Buying power pays off with $20 million acquisition of 2013-built MR. A MR (medium range) product tanker will be acquired for $20 million, The 2013-built MR was constructed at Hyundai Mipo shipyard in South Korea. The MR will complement the three MRs in the fleet once it is delivered in 3Q2021. Assuming a TCE rate in the $16k/day range, the MR should generate EBITDA of $3.7 million per year, and it lifts our 2021 EBITDA to $5.5 million from $4.3 million.Financing moves created financial flexibility. Also, equity offering materially improved public market float. A term loan of $17 million on the Epsilon and existing cash refinanced existing debt recently and a well-timed equity offering improved financial flexibility to shift to growth. The equity offering, in addition to preferred stock conversions, expanded the public market float to more than 50%, and set the stage for the MR acquisition. Assuming leverage in the 50% range, we estimate that pro forma cash should be in the $15 million range.Current refined product tanker market appears soft, but intermediate term outlook more favorable. There is no change in our view that intermediate -term fundamentals remain attractive due to a shift in refining capacity in the eastern hemisphere and a limited order book (at the lowest level since 2000). Global refined product demand growth and the shift in refining capacity in the eastern hemisphere should have positive impact on refined product tanker demand. Once the global economy moves beyond the uncertainty triggered by the spread of the COVID-19, refined product demand should outpace supply over the next year(s) and the MR2 order book is lowest since 2000.Maintain Market Perform rating due to balanced risk/reward profile. We have a positive view on refined product tanker intermediate term fundamentals, based on a limited order book and potential demand recovery, but the near-term outlook appears challenging. While the stock has fallen back recently (down 19% in March and 15% in April), we are waiting for signs of a turn in the refund product market and believe that the risk/reward profile is balanced. Read More >>