Given the relative lack of funding support from the domestic banks, is leasing a viable option for the Chinese small and medium sized shipowners? There are over 1,400 leasing companies in China, according to an unofficial estimate, but very few actually have the capacity to deal with big ticket items like ships. However over the past two years, state-owned banks have established wholly-owned leasing divisions. Industrial and Commercial Bank of China (“ICBC”), China Construction Bank, China Development Bank, China Merchant Bank, Bank of Communications and Min Sheng Bank have all ventured into offering ship leasing services, and many of these specialised leasing units offer leasing services not only to ships but to other asset types such as industrial machinery and construction equipment as well. Bank of China Leasing for example is established in Singapore and offers aircraft leasing services.
There have been varying degrees of success. These state-owned leasing arms prefer to carry out leasing transactions with the first tier shipping companies in China to minimise counterparty risk, but interest has so far been limited, bearing in mind that these top clients have no lack of competitive funding support domestically. Some leasing companies have nonetheless found success with the state-owned power generation enterprises in China who have the need for coal transportation. Continue Reading
Written by:
carisk | Categories:
Asia,
Leasing | September 24th, 2009 |
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Korea Development Bank has established a KRW 2 trillion won (USD 1.6 billion) distressed asset fund to support the domestic shipping industry. We will be providing more details as well as a highlight on the differences between KDB’s fund and state-run debt-clearing agency Korea Asset Management Corp (Kamco)’s fund in the next issue of Marine Money Asia. Stay tuned.
Written by:
carisk | Categories:
Asia,
Leasing | August 13th, 2009 |
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One of the structures that could be expected to grow in the next months is Islamic finance. Access to a separate group of investors aside, Islamic finance in shipping has often been cited as uneconomical due to the costs and complications associated with the structuring of deals. The relevance of such inhibitors pales compared to the relative difficulty of finding finance at all in today’s market.
Standard Chartered has long been at home in this arena, and it is little surprise that they have been actively closing a relatively large number of modestly sized deals. Most recent was a MYR 162 million bilateral 10-year Islamic Finance Lease Facility for Tanjung Kapal Services Sdn Bhd, a subsidiary of Tanjung Offshore, for the construction and commissioning of four new AHTS vessels. These will complement Tanjung’s existing fleet of 11 offshore support vessels. The facility is based on the Sharia-compliant concept of Ijarah and shall be disbursed in two tranches within an expected timeframe of two years.
Written by:
carisk | Categories:
Asia,
Leasing | July 2nd, 2009 |
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Singapore based Swiber Holdings (“Swiber”) has demonstrated that with the right asset and out of the box thinking, pockets of liquidity still exist even in the heart of the global financial crisis. On 24 March 2009, US based ICON Capital Corporation (“ICON”) – one of the largest independent, privately held equipment leasing and specialty finance companies in the United States paid Swiber USD 19.125 million for a 51% interest in Victorious LLC, a Marshall Islands incorporated wholly owned subsidiary of Swiber whose sole asset is a 300 men dive support accommodation work barge. R.S. Platou Finans Singapore Pte. Ltd. And LS Finans A.S., Oslo were the advisers to this transaction.
The consideration is calculated based on the unaudited net tangible asset value of Victorious LLC at the time of subscription, being USD 37.5 million. ICON will acquire a senior, controlling equity interest in and all management rights with respect to Victoria while Swiber will provide the barge in exchange for a subordinate non-controlling 49% interest in Victorious. Victorious will also assume USD 5 million of subordinated indebtedness in favour of Swiber that bears interest at the rate of 3.5% per annum. Continue Reading
Written by:
carisk | Categories:
Asia,
Equity,
Leasing | April 9th, 2009 |
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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
Written by:
carisk | Categories:
Asia,
Equity,
Leasing | March 12th, 2009 |
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The Royal Bank of Scotland has demonstrated its creativity and competence once again in the completion of an $800 million UK operating lease, the first of its kind, to finance four LNG carriers. The lease has a relatively short term, compared to standard 25-year leases, and comes as the UK government threatens rule changes that would put disallow commonly-used arrangements. RBS served as lead arranger of the deal and is the sole lessor, while financing has been syndicated down to BNP, Societe General, KfW and National Australia Bank.
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carisk | Categories:
Freshly Minted,
Leasing | April 21st, 2005 |
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Fueled by loads of liquidity and a desire among many investors to use strong Kroners to make deals in cheap dollars, Norwegian K/S arranger Fearnley Finans together with Lorentzen & Stemoco launched this week with Bergesen the largest deal to come to the market. The deal is for the acquisition of four medium-sized LPG tankers currently trading in the Exmar Midsize pool. The new company, Edda Gas K/S, will acquire two of the ships from Bibby Line and the other two from Bergesen. The project price is $176.2 with $50.2 million in paid in capital and $30 million in uncalled capital. Bergesen has already committed 45-49% of the capital, while commercial banks will provide mortgage financing of $126 million. It is estimated he deal will achieve an IRR on 15 years of 15%. The deal is an excellent opportunity for Bergesen to reduce its risk in this market and benefit from premium asset prices while it also represents an growing interest from the larger shipping companies to use the K/S market for sale-lease back deals.
