Chemical tanker operators have largely posted lacklustre 2010 results amid a very challenging operating environment plagued by over capacity. But despite this, Odfjell’s lenders and financial partners have maintained their faith and support in the company’s business model and strategy. Marine Money speaks to President and CEO Jan Hammer and Vice President – Finance & Investment Sylvia Low on the challenges faced by the Norwegian chemical carrier and terminal operator and its success in tapping financing in Asia.
With a fleet of about 86 owned and chartered chemical tankers and interests in 9 tank terminals at strategic locations around the world, Odfjell is a leading player in the global market for transportation and storage of chemical and other speciality bulk liquids. Odfjell has been consistently delivering positive cash flow in the last ten years prior to 2010, but the company ran into losses in 2010 due to continued weakness in shipping activity and capacity glut. Coupled with impairment costs and taxes, Odfjell recorded a loss of USD 79 million in 2010, compared to a profit of USD 121 million in 2009. Continue Reading
Written by:
rwong | Categories:
Asia,
Equity | May 5th, 2011 |
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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.
Written by:
carisk | Categories:
Asia,
Bank Debt,
Debt | July 16th, 2009 |
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Hindered by the financial crisis, Odfjell has been working on ways to strengthen its balance sheet, which was severely weakened by the retroactive tax imposed by the Norwegian government on participants in the original tonnage tax system. The company’s tax on the previously untaxed amount is approximately $213 million payable over 10 years. On a present value basis, this equates to $140 million which charge was taken against last year’s earnings.
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Written by:
carisk | Categories:
Freshly Minted,
The Week in Review | November 6th, 2008 |
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Whilst we know its summer in Surfers’ Paradise, Buenos Aires and Cape Town, the winter of 2003 has been particularly memorable at our headquarters near New York for the weather. Snow and cold and then even more snow in an unrelenting attack.
Equally unrelenting is our little corner of the world in ship finance. Since December 15, 2002, NYSE listed tanker companies have raised $1 .64b in new funds to finance what is largely consolidation in the industry and not for new tonnage. But others, like OMI, are refinancing and sandbagging the balance sheet to get stronger in a market that looks as if it cannot last, instead of getting bigger and more leveraged. Which strategy will win? Well, there are lot of theories out there and all are right in some respects but the best answer is that no one really knows. The world is just too uncertain. Activity has not just been in tankers. Sinotrans, the Chinese version of United Parcel Service and the old Sea-Land combined, hit the market with a $450m IPO with Credit Suisse and BOC International. It’s oversubscribed and up on the issue date. RCCL is out to replace their $1 bn revolver with a ‘best efforts’ of the same size with Citibank, Nordea and Dnb.
Indeed many bankers have indicated to this editor it’s the best in a while in terms of opportunities. Said one, “Last year you (the bank) had to grab onto whatever you could get and hope that you did not lose it, because if you did you would have a bad year. This year the bulls-eye is much easier to discern and the chance for many to have a good year, is not only excellent, its downright likely.”
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Written by:
carisk | Categories:
Marine Money | June 30th, 2008 |
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The week has been relatively quiet from a transaction standpoint, but sentiment by and large is upbeat. The shipping markets as a whole continue to perform above expectations, and the credit and equity markets functioning smoothly, if not lavishly.
For example, Caterpillar Financial Services this week entered into an agreement to increase Aker Philadelphia Shipyard’s credit line by $150 million. Under the agreement, Caterpillar will fund up to $80 million in construction costs for seven consecutive product tankers, valuing the full agreement at $560 million. Interest payments will be required only during the construction period, and Aker may apply the funding to up to three ships simultaneously. The deal takes care of financing for the remainder of the 12 Jones Act tankers under construction at the yard, which are to be sold to Aker American Shipping for bareboat charter to OSG America. Four these tankers have been delivered, three are currently under construction, and the remainder are to be completed by 2011. Continue Reading
Odfjell Set to Raise up to NOK 600 million with
Inaugural Issue
On February 16, Odfjell launched its inaugural bond issue in the Norwegian market. The issue is to have a maximum amount of NOK 600 million (about $94.3m USD), with a first tranche of NOK 300 million. DnB NOR Markets is serving as sole lead manager for the issue, which has a tenor of three years and a coupon of 3-month NIBOR + 1.10%. Odfjell specializes in the transportation of chemicals and other specialty bulk liquids.
On February 16, Odfjell launched its inaugural bond issue in the Norwegian market. The issue is to have a maximum amount of NOK 600 million (about $94.3m USD), with a first tranche of NOK 300 million. DnB NOR Markets is serving as sole lead manager for the issue, which has a tenor of three years and a coupon of 3-month NIBOR + 1.10%. Odfjell specializes in the transportation of chemicals and other specialty bulk liquids.
