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10 Questions with Marco Polo Marine CEO Sean Lee
Investors may be well familiar with the major rig builders and the Chinese shipyards listed on the Singapore Exchange, but a special group of integrated marine companies have not been hitting their radar screens in the same way. ASL Marine, Marco Polo Marine, Otto Marine, Penguin International and Swissco are among the few Singapore based small and mid-cap companies that have been expanding steadily over the past few years and many of them have diversified revenue streams from their shipbuilding/ship repairing and ship chartering operations in Southeast Asia. In this edition of Marine Money, we speak to Mr. Sean Lee, Chief Executive Officer of Marco Polo Marine.
Marco Polo Marine has its roots in shipping as early in 1991 when management saw the opportunity to ride on the increasing demand for commodity transportation services in Indonesia. In 2006, under the stewardship of Mr. Sean Lee, Marco Polo Marine found a niche in the transportation of coal. Driven by rapid economic development and population growth, energy demand in Indonesia has been rising rapidly and coal has become an increasingly important resource for the country. The exponential growth in coal production, from barely 2 million tons in 1985 to over 200 million tons today, has further spurred the demand for coal transportation services by tugs and barges. In 2007, the company saw its successful listing in Singapore where it raised SGD 15.0 million (USD 11.7 million) on the Singapore Exchange. 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
Fun Raising Continues
As economists struggle to reach a consensus on whether the global economy has indeed begun a sustainable recovery or this is simply a slower pace of contraction, investors are just befuddled by the strength and endurance of the present stock market rally. But one thing is for sure, shipping companies are wasting no time in taking advantage of this broad-based improvement in market sentiment.
In Japan, Mitsui O.S.K. Lines (“MOL”) issued two series of secured straight bonds – bonds number 11 and bonds number 12 last week and raised over JPY 50 billion (USD 528 million). The first tranche of five year JPY 30 billion bonds carries an annual coupon of 1.278% while the second ten year JPY 20 billion tranche pays investors 1.999% annually. The funds will be used to repay existing borrowings and for the redemption of commercial paper. Both Rating & Investment Information and Japan Credit Rating Agency have assigned AA- to the bonds, acknowledging that the company’s well diversified earnings have a strong capacity to recover in a market turnaround. The bonds, although unsecured, come with a negative pledge. At the same time, the company is said to be in the market for a three year JPY 15 billion (USD 156 million) loan with SMBC as the sole bookrunner. The loan is priced at 30 bp over 6-month TIBOR (Tokyo Interbank Offered Rate). MOL expects some signs of recovery in summer this year and is implementing its JPY 40 billion group-wide cost reduction measures to secure stable long term profits. The ability to secure incredibly low cost funding and execute rapid fleet reduction will prove to be critical for the company emerge stronger in face of the crisis. Continue Reading
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