying to use the industry's struggles to its advantage by buying tankers on the cheap when shipping rates are depressed.
"While the tanker market may face continued headwinds in the short to medium term, the attached time charter contracts provide us with cash flow security while the profit-sharing arrangement allows us to benefit further should a rate recovery materialize within their duration," Panagiotidis said.
Investors should expect Castor Maritime to remain on the hunt for more deals. "With significant capital on hand, we are actively continuing to look for further opportunities to diversify and grow our fleet with the addition of high-quality tonnage," Panagiotidis said.