SapuraCrest and Kencana in RM 12 billion Merger

Two Bursa Malaysia listed oil and gas firms, SapuraCrest Petroleum and Kencana Petroleum, are in talks over a potential RM 12 billion (USD 3.95 billion) merger that will create one of the largest integrated oil services companies in the country. The structure of the merger will be carried out in the form of a sale to a SPV, in which a shell company Integral named Integral Key Sdn Bhd (“IKSB”) will acquire the assets and liabilities of both SapuraCrest and Kencana.

Under the buy-out offer, IKSB has offered SapuraCrest’s shareholders RM 5.87 billion (USD 1.95 billion) that will be satisfied by the issuance of 2.5 billion new ordinary shares in IKSB at an issue price of RM 2.00 per new IKSB share and a cash payment of RM 875 million (USD 291 million). IKSB has simultaneously submitted a RM 5.97 billion (USD 1.97 billion) offer to acquire the entire business and undertakings of Kencana, in the form of cash of RM 969 million (USD 322 million) and 2.5 billion new IKSB shares at the same issue price of RM 2.00. Both companies will be delisted from the exchange after the merger, and the new entity will be relisted under a different name.  Continue Reading

J-WesCo Acquires Westwood Shipping

Sumitomo Warehouse’s wholly owned subsidiary J-WesCo is set to acquire the entire stake in US based Westwood Shipping Lines (“Westwood Shipping”) for USD 53 million. Westwood Shipping is currently owned by Weyerhaeuser NR Company, one of the world’s largest pulp and paper companies, and operates a fleet of seven ships in the Japan, Korea, China, and Pacific Northwest gateways with a turnover of USD 246 million in 2010.

Integrated logistics services provider Osaka based Sumitomo Warehouse hopes that the acquisition will help further expand its international operations. Closing of the transaction is scheduled for August 31, 2011.

From Selling Ceramic Tiles to Building Offshore Vessels

Beneath this intriguing headline lies an interesting story. What would you do if you want to list your privately held Malaysia based shipbuilding company on the Mainboard of the Singapore Exchange? Nam Cheong took an unconventional approach and executed a back-door listing, without raising any equity, through Eagle Brand Holdings (“Eagle Brand”) – a China based manufacturer of ceramic tiles.

For Nam Cheong, Eagle Brand is an ideal reverse take-over candidate: it is a cash positive shell company without any manufacturing activity, hardly any liability and more importantly, it has a management team that is willing to sell out. In 2009, the group divested its entire equity stakes in the manufacturing of ceramic tiles and began its search for alternative investment opportunities. After the completion of the divestment and a substantial capital distribution that followed, the management held numerous negotiations with interested corporations to realise its reverse-takeover plans and Nam Cheong was eventually the chosen suitor. Continue Reading

STX Pan Ocean Acquires Heung Kook Bank

In a rather unusual development, STX Pan Ocean has made an offer to acquire all the outstanding shares in Heung Kook Mutual Savings Bank that it does not already own. The largest dry-bulk shipping line in South Korea will be paying KRW 34 billion (USD 31 million) to STX Construction and Bulim Mutual Savings Bank for their 65.6% and 18.8% equity stakes in the Busan based Heung Kook Bank. This will effectively increase the company’s stake in the bank from 15.6% to 100%.

Explaining the reason behind the acquisition, STX Pan Ocean said that the bank will “enhance the efficiency across its businesses and management, and strengthen the competitiveness in ship financing market.” But what this exactly means remains unclear and the market will need more clarity on the potential synergies the shipping company can derive from the acquisition of a local bank. Continue Reading

Plan B(LT)

Berlian Laju Tanker (“BLT”)’s acquisition of Camillo Eitzen & Co ASA (“CECO”) may have hit a speed bump when its initial transaction structure, which involved the issuance of mandatory exchangeable bonds (“MEBs”), was rejected by the Indonesian market regulator. But we understand that the company and its advisor RS Platou Markets remain resolute and are working hard on an alternative plan. Since then, a series of developments have occurred that added uncertainty to BLT’s quest for CECO and we hereby provide a summary of these developments in chronological order.

On 1 October 2009, Eitzen Chemical ASA (“ECHEM”) reached an agreement with most of its lenders (all syndicate loans and most bilateral loans) on the restructuring of its bank debt. However, this was conditional upon a new equity issue of a minimum USD 100 million by November. ECHEM was in dire need of capital injection. Continue Reading

BLT Loses CECO Exclusivity

Berlian Laju Tanker (“BLT”) and Camillo Eitzen & Co ASA (“CECO”) provided an update on the acquisition progress. BLT is proposing a new transaction structure that involves the issuance of new shares to CECO shareholders, after its initial plans of a mandatory exchangeable bonds issue hit a roadblock with the Indonesian regulator. CECO re-affirmed that BLT’s offer is still attractive but no extension of the exclusivity agreement was granted to BLT. Immediate hurdles for BLT would be to raise USD 200 million in new equity and secure the green lights from all the lending banks of BLT and CECO.

Hoe Leong Moves Into Tanker Business

Singapore listed spare parts distributor Hoe Leong Corporation (“Hoe Leong”) is acquiring a 49% equity interest in the tanker business of Sumatec Resources (“Sumatec”), a Malaysia listed oil and gas service provider. A new company will be established to acquire the entire share capital of Sumatec’s tanker operating and owning subsidiaries (Semado Maritime, Semua Shipping, Semua Chemical Shipping and Mini Tanker Chartering or collectively, the “Semua Group”). Following the acquisition, Hoe Leong, Sumatec and a private investment holding company Grand Columbia Holdings will each own 49%, 38% and 13% in the new entity. Continue Reading

Picking up Distresed Assets and Private Equity

John Kennedy has a quote: “When written in Chinese, the word “crisis” is composed of two characters-one represents danger, and the other represents opportunity.” But even as the shipping markets in general remain in doldrums, there have been surprisingly few mergers and acquisitions in the market, contrary to what one might expect. The lack of liquidity and funding from the banks could be a reason. Or could it also be that market watchers are still holding on to the view that asset prices have yet to hit rock bottom? So whether it is this fear of catching a fallen knife or the lack of financing and quality investment opportunities, seasoned shipping investors and private equity firms remain largely on the sidelines. There were few public distressed situations this year and this could well suggest that banks are working very hard with their clients to avoid foreclosures, rather than accepting haircuts on assets. Continue Reading

CIMC Begins Full Acquisition of Yantai Raffles

China International Marine Containers Group (“CIMC”) has appointed Goldman Sachs (Singapore) for the full acquisition of Singapore’s Yantai Raffles Shipyard (“Yantai Raffles”). This move by CIMC comes as the next step in its bid to takeover the remaining Yantai Raffles’ shares, of which CIMC already owns 18.27% through its wholly owned subsidiaries CIMC HK and Sharp Vision Holdings.    Continue Reading

Acquisition Alert

Singapore listed offshore support company Swissco could be acquired by C2O Holdings. C20 Holdings has agreed to acquire 54.75% of the total issued shares of Swissco from its controlling shareholder, Yeo Holdings Private Limited as part of its plans to take full control of the company. The offer price of SGD 0.89 is a 22% premium over the company’s net tangible asset value of SGD 0.73. Based in Singapore, Swissco provides marine services to the shipping and offshore oil and gas industries. The group owns, operates and charter offshore support vessels, out-port-limit boats, tugs and barges in support of its customers’ marine logistic needs.

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