BLT Subsidiary Launches USD 147 million IPO

Investor sentiments worldwide may be jittery but this has not dampened Berlian Laju Tanker (“BLT”)’s ambition to list its subsidiary Buana Listya Tama on the Indonesia Stock Exchange. Right after the completion of a USD 93.5 million sale & leaseback agreement with Standard Chartered in March and a USD 685 million refinancing package with six lenders (DnB NOR, Nordea, Standard Chartered, ING, NIBC and BNP Paribas), the chemical tanker owner and operator is now setting its sights to enhance its liquidity position even further by selling up to 7.26 billion new shares or close to 40% of the enlarged share capital in its wholly owned subsidiary Buana Listya.

The objectives for the spin-off are straight-forward. By itself, BLT is already a listed company on the Indonesia Stock Exchange and Singapore Exchange, and the listing of its subsidiary Buana Listya will give the group financial flexibility and the access to the capital markets for debt and equity funding via two separate listed entities. The spin-off will also allow the group to
streamline its operations and better position itself for the domestic and international markets. BLT will focus its resources on growing its business as a provider of global seaborne transportation of liquid cargoes mainly the chemical sector (other than Indonesia) while Buana Listya will focus primarily on energy related shipping services serving the oil, gas, FPSO and FSO and chemical sectors throughout Indonesia. And this clear mandate to expand business within Indonesia is exactly what makes Buana Listya an attractive investment. Continue Reading

ICON Builds Relationship with MISC

Even as the tanker market outlook remains soft, the market for financial deals in this segment continues on. MISC, the largest tanker operator in Asia Pacific, has just closed on four tanker sale leaseback transactions worth a total USD 167 million with New York based ICON Capital. AET, a subsidiary of MISC, sold two 2002 built VLCCs, Eagle Vermont and Eagle Virginia, to ICON Capital and took the vessels back on bareboat charter for 7 years at an undisclosed rate. Two other 1994 built aframax tankers “Eagle Otome” and “Eagle Subaru” were also sold to ICON on a similar arrangement. In total, the sale and leaseback transaction allowed MISC to book a disposal gain of USD 33 million, which forms a part of the company’s medium and long term fleet rejuvenation strategy through the phasing out of older vessels.

ICON has participated in numerous maritime transactions with shipping companies that include ZIM, Wilh. Wilhelmsen, Teekay and TOP Tankers and this is not its first foray in Asia. Way back in 2008, ICON Leasing Fund Ten and Fund Twelve purchased four double hulled aframax product tankers – Eagle Auriga, Eagle Centaurus, Eagle Carina and Eagle Corona from affiliates of the maritime investment fund Global Skipholding 1 for USD 162.8 million. These vessels were funded with USD 52.8 million in cash and USD 111 million with loan facilities provided by Fortis and DVB Bank.  These vessels were “Hell or High Water” bareboat chartered to AET for a term of seven years and will have approximately 5 years of remaining useful life when they come off charter. In 2009, ICON Leasing Fund Twelve purchased a 51% stake in a
300-man accommodation and work barge from Singapore listed offshore marine services provider Swiber Holdings for USD 19.1 million.

Full Steam Ahead!

It is not exaggerating to say that investors are infatuated with Hong Kong Tycoon Li Ka-shing. In 2000, hundreds of thousands of people queued outside banks hoping to cash in on the Internet mania generated by the offer of shares in his Tom.com venture. Fast forward to today and you will read that the institutional book of his USD 5.8 billion business trust in Singapore, Hutchison Port Holdings (HPH) Trust, is also oversubscribed by strong demand. Perhaps this has to do with his philosophy in making sure that money is always left on the tables for his business partners.

In a Fortune magazine article years ago, Mr. Li was quoted advising his sons in the following fashion: When you enter into a partnership with somebody and you expect to make a dollar and your partner expects to make a dollar, too, then when the deal is over, why don’t you just take 80 cents? And if you take 80 cents, maybe he will offer you 90 cents, and you still have a good partnership. But even if he doesn’t offer you 90 cents and you take your 80 cents, that’s okay. But never, never should you try to take $1.10. If you follow my advice, he told his sons, you will never lack partners.  Continue Reading

China Shipbuilding Industry Co Rolls Out RMB 17.46 billion Private Placement

China Shipbuilding Industry Co will be carrying out a RMB 17.46 billion (USD 2.6 billion) private placement to fund the acquisition of four shipbuilding companies. The Shanghai listed subsidiary of state-owned shipbuilding conglomerate China Shipbuilding Industry Corporation (“CSIC”) will be placing out 2.52 billion new shares at RMB 6.93 (USD 1.05) a piece to seven companies including its parent.

