A Giant Becalmed

Few businesses are as nerve-racking as the chartering of behemoth supertankers to carry oil, and until recently few tycoons played the risks with such consummate cool as Norway's Hilmar Reksten, 77. The tanker business seems always to swing from boom times of frantic demand and soaring charter rates to busts during which expensive tankers lie idle and unwanted. Reksten, a ramrod-straight six-footer and lone-wolf operator, started out as a shipping clerk; in 1929 he bought a freighter cheap, parlayed it into a modest fleet (thanks in part to two rich wives), then seized on slumps to buy up tonnage cut-rate. By 1973 he had amassed a flotilla worth, by some estimates, $600 million. Now, one of the worst depressions ever in the tanker business (TIME, March 10) has left Reksten financially becalmed, if not yet dead in the water.

One of Reksten's strategies was to spurn the security of long-term charters for some of his ships, preferring to shoot for higher gains on the mercurial spot market; indeed, he sometimes chartered tankers from other firms so that he could recharter them to shippers at spot rates. Between 1970 and 1973, when rates were generally rising, he chartered four huge tankers. Then came the Arab-Israeli war and Arab oil embargo, during which many tankers had to lie idle because there was no oil for them to move. The four tankers have been repossessed from Reksten for nonpayment of rates that probably totaled well over $500,000 a month.

Reksten also signed a contract in 1973 for construction of four new 420,000-ton supertankers to add to his fleet of a dozen. But the world recession and quintupled prices for oil depressed demand for petroleum and thus for tankers. As a result, Reksten canceled the contract, and now must pay Norway's Aker shipyards damages of $67 million. The Norwegian government this month came to his rescue: it agreed to buy shares in several Reksten companies for $35 million. The government will become sole owner of an oil-rig contracting firm, but Reksten will keep control of the other companies. On top of that, the Reksten tanker Sir Winston Churchill, which has been idled in the Persian Gulf for months, has received charters for two trips to Singapore. (Other Reksten tankers are named after Roman emperors, busts of whom decorate his palatial home in Bergen; his favorite is Hadrian.)

Still, Reksten's fate hangs in the balance. His expenses run to tens of thousands of dollars daily, and his debts, by one estimate, to more than $200 million. On paper Reksten can pay: his ships are still worth about $250 million. But that figure can comfort only his bankers, primarily Britain's Hambros group, who can claim some of his ships as security for loans. Most experts think that high oil prices will hold down petroleum demand and keep tanker rates unprofitable even after the world recession ends. Meanwhile, Norway's magnificent fjords, the Persian Gulf and many of the world's ports are clogged with idle tankers, including eleven of Reksten's twelve.

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