Banking Crisis? Not an Issue for BW Group or NOL

2012 is broadly expected to be challenging for both shipping lenders and borrowers. As long as the Euro debt crisis persists and continues to worsen, capital will become increasing scarce. Even shipping companies at the top of the pyramid are busy strengthening their balance sheets and making sure that they have adequate funds to meet capital expenditure requirements in the coming years.

One of the world’s leading maritime companies BW Group has successfully completed a USD 1.5 billion seven-year revolver in mid-November. According to market sources, the proceeds will be used for refinancing and the participants are largely from the previous revolving facility. Pricing is said to be “slightly higher” than the previous revolving facility, although it remains highly competitive in today’s tight market conditions. Continue Reading

One is Not Enough – FSL Goes Back to Torm

Having whetted its appetite two weeks ago, First Ship Lease Trust (“FSL”) announced that it had acquired from a subsidiary of TORM A/S its second LR2 product carrier, purchasing the M/T TORM Marie, a sister ship to the earlier acquired TORM Margrethe, for the same USD 46 million. Both vessels, which have a deadweight capacity of 109,672 DWT, were built in 2006 at Dalian Shipbuilding Industry. As was the case with the first vessel, the TORM Marie will also be bareboat chartered back to TORM for 7 years, but “on slightly better terms” than the Margrethe. In its weekly report, Martin Korsvold of Pareto suggests the rate is ~USD 16,000/day. The bareboat is similarly structured with recourse to TORM, a purchase option at maturity, an EBO at or after five years and three one year extensions. This vessel is also expected to be delivered this month.

The latest acquisition will also be financed with drawdown of USD 23 million from its existing revolving credit facility together with the proceeds of a just concluded fully underwritten private placement, which raised SGD 20 million (USD 16 million) and cash liquidity. Oversea-Chinese Banking Corporation as the underwriter and placement agent was able to complete the private placement and sold 56 million new FSL units at SGD 0.35 a piece. The issue price represented a discount of 6.4% to the volume weighted average price of the units traded on the Singapore Exchange on the day preceding the time the placement agreement was signed.

PST Closes USD 132 million Financing Commitments

Last Friday, Pacific Shipping Trust (“PST”) announced that it has secured bilateral financing commitments for a total of USD 132 million from Oversea-Chinese Banking Corporation, Standard Chartered and ING Bank to fund its acquisition of five new 57,000 dwt Supramax bulk carriers. The ships are contracted with Tianjin Xingang Shipbuilding, part of state-owned China Shipbuilding Industry Company, at a total cost of USD 150 million. By simple arithmetic, the trust has demonstrated once again its ability to secure loans of exceptionally high advance ratios (between 80 – 90%) from its lenders. These ships upon delivery will be time-chartered to Glovis, the car carrier/logistics company under the Hyundai-Kia Automatic group of South Korea, for periods of 8 and 10 years respectively.

The tenors and structure for the new financing arrangements are understood to be largely similar to the loans secured previously from DBS Bank, Malayan Banking and Bangkok Bank, and, more importantly, these bilateral loans are also free from any loan-to-value covenants or financial covenants, very much in line with PST’s standard requirements. In return, the shipping trust will amortise their debt monthly. We view this as another example of banks competing aggressively against one another for the same high quality owners in Asia, which has inevitably resulted in further polarization of the shipowners into two separate groups – one that is extremely well serviced by their bankers and the other that continues to face huge challenges in raising debt.   Continue Reading

Labuan Woos Shipowners with Tax Savings But…

Malaysia has been pushing forward on plans to attract shipowners to Labuan but experts say many corporations and SMEs in the shipping business remain unaware of the significant tax benefits offered to encourage more shipping leasing activities in the island. Speaking at a seminar co-organised by OCBC Bank (Malaysia) Berhad and Equity Trust (Labuan) Limited recently, Ms Sue Yong, managing director of Equity Trust, said the favourable tax regime and regulatory environment in Labuan has helped both foreign and Malaysian-based companies to lower their operating costs through innovative leasing structures.

