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

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.

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