Written by:
carisk | Categories:
Bonds,
Freshly Minted | February 17th, 2005 |
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Why Bankers, Investors Should Look to Chemicals
It has often been said that the chemical tanker market is a lagging indicator of economic expansion, and that theory appears to hold true for the shipping companies that serve the business. If that is the case, the chemical tanker sector, comprised of companies such as Stolt Nielsen, Odfjell and Berlian Laju Tankers, may be the next place for both equity investors and lenders to put capital to work at this point in the cycle. Although we have said it before, we will say it again: we would very much like to see Odfjell and BLT come to the U.S. markets and, along with recently renewed Stolt Nielsen, create some critical mass and institutional awareness of the sector. Hopefully, we will all be able to discuss this at Marine Money Week.
In a very encouraging pre-announcement made this week, Odfjell said that gross revenue reached USD 1 billion and daily timecharter earnings in fourth quarter 2004 were 24% higher than fourth quarter 2003. Although EBIT in 2004 was up 36% over last year, the company’s net result was lower in the fourth quarter due to higher bunker prices, bonuses and “antitrust expenses.” Odfjell’s consolidated net result after tax was USD 86 million in 2004, compared to USD 22 million in 2003. EBITDA for 2004 was $194 million, up from $170 million last year. Odfjell’s return on equity was 15.5% and return on total assets was 6.6%. Return on capital employed (ROCE) was 8.0% in 2004. “As per 31 December 2004, the Price/Earnings ratio (P/E) was 17.8 and the Price/Cash flow ratio was 8.3. Based on book value, the Enterprise Value (EV)/EBITDA multiple is 7.0 while, based upon market value as per 31 December 2004, the EV/EBITDA multiple is 11.9. Interest coverage ratio (EBITDA/Net interest expenses) stays high in 2004 at 7.4, compared to 7.5 last year.
Stolt Nielsen Can’t Wait to Celebrate
Hard-earned Success
It’s remarkable what happens when momentum shifts. This week Stolt Nielsen released certain unaudited financial information regarding its anticipated results for the fourth quarter and full year ended November 30, 2004. SNSA expects to report income before tax provision and minority interest for the fourth quarter of $48 million to $54 million. For the full year, SNSA expects to report income before tax provision and minority interest of $83 million to $89 million, about $60 million of which comes in from the transportation group which includes the parcel tankers. The outlook for 2005 also looks good with contracts of affreightment being renewed at “significantly higher rates.”
Moreover, the tank container division (which Jefferies was mandated to sell but was subsequently taken off the market when Stolt realized it would not need the cash) saw further improvements in margins as the business is benefiting from a strong market.
Here are a few highlights of Stolt’s major presence on the Oslo Stock Exchange:
• SNSA is the 3rd largest non-Norwegian company (as measured by market cap) listed on the OSE after RCCL and Frontline, and just ahead of SOSA.
• SNSA had the best return of all of the companies in 2004 in the OBX (172%)
• SNSA was number 14 of all companies in terms of trading volume.
It has often been said that the chemical tanker market is a lagging indicator of economic expansion, and that theory appears to hold true for the shipping companies that serve the business. If that is the case, the chemical tanker sector, comprised of companies such as Stolt Nielsen, Odfjell and Berlian Laju Tankers, may be the next place for both equity investors and lenders to put capital to work at this point in the cycle. Although we have said it before, we will say it again: we would very much like to see Odfjell and BLT come to the U.S. markets and, along with recently renewed Stolt Nielsen, create some critical mass and institutional awareness of the sector. Hopefully, we will all be able to discuss this at Marine Money Week.
In a very encouraging pre-announcement made this week, Odfjell said that gross revenue reached USD 1 billion and daily timecharter earnings in fourth quarter 2004 were 24% higher than fourth quarter 2003. Although EBIT in 2004 was up 36% over last year, the company’s net result was lower in the fourth quarter due to higher bunker prices, bonuses and “antitrust expenses.” Odfjell’s consolidated net result after tax was USD 86 million in 2004, compared to USD 22 million in 2003. EBITDA for 2004 was $194 million, up from $170 million last year. Odfjell’s return on equity was 15.5% and return on total assets was 6.6%. Return on capital employed (ROCE) was 8.0% in 2004. “As per 31 December 2004, the Price/Earnings ratio (P/E) was 17.8 and the Price/Cash flow ratio was 8.3. Based on book value, the Enterprise Value (EV)/EBITDA multiple is 7.0 while, based upon market value as per 31 December 2004, the EV/EBITDA multiple is 11.9. Interest coverage ratio (EBITDA/Net interest expenses) stays high in 2004 at 7.4, compared to 7.5 last year.
Written by:
carisk | Categories:
Equity,
Freshly Minted | February 3rd, 2005 |
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Stolt Liquefies, Readies to Negotiate with Bondholders
This week marked another triumph in the restructuring of Stolt-Nielsen. Stolt-Nielsen SA announced this week plans to sell its 79,414,260 common shares, or entire 42% stake, in Stolt Offshore. The sale was executed through Fearnley, Lehman Brothers and Pareto Securities and will result in a liquidity event of $504 million at $6.35 per share, of which Stolt-Nielsen expects to book net profits of $360 million in 1Q05. One year ago Stolt had three business issues – Stolt Offshore, the fish farm and the Department of Justice investigation. Now it has just one.