Ms Yong pointed out that leasing through the Labuan International Business & Financial Centre (“Labuan IBFC”) involves enormous tax benefits – taxation at 3% of net audited profit or a flat tax of RM20,000 (USD 6,226) instead of the usual 25%. In addition to the tax benefit, offshore companies registered in Labuan need not pay withholding tax or stamp duty on offshore transactions with the exception of companies that are engaging in the business of transporting passengers or cargoes by sea or the chartering of ships on a voyage or time charter basis. Continue Reading

MEO Club

Amid a spate of ship financing activities happening in Asia, Singapore based Miclyn Express Offshore (“MEO”) was able to secure USD 150 million facilities from an international club of lenders comprising Standard Chartered Bank, WestLB and Oversea-Chinese Banking Corporation. The facilities were used to pay down part of the group’s existing debt and the remainder was paid down out of the proceeds of a simultaneous initial public offering of MEO on the Australia Securities Exchange in Sydney.

Macquarie Capital (Hong Kong) Limited were sponsor and financial adviser to MEO and exited as a principal shareholder of MEO on completion of the listing. The Norton Rose team in Singapore had previously advised the shareholders of MEO on its sale to Macquarie and that role was instrumental in its appointment as lenders’ counsel. MEO was advised by Clifford Chance.

Successfully Financed And In Search For More

Thailand based Regional Container Lines (“RCL Group”)’s wholly owned subsidiary in Singapore, RCL Feeder Pte Ltd, has secured a term loan of up to USD 35 million from Overseas Chinese Banking Corporation (“OCBC”) on August 21, 2009. The tenor of the loan will expire 3 years from the drawdown or October 31, 2012 at the latest, and the quantum should not exceed 50% of the market value of the RCL office building in Singapore. Proceeds will be used for working capital.

In a similar transaction concluded on 23 June 2009, another RCL wholly-owned subsidiary in Singapore, Regional Container Lines Pte Ltd, signed a loan facility agreement with DnB NOR Bank ASA, Singapore branch for up to USD 17.5 million or an amount not more than 55% of the combined market value of the vessels under the collateral pool. The loan has a tenor of 5 years from the drawdown and the proceeds will be used to refinance an existing loan.  Continue Reading

DBS Finances Oiltanking Odfjell Terminal Singapore

Oiltanking Odfjell Terminal Singapore Pte Ltd has signed a 6 year syndicated term loan facility of SGD 200 million (USD 138 million) via a club deal by DBS Bank Ltd, Calyon, and Oversea-Chinese Banking Corporation Limited. DBS Bank Ltd was the sole Bookrunner. The proceeds from the 6 year facility will be used to refinance existing loans and to finance the company’s expansion project on Jurong Island. OOTS is one of the very few companies in Asia who has been able to successfully tap the syndication loan market for a facility with tenor of more than 5 years.

Oiltanking Odfjell Terminal Singapore Pte Ltd is a 50/50 joint venture between Oiltanking GmbH and Odfjell SE. OOTS, incorporated in December 1999, owns and currently operates a 226,000 cubic metre (cbm) chemical storage terminal in Jurong Island.

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 18^th 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 13^th largest producer of natural gas and 24^th largest in crude oil production which explains the vibrancy of its domestic oil and gas sector.        Continue Reading

Nordea, DnB, ING Arrange $3 billion Facility for BW Group

Jumbo loans have officially returned with the announcement by BW Group that it has executed a 5-year $3 billion facility with a consortium of 11 banks, which committed a total sum of $5 billion against BW Group’s $3 billion requirement. Nordea, DnB and ING acted as bookrunners of the facility, and they were joined as mandat­ed lead arrangers and underwriters by Svenska Handelsbanken, Swedbank, HSH Nordbank, Danske Bank, Fortis Singapore, OCBC, Deutsche Bank and HSBC.