A Look At BLT

Indonesian chemical tanker owner Berlian Laju Tanker (“BLT”) has released its 2008 results this week, a balance sheet that we feel should provide some comfort to the stakeholders. Even though investors may be disappointed that net profit has declined 67.6% from USD 76.8 million in 2007 to USD 24.9 million in 2008 and no dividend has been declared, the financial strength of the company has improved as the management pro-actively seeks ways to bring down the debt level through deleveraging plans. BLT sold five vessels and leased back four for 12 years last year, booking USD 50.9 million gains, although one should also note that the company has 15 vessels still under construction as at the end of December 2008, to be completed between 2009 and 2011.

Since the leveraged buy-out of Chembulk in December 2007, the company’s balance sheet has been placed under tremendous pressure by the high gearing ratio which subsequently led to a breach of covenants on its four rupiah bonds. Net debt to equity gearing ratios based on the latest published numbers was at 1.95 times in 2008 based on USD IFRS accounts, a great improvement from 2.56 times in 2007. This decline in debt is due to the significant decline in the value of its notes and bonds as BLT practices a “mark to market” policy on its notes payable and convertible bonds.

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