And a Pleasant Surprise in Malaysia

While the Singapore Exchange suffers a major setback, Bursa Malaysia is all ready to welcome the listing of one of the country’s leading shipbuilders, Shin Yang Shipping. The Sarawak based shipbuilder and owner has plans to list in Malaysia by the third quarter of this year. It hopes to sell 178.38 million new shares with AmInvestment Bank as the appointed advisor. Proceeds from the IPO will be used to acquire three anchor handling tugs and four cargo ships while the remaining funds will be used to expand its shipyards.

In addition to boasting a strong fleet of 238 vessels that comprises mainly tugboats, barges and small oil tankers, Shin Yang is also a leading shipbuilder in Malaysia, and has constructed over 103 vessels over the past five years. It is currently constructing a ship repairing yard in the United Arab Emirates as parts of its plans to grow into a major regional shipping company in Asia.

An Unexpected Twist

In a bizarre turn of events, New Century Shipbuilding (“NCS”) has canned its listing plans in Singapore on eve of pricing, citing tough market conditions. The Business Times in Singapore reported today that there is more to the sudden IPO pull-out than meets the eye. The largest privately owned shipbuilder in China is now accused of misleading investors through material inaccuracies contained in its prospectus. Quoting unnamed sources, a complaint made to the Singapore Exchange pointed out that the shipbuilder had failed to disclose that two shipbuilding contracts for Sino Noble worth USD 180 million had been terminated late last year and were wrongly listed as part of its outstanding orderbook. NCS had also failed to mention the legal claim amounting to USD 60 million that Sino Noble is currently claiming against the shipbuilder.

The company could face criminal action from the Monetary Authority of Singapore if found guilty of making false and misleading statements. According to its prospectus, its orderbook has an aggregate value of USD 5.2 billion as at 31 March 2010 and included orders for 83 vessels with a combined tonnage of approximately 10.8 million dwt to be delivered between 2010 and 2012. We are absolutely baffled by NCS’ non-disclosure in consideration that the two disputed contracts with Sino Noble accounted for only 3.5% of its total orderbook. There appear to be hardly sufficient reasons to place the IPO in jeopardy by not being transparent in this regard. Continue Reading

More Rights Issues in the Works?

It is the time of the year when most companies in Singapore will be holding their Annual General Meetings. This year, more companies are expected to put forward “blank cheque” resolutions to raise money by selling more shares, encouraged by the revisions in Singapore Exchange (“SGX”) listing rules.

In February 2009, SGX increased the limit to allow a listed issuer to seek a general mandate from shareholders for issuance of new shares on a pro-rata basis up to 100% of its issued share capital, vis-à-vis the 50% limit previously. The stock exchange believes that concerns over dilution of minority shareholders’ interests are mitigated in a pro-rata renounceable rights issue as all shareholders have equal opportunities to participate and can dispose their entitlements through trading of nil-paid rights if they do not wish to subscribe for their rights shares. Continue Reading

China’s Largest Shipbuilder Eyes Singapore

It has been more than two years since Yangzijiang Shipbuilding and JES International made their way to the Singapore Exchange and the city state is now buzzing with excitement over New Century Shipbuilding (“NCS”)’s imminent IPO. NCS is the largest privately owned shipbuilder in China and is ranked among the fifth largest shipbuilding groups in China. Market hearsays suggest that the shipbuilder is looking at raising up to USD 2.4 billion, making this possibly the largest Chinese IPO in Singapore. We will be providing more coverage in the next edition of Marine Money Asia when more details are available.

Game Changers?

In their 4th quarter earnings release, Golden Ocean Group Limited announced that its application for a secondary listing in Singapore had been approved by the Singapore Exchange (“SGX”). The company already has an operational presence in Asia and saw the opportunity offered by the July 2009 Memorandum of Understanding between SGX and the Oslo Bors (“OSE”), which facilitated a simplified and accelerated dual listing process between the exchanges. This will be the first secondary listing by a Norwegian firm under the new accords.

From our perspective, this is an interesting transaction. Not only is this an example of a western company seeking equity capital in the East, it also raises the question of whether the market would follow the trendsetter, John Fredriksen, who was the first to bring his company to the U.S markets. The successful listing of Golden Ocean will blaze the trail for more to follow and strengthen Singapore’s position as a maritime and financial hub. Continue Reading

Wikborg Rein Sees More Listings in Singapore

Last week, Wikborg Rein provided an outlook for listings in Singapore in 2010. The Norwegian law firm pointed out that a large part of market capitalisation has been eroded by the privatisation of several listed companies but it expects to see a greater number of listing candidates, both in primary and secondary in Singapore this year. In view of the Memorandum of Understanding (MoU) signed between Singapore Exchange (“SGX”) and Oslo Børs on 8 July 2009 to promote dual listings on the two markets and an improving global economic outlook, Wikborg Rein believes that secondary listings of Oslo-listed companies will re­ceive increased attention.