CSIC and two of its wholly owned flagship subsidiaries Dalian Shipbuilding Industry Group and Bohai Shipbuilding Group as well as China Huarong Asset Management Corporation, China Construction Bank, China Development Bank Capital and China Orient Asset Management Corporation have agreed to swap their combined majority stakes in four of CSIC’s shipyards, namely 100% of Dalian Shipbuilding Industry Corporation, 100% of Bohai Shipbuilding Heavy Industry, 100% of Shanhaiguan Shipbuilding Industry and 94.85% of Qingdao Beihai Shipbuilding Heavy Industry, for shares in China Shipbuilding Industry Co (see accompanying chart). Valued at around RMB 17.44 billion (USD 2.6 billion), the injection of assets is part of CSIC’s on-going efforts to create a listed flagship vehicle, which will also equip China Shipbuilding Industry Co the ability to offer a complete suite of products including shipbuilding, ship repairing, ship conversion and the manufacturing of warship equipment. Continue Reading

IPO Renaissance in Indonesian Shipping

Indonesia is one of Asia’s fastest growing economies and more shipping companies are hoping to take advantage of this rising optimism by taking a shot at the domestic IPO market. According to the local press, as many as four shipping companies are planning to launch their share offerings in the first half of 2011.

Among them, perhaps arguably the most exciting would be PT Buana Listya Tama’s share offering. The Indonesia and Singapore listed PT Berlian Laju Tanker (“BLT”) is reportedly planning to spin off this wholly owned subsidiary to raise up to USD 120 million. Eddy Sugito, Director of the Indonesian Stock Exchange (“IDX”), confirmed market rumours that the company has already submitted its IPO documents for approval. PT Danatama Makmur, JP Morgan Securities, Deutsche Bank and Standard Chartered Securities are said to be the appointed underwriters. Continue Reading

Ananda Goes on a Road Show

Ananda Shipyard and Slipways (“Ananda Shipyard”) is on its way to become the first shipbuilding company to go public in Asia this year. The Bangladesh based shipbuilder is currently on the roadshow to sell 30 million new shares and list on the Chittagong Stock Exchange. The offer price has yet to be finalised, but shares could be offered at BDT 65 (USD 0.91) a piece as indicated in its IPO prospectus. Even though the IPO size may be as large as the mega shipbuilding IPOs that we are used to in Asia, the offering is nonetheless interesting in its own ways. 

Ananda Shipyard was incorporated in 1999 as a subsidiary of the Ananda Group, a leading conglomerate in Bangladesh that is also involved in other business segments such as textile, polypropylene woven bag mills, land development, railway engineering and information technology. Today, the shipbuilding division employs over 1,362 workers and prides itself as the largest private shipbuilder in the country. Its clients include domestic companies such as Chittagong Port Authority, Mongla Port Authority, Bangladesh Inland Water Transport Authority, Bangladesh Water Development Board, Bangladesh Navy as well as European owners such as Stella Shipping, Johs, Gram-Hanssen A/S in Denmark and Komrowski Maritim, Navalis Shipping and Wesels Reederei in Germany.  Continue Reading

Malaysia Marine and Heavy Engineering Moves Forward with IPO

MISC is one step closer to the listing of its shipbuilding arm. Europe’s second-largest oilfield-services provider Technip Société Anonyme has agreed to subscribe between 128 million and up to 158.4 million shares or an equivalent between 8.0% and 9.9% of the enlarged and paid-up capital of Malaysia Marine and Heavy Engineering (“MMHE”). Under the binding term sheets, Technip will pay a 2% premium to the Institutional price of MMHE shares.

BLT Gets Lukewarm Response

It remains challenging for shipping companies to tap the capital markets in Asia, and many are still waiting for any window of opportunity to raise funds amid the uncertain global macro environment. In recent months, there have been a number of bond issues and share offerings, but deal sizes tend to be small and not more than USD 100 million. Kudos goes to Berlian Laju Tanker (“BLT”) for having concluded its latest rights offering, but it was not without any difficulties.  

In May, the Indonesian chemical tanker owner and operator proposed a one-for-one rights issue to raise up to USD 131 million. The larger than expected discount offered (39.7% discount from its theoretical ex-rights price) surprised the market and led to the company’s share price tumbling by 18.6% in a single day. Investment bankers we spoke to pointed out that the large discount was not excessive and in line with the market conditions at that point of time. But it remains unclear why BLT continued with its rights issue despite the less than ideal valuation. We were told that BLT has no immediate issues with its lending banks and the rights issue was a part of the management’s continuous efforts in managing its balance sheet. Continue Reading

Yangzijiang taps Taiwanese Equity

Yangzijiang Shipbuilding is one step closer to the listing of its Taiwan Depository Receipts (“TDRs”) by September this year. The largest private Chinese shipbuilder, which is already listed on the Singapore Exchange, has received all the necessary approvals from Taiwan and has made an application to the Singapore Exchange. Pending approval, it will be the first Singapore listed company to list TDRs in Taiwan. Yangzijiang Shipbuilding hopes to list up to 120 million TDR shares, comprising 100 million new shares and 20 million vendor shares with the objective to boost its existing share valuation and raise more funds for potential acqusitions. Continue Reading

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.