The Landscape Has Changed

In what we believe could be a far reaching decision first reported in Lloyds List, London’s High Court has in effect leveled the playing field when it comes to cross-border insolvency proceedings involving shipping. In Mr. Justice Morgan’s decision, the High Court recognized the primacy of Samsun Logix Corporation’s (“Samsun”) insolvency proceedings in Korea and imposed a moratorium on Samsun’s creditors in the UK. According to Nicholas Woo of Birketts LLP, Samsun’s legal counsel, this action recognizes the company as a going concern in the long-term and gives it the necessary breathing space to position itself accordingly.

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Loose Lips Sink Ships

It has been a very frustrating week. We have talked to bankers who have indicated that they are in fact working on M&A deals but whether they are constrained from discussing them or are just simply fearful of jinxing them, we cannot unearth any detail. Among previously identified deals, Tufton’s distressed fund is rumored to be near closing its first deal and the TUI and Hapag Lloyd deal seems to be back on track. The good news however is that there is activity. We remain on the case and, of course, would welcome a quiet hint.

Brian Chang Takes Over as CEO

Yantai Raffles Shipyard Limited (“YRSL”), the largest builder of semi-submersible drilling rigs in the PRC, has announced the successful completion of its CEO Mr Cho Yong Jin’s three-year contract with the company. Mr Brian Chang will take over as CEO, in addition to his current role as Deputy Chairman of YRSL. Continue Reading

New Appointment for Watson, Farley & Williams

Watson, Farley & Williams (“WFW”) has appointed Angel Chiang to the Singapore office as a consultant to support its increased activity in the oil and gas sector and in particular in its market leading position in upstream work. 

Angel was previously in-house legal counsel with Single Buoy Moorings (“SBM”) for seven years. Her scope of work with SBM included advising internally and co-ordinating with external counsel on financing, joint ventures, services agreements and corporate work. She is experienced with oil and gas industry operations throughout Southeast Asia and other major oil producing countries such as Angola, Nigeria and Brazil. Continue Reading

DnB NOR Opens a Representative Office in Mumbai

DnB NOR officially opened a representative office in Mumbai this week, the first such office for the bank on the Indian sub-continent. The office was formally opened by Mr Rune Bjerke, group chief executive of DnB NOR ASA, at a ceremony attended by the Norwegian Ambassador to India, Her Excellency Ms Ann Ollestad. Continue Reading

Heard from the Grapevine

Market rumours have suggested that STX Pan Ocean has successfully issued unsecured KRW 150 billion (USD 100 million) straight bonds domestically. The 18 month bonds carry a fixed interest rate of 8.2 percent, payable every quarter.

In Vietnam, the government has granted approval for the state-owned Vietnam Shipbuilding Industry Group (Vinashin) to issue VND 3 trillion (USD 171.6 million) of local bonds and USD 400 million dollar denominated bonds. Vinashin has reportedly started discussions with rating companies including Standard & Poor’s in preparation for the bond issue Continue Reading

Government Responses

Lately, many governments in Asia have come up with plans to lend a helping hand to the shipping or shipbuilding industry – sectors that they consider to pivotal to their country’s economic well being. In February, the Chinese State Council has approved a stimulus package for the domestic shipbuilders – largely aimed at stabilizing the orderbooks, reducing operating risks and regulating capacity of the shipbuilders. The plan has outlined six policies as summarised below:

1. Stablise shipbuilders’ orderbooks: By providing more financial support to shipowners, encouraging large shipping companies to adhere to their newbuilding delivery schedules and introducing policies to expedite vessel replacements Continue Reading

Precious Money

Shipowners continue to face difficulties in securing financing, but for the fortunate few there exist some pockets of liquidity, albeit at smaller amounts. Thailand’s Precious Shipping has successfully negotiated for an extension of its credit facility from Krung Thai Bank and two other local banks for the baht equivalent of USD 250 million. This follows closely its earlier announcement that it had renewed its secured revolving loan facility agreement with DnB NOR Bank, Singapore branch and two undisclosed lenders. The two facilities will provide Precious Shipping with up to USD 350 million for the acquisition of second hand vessels.   

In the latest transaction, Krung Thai Bank, Bank of Ayudhya and Siam City Bank have extended its facility till 18^th January 2010 but not without some amendments. The facility amount was lowered from USD 300 million to Thai Baht equivalent of USD 250 million (Baht 8,750 million) and the currency of the facility was changed from US dollar to Thai Baht. This seems to suggest the local banks are still facing difficulties in financing long positions in US dollars. Precious Shipping will therefore have to assume the risk of an appreciating US dollar against Thai Baht at the time of the drawdown. The facility is priced at the minimum lending rate minus 1% with a commitment fee of 1% per annum on undrawn loan amount. Continue Reading

“Safeena”

Asia Finance Bank and AmanahRaya Investment Bank have committed equity to a new USD 50 million shipping fund in Malaysia. During our visit in Malaysia, we caught up with Mr. Mohd Zamri Shariff, Head of Asset Management Division, Asian Finance Bank for an update on the first Sharia compliant shipping fund in the Asian region – the Safeena Islamic Shipping Fund (“Safeena shipping fund”). Safeena shipping fund which literally means “my ship” in Arabic was launched on 28 April 2008, with a committed equity participation from its two sponsors, Asian Finance Bank (“AFB”) and AmanahRaya Investment Bank (“ARIB”) amounting to USD 50 million.

Owned by a consortium of shareholders from leading Middle Eastern financial institutions – Qatar Islamic Bank and associates (70%), RUSD Investment Bank Inc of Saudi Arabia (20%) and Financial Assets Bahrain W.L.L (10%) – Asian Finance Bank is one of the three foreign Islamic banks that has been granted a license by Bank Negara Malaysia (Malaysia’s Central) to undertake Islamic banking business. In 2004, Malaysia awarded three licenses to Kuwait Finance House, Saudi Arabia’s Al Rajhi Bank and AFB, in an effort to develop into a region Islamic finance hub. The other sponsor of the shipping fund, AmanahRaya Investment Bank, is Malaysia’s leading Trustee Company, wholly owned by the government. Continue Reading

Sages of Shipping

Often we need a fresh perspective or even confirmation of what we are thinking. We are certain that there is much going on behind the scenes, between negotiations with banks and with charterers. Yet we feel that we are missing the proverbial forest through the trees. So this week we sat down with two close friends who gave us their perspective of what, in their view, is going on today in wide ranging discussions. There are many questions but no answers for the moment.

Historically, there were certain truths about shipping which were inviolate. Credit was always available, supply was predictable and demand was the unknown factor. The world has changed drastically. Today, there is an absence of credit, supply is unpredictable, and demand even less so. And, on the practical side, making matters worse, owners don’t know what their bankers can do whether it relates to funding, or even restructuring.

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