For those IPO aspirants, Wikborg Rein has the following advice.

-          Companies contemplating primary lis­tings on the SGX should commence the process sooner rather than later due to the proposed changes to the listing rules in Sin­gapore which will, inter alia, tighten the admission requirements and raise the minimum issue price. In this regard, timing is the key for any company which wishes to list on the SGX – the candidate should either decide to do so quickly before the changes take place, or wait until the new regime is in place. Continue Reading

Shipping IPO in Asia: Where Else But China

We could barely contain our excitement when we picked up news that Hainan Strait Shipping had successfully raised net proceeds of RMB 1.28 billion (USD 187 million) on the Shenzhen Stock Exchange last December. The news might be a little old but any shipping company that managed to pull off an IPO last year deserves some recognition in our newsletter.

Hainan Strait Shipping, a ro-ro operator based in Hainan Island in China sold 39.5 million new shares at RMB 33.6 (USD 4.92) a piece, making this the second shipping IPO in Asia last year. Established by Haikou Port Group together with co-investors Shenzhen Yantian Port Holdings and China Shipping Haisheng (a listed subsidiary of state-controlled China Shipping Group), Hainan Strait Shipping operates a fleet of 17 vessels including 15 ro-ro passenger ferries and 2 passenger vessels between Hainan Island and Guangdong province in China. Its main shareholder Haikou Port Group has a 75% stake prior to the IPO and is 95% owned by the central government. For those who are not familiar with Hainan, the island is located in the southern most of China and Hainan Strait Shipping operate ferry services in the shallow, narrow Qiongzhou Strait that separates the island and Guangdong’s Leizhou Peninsula. Continue Reading

From Selling Compact Discs To Buying Offshore Vessels

Underneath this rather intriguing headline lies an interesting story. What would you do if you want to list your privately held offshore support services business on the Mainboard of the Singapore Exchange? Falcon Energy took a different approach and executed a back-door listing through Sembawang Music – a well known music retailer in Singapore in May 2006. Sembawang Music was an ideal acquisition target back then: It had only one business, with hardly any liability and more importantly controlled by only one major shareholder who was willing to sell out. And the rest is history. After selling its music retail chain store business, Falcon Energy grew steadily into an oil and gas operator with a focus on the production phrase of oilfield activities. It currently owns and operates nine offshore vessels, mainly work/accommodation vessels.

In the greater scheme of things, Falcon Energy announced a surprise major acquisition last Friday. It will be acquiring the entire 29.07% stake in CH Offshore, 205 million shares at SGD 0.70 per share from Malaysia’s Scomi Marine Berhad for SGD143.5 million (USD 101.7 million). Scomi Marine will pocket a profit of USD 18.6 million from the investment it made in 2005 and proceeds will be used to repay its existing borrowings. Continue Reading

Different Means, Same End

There are a number of similarities between Marco Polo Marine and Otto Marine. Both are Singapore listed and have their ship chartering and shipbuilding businesses focused on tugboats and barges. Coincidentally, both revealed plans to raise more capital in the past two weeks, but in different ways.

Last Wednesday, Marco Polo Marine announced its disposal of 8 vessels to a related party on a sale-and-leaseback arrangement for SGD 11.9 million (USD 8.48 million). The company explained that this arrangement would serve two purposes. Firstly, this reduces the company’s gearing level and improves cash flow while maintaining the fleet size without the loss of commercial and operational control. Secondly, this circumvents the restriction faced by company in operating Indonesian flagged vessels. The company is not allowed to own Indonesian flagged vessels (since only Indonesians can do so) and the sale-and-leaseback arrangement will enable the company to operate Indonesian flagged vessels freely in Indonesian waters. Continue Reading

STX Group Mulls China Listing

STX Group is paving the way for a potential listing of its shipbuilding units in China. The new holding company STX Dalian Holdings will take control of STX Dalian Shipbuilding, STX Dalian Heavy Industries and STXDalian Marine Engineering, with plans of an eventual listing either in Shanghai or Hong Kong in 2011. Last year, STX Dalian Shipbuilding secured a 9 year loan of RM 2.85 billion (USD 417 million) from China Construction bank and another unnamed Chinese bank at 6.14%. Continue Reading