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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.
MISC’s Unit Clinches USD 137 million
Malaysia Vietnam Offshore Terminal (“MVOT”), a 51% jointly controlled entity of MISC, signed a USD 137 million limited recourse term loan facility from a syndicate of banks comprising Sumitomo Mitsui Banking Corporation, HSBC, Natixis and OCBC Bank (Labuan). PetroVietnam Technical Services Corporation (“PTSC”), a member of the Vietnam National Oil and Gas Group (“PetroVietnam”) owns the remaining 49% in MVOT.
The floating storage and offloading unit (“FSO”) owner will be making use of the seven year loan to finance project costs. Both MISC and PTSC will provide guarantees to the loan in proportion to their shareholding interests in MVOT via a pledge of the shares held by both companies.
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.
The Importance of Self Preservation
In 2009, the equity markets had a roller coaster run, but some shipping companies found windows of opportunity for share placements, often tied to debt reduction. Self help through raising equity capital for balance sheet recapitalization is one way to ride through the difficult times. There had been varying degrees of success and among the most notable would be Neptune Oriental Lines’ (“NOL”) USD 972 million rights issue in June and NYK’s recently concluded JPY 116.4 billion (USD 1.3 billion) global equity offering. Continue Reading
MISC Wants it Right
With the strong support from state-owned oil and gas company Petroliam Nasional Berhad (“Petronas”), MISC has announced last week that it plans to raise up to RM 5.2 billion (USD 1.5 billion) via a renounceable rights issue. Petronas, which currently owns 62.67% of MISC, has agreed to subscribe its entitlement in full in proportion to its shareholdings and will take up additional rights shares, should these shares remained unsubscribed by other entitled shareholders.
744 million new ordinary rights issues which represent 16.7% of the enlarged share capital will be sold to existing shareholders on the basis of one rights share for every five existing ordinary MISC shares at an issue price of RM 7.00 a piece. The issue price is a discount of approximately 18% from the theoretical ex-rights price of RM 8.53 based in the 5-day volume weighted average market price of MISC shares up to an inclusive of 20 November 2009. The rights shares will rank pari-passu with all existing MISC shares.
Proceeds will be used for capital expenditure to partially finance projects for floating production systems. MISC says the proposed rights issue will allow the company to raise new capital without diluting existing shareholders’ shareholdings and at the same time lower its debt-equity ratio from 0.57 to 0.45. MISC has currently total borrowings of RM 11.8 billion (USD 3.5 billion).
The offering managed by sole advisor RHB Investment Bank is expected to be closed by the first quarter of 2010.
MISC secures USD 100 Million For Offshore Project
Following the announcement that it has clinched a contract for the lease of 2 mobile offshore production units, MISC’s subsidiary Malaysian Offshore Mobile Production (Labuan) has completed a USD 110 million seven year project financing with mandated lead arrangers ABN AMRO, ANZ, ING Bank, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation. Continue Reading
Malaysia: Challenges and Opportunities
Marine Money Asia hits the road this week as we head to Kuala Lumpur to present at the Maritime Financing Seminar 2009 put together by our friend Nazery Khalid at the Maritime Institute of Malaysia (“MIMA”) with the sponsor OCBC Bank. More than any other cities in the country, Kuala Lumpur represents the focal point of Malaysia in many aspects and the same can be said for ship financing. The two day seminar gathered an impressive list of over 80 delegates to discuss the current state and the opportunities for the growing Malaysian shipping industry. In his opening address, Director General Dato Cheah Kong Wai from MIMA highlighted some of Malaysia’s achievements in the maritime sector. Today, Malaysia is ranked by UNCTAD as the 18th most important nation in terms of its 1.2% contribution to the world’s merchant fleet in 2008. In addition to two world class container ports – Port Klang and Pelabuhan Tanjung Pelepas, Malaysia’s national carrier MISC is the world’s largest owner-operator of LNG tankers with a fleet of 27 vessels. The nation is also the world’s 13th largest producer of natural gas and 24th largest in crude oil production which explains the vibrancy of its domestic oil and gas sector. Continue Reading
N O L FINALLY SELLS AET
By Urs M Dür
[The following is an updated version of what appeared in Freshly Minted May 1st 2003. The conclusions are similar, but new numbers were provided and added to shed even more light on this substantial deal. – ED]
Singapore listed Neptune Orient Lines (NOL) finally, after years of trying to divest itself of its profitable Atlantic basin tanker arm, sold American Eagle Tankers (AET) to Malaysia International Shipping Corp. (MISC) for a total of $1 ,02 billion in equity ($445m), dividend funding $75m) and assumption of debt ($500m according to sources at NOL). NOL, losing over $220m last year and levered 84% debt to book at the end of ’02 (far worse, needless to say, debt/NAV), needed to do something and by our estimation got a big premium for the AET assets even if one includes the goodwill and franchise value associated with AET, about 202% of NAV. We go over our estimates below.
JPMorgan, specifically Michael Borch, was financial advisor to NOL and Citibank to MISC. Both banks, while it appears at this stage that NOL got the better of the deal just as the Aframax market is going to get blasted with a 9% supply increase in a falling market, deserve a huge amount of credit for getting a deal, which many said was politically unfeasible especially as the Malaysian government, via Petronas, and the Singaporean authorities, Temasec, respectively controlling owners of MISC and NOL, are known political rivals not usually willing to cut each other some slack. Really, bravo to both banks.
Deal of the Year – 2002 M&A and Joint Ventures
In shipping charter parties, a good broker makes both parties feel that they have won the negotiation, while it is likely that both have yielded more than they would have at the start. In shipping M&A brokers and advisors too are involved, but, unless the deal is an obvious one between friendly parties, this “good broker” dynamic is often lost because the deals are done in a public forum.
2002 was a down year in shipping in general and while there were some notable successes this year, see below, just as notable was the abundance of big merger ideas that did not come to fruition. Think about what did not happen in 2002 (so far):
- Royal Caribbean/P&O Princess/Carnival saga.
- Torm/Norden
- AET and MISC/General Maritime/Teekay?
- SCI Privatization and ???
- Bergesen/Worldwide
- Golar’s rumoured sale
- Rumoured merger of PSA and NOL
The list goes on…
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