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carisk | Categories:
Freshly Minted,
Leasing | March 17th, 2005 |
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Navigation Finance Closes 8-year Deal on
Rio Tinto Panamax
Details are very sketchy, but we understand from market sources that NFC’s Al Rubban Fund has closed an 8-year bareboat on the 1996-built panamax bulker Endeavour owned by Pratap Shirke’s PanOceanic Bulk Carriers. Close watchers of the high yield fiasco of the late 1990s will recall that the ship was part of the PanOceanic fleet, which issued bonds through Chase in 1997 and were the first to restructure with a $0.75 settlement. As we understand this deal, NFC purchased the ship from Shirke and bareboated it back to him, after which time Shirke then bareboated the vessel to mining giant Rio Tinto, which then hired Shirke to perform technical management. Debt on the deal, which we assume was at least 90% of the purchase price thanks to an 8-year deal with a credit like Rio Tinto, was provided by Bank of Ireland.
Details are very sketchy, but we understand from market sources that NFC’s Al Rubban Fund has closed an 8-year bareboat on the 1996-built panamax bulker Endeavour owned by Pratap Shirke’s PanOceanic Bulk Carriers. Close watchers of the high yield fiasco of the late 1990s will recall that the ship was part of the PanOceanic fleet, which issued bonds through Chase in 1997 and were the first to restructure with a $0.75 settlement. As we understand this deal, NFC purchased the ship from Shirke and bareboated it back to him, after which time Shirke then bareboated the vessel to mining giant Rio Tinto, which then hired Shirke to perform technical management. Debt on the deal, which we assume was at least 90% of the purchase price thanks to an 8-year deal with a credit like Rio Tinto, was provided by Bank of Ireland.
Written by:
carisk | Categories:
Freshly Minted,
Leasing | March 3rd, 2005 |
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MC Shipping In Sale/Leaseback on Bergesen LPG Ships
The progress that CEO Tony Crawford has made at MC Shipping over the last few months has been nothing short of remarkable. In that time, the once dormant Amex-listed company has shown a burst of energy and ambition with the sale of its older container ships, the recapitalization of its balance sheet, the streamlining of its shareholding structure, the buy back of its bonds, the expansion of its banking relationship and a sharp focus on the white-hot LPG sector. Not surprisingly, MC’s share price has soared 167%, from $3 to $8, over the course of the restructuring.
In the company’s latest move, MC announced late last week that it had acquired two very large LPG vessels from Bergesen. MC paid $83 million for the 75,000 cubic Berge Flanders (1991) and 77,000 cubic Berge Kobe (1987) and leased the ships back to Bergesen for five years. Although this deal is largely an equity financing (the success of which will hinge on residual values when the ships are redelivered) and could have been done in the KS market, it demonstrates MC’s ambition to be a leading player in one of the hottest sectors of shipping. Including the new ships, MC Shipping owns a fleet of nine LPG vessels, including three VLGC’s and six smaller vessels ranging from 3,000 to 77,000 cubic meters in capacity. MC also retains an investment in four container ships as well as two small sea-river vessels.
The progress that CEO Tony Crawford has made at MC Shipping over the last few months has been nothing short of remarkable. In that time, the once dormant Amex-listed company has shown a burst of energy and ambition with the sale of its older container ships, the recapitalization of its balance sheet, the streamlining of its shareholding structure, the buy back of its bonds, the expansion of its banking relationship and a sharp focus on the white-hot LPG sector. Not surprisingly, MC’s share price has soared 167%, from $3 to $8, over the course of the restructuring.
In the company’s latest move, MC announced late last week that it had acquired two very large LPG vessels from Bergesen. MC paid $83 million for the 75,000 cubic Berge Flanders (1991) and 77,000 cubic Berge Kobe (1987) and leased the ships back to Bergesen for five years. Although this deal is largely an equity financing (the success of which will hinge on residual values when the ships are redelivered) and could have been done in the KS market, it demonstrates MC’s ambition to be a leading player in one of the hottest sectors of shipping. Including the new ships, MC Shipping owns a fleet of nine LPG vessels, including three VLGC’s and six smaller vessels ranging from 3,000 to 77,000 cubic meters in capacity. MC also retains an investment in four container ships as well as two small sea-river vessels.
Written by:
carisk | Categories:
Freshly Minted,
Leasing | March 3rd, 2005 |
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UK Tightens Leasing Criteria
The United Kingdom Inland Revenue issued a clarification notice regarding the use of offshore-onshore structures for UK tax leases of vessels, according to Tom Kane of Global Capital Finance. Formerly, in the circumstance where there was a chain of leases, only one lessee had to satisfy the criteria set out to qualify them as a bona fide UK ship operator. With effect from February 3rd, all lessees must satisfy these criteria. Leases entered into before February 3, 2005 or within three months of this date providing that the terms had been agreed prior to it, will not be subject to the revised regulation, nor will time-charter arrangements or contracts of affreightment. Mr. Kane assures us that even after the change takes effect, the UK lease should remain “a highly effective and tax efficient method of financing vessels.”
The United Kingdom Inland Revenue issued a clarification notice regarding the use of offshore-onshore structures for UK tax leases of vessels, according to Tom Kane of Global Capital Finance. Formerly, in the circumstance where there was a chain of leases, only one lessee had to satisfy the criteria set out to qualify them as a bona fide UK ship operator. With effect from February 3rd, all lessees must satisfy these criteria. Leases entered into before February 3, 2005 or within three months of this date providing that the terms had been agreed prior to it, will not be subject to the revised regulation, nor will time-charter arrangements or contracts of affreightment. Mr. Kane assures us that even after the change takes effect, the UK lease should remain “a highly effective and tax efficient method of financing vessels.”
Written by:
carisk | Categories:
Freshly Minted,
Leasing | February 10th, 2005 |
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