Turning Three Problems into One
This transaction constitutes yet another step forward in the company’s multi-faceted restructuring process outlined in the accompanying table. This is, of course, a step forward in the particular process begun with the deconsolidation of the problematic Stolt Offshore group. Combined with the merging of much of Stolt Seafarm with Nutreco and its planned sale, this leaves the company, so badly tangled just one year ago, facing only the legal issues surrounding accusations of price fixing that have plagued its historically successful core business.
This deal is good news for both Stolt investors and lenders, many of whom have not given Stolt full credit for the value of its stake in Offshore. But the question is: what will Stolt do with the money? As readers may recall, Stolt gave bondholders a silent, or “hands off” lien over the stake in Offshore (along with a 1% bump up in interest rate) in exchange for waiving defaulted covenants. Under the terms of then negotiated deal, bondholders did not have to give consent for the sale, but Stolt is required to use a minimum of 70% of the proceeds to tender for the bonds at par. But here’s the rub: the Stolt bonds are now trading OVER par, which means holders will be very unlikely to tender in their bonds.
Capturing the Interest Arbitrage
So Stolt keeps the cash, buys T-bills and everything is fine, right? Right, unless Stolt wants to pay a dividend, engage in joint ventures or spend money on new business, although investment into existing core business is allowed. And lest anyone forget, it is the dividend paying shipping stocks that are commanding the highest valuation.
In order to be relieved of this liability, Stolt-Nielsen would have to call the bonds and pay its bondholders a make whole premium of about $20 million. This tends to imply that the company would have to be pretty well set on either wanting to pay dividends or invest in new business in order to pay the make whole. But there’s another variable: Stolt is looking at an annual extra cost of capital in the realm of 400 basis points if it does not buy back the existing bonds. So the company still has some important post-sale determinations to make about its financing. What will happen? The company and its bondholders have proven that they can negotiate with each other, so look for a deal that’s somewhere in between the make whole and par.
Another interesting aspect of the deal is speculating on the identity of the buyers. According to press releases, the shares were sold through Lehman, Fearnley and Pareto to qualified institutional investors. The sale, however, still echoes the company’s legal issues. It was not registered in the US, as is true of many international transactions, but it was also not registered in the UK, Sweden, or Norway, which leads us to conclude that the Stolt Offshore shares most likely have gone, somewhat appropriately, to offshore interests.
Stolt Stolt-Nielsen Proves itself to Oslo Analysts –
How about New York
Whatever the details of the deal, it seems that Stolt-Nielsen’s ability to overcome daunting obstacles and move forward for a solid year in its reconstruction has won the hearts and minds of a number of analysts. Norwegian analysts expect the company’s share price to rise rapidly, with Enskilda pointing out that the sale of Stolt Offshore shares increases the possibility of an extraordinary dividend (if they pay off bondholders). DnB NOR Markets expects a strong chemical tanker market going forward and believes both Stolt-Nielsen and Odfjell’s share prices will continue to rise, also commenting that the sale has the potential to release about $480 million in cash for Stolt-Nielsen and reduce its debt by 40%. Enskilda has maintained its target price of NOK 210 per share while DnB NOR predicts Stolt shares will hit NOK 250 in the next three months. The future looks rosier now for the long-suffering company, which has officially become a pure chemical tanker operator with promising markets ahead. All the company needs now is research coverage from New York.
This week marked another triumph in the restructuring of Stolt-Nielsen. Stolt-Nielsen SA announced this week plans to sell its 79,414,260 common shares, or entire 42% stake, in Stolt Offshore. The sale was executed through Fearnley, Lehman Brothers and Pareto Securities and will result in a liquidity event of $504 million at $6.35 per share, of which Stolt-Nielsen expects to book net profits of $360 million in 1Q05. One year ago Stolt had three business issues – Stolt Offshore, the fish farm and the Department of Justice investigation. Now it has just one.
Turning Three Problems into One
This transaction constitutes yet another step forward in the company’s multi-faceted restructuring process outlined in the accompanying table. This is, of course, a step forward in the particular process begun with the deconsolidation of the problematic Stolt Offshore group. Combined with the merging of much of Stolt Seafarm with Nutreco and its planned sale, this leaves the company, so badly tangled just one year ago, facing only the legal issues surrounding accusations of price fixing that have plagued its historically successful core business.
This deal is good news for both Stolt investors and lenders, many of whom have not given Stolt full credit for the value of its stake in Offshore. But the question is: what will Stolt do with the money? As readers may recall, Stolt gave bondholders a silent, or “hands off” lien over the stake in Offshore (along with a 1% bump up in interest rate) in exchange for waiving defaulted covenants. Under the terms of then negotiated deal, bondholders did not have to give consent for the sale, but Stolt is required to use a minimum of 70% of the proceeds to tender for the bonds at par. But here’s the rub: the Stolt bonds are now trading OVER par, which means holders will be very unlikely to tender in their bonds.
Capturing the Interest Arbitrage
So Stolt keeps the cash, buys T-bills and everything is fine, right? Right, unless Stolt wants to pay a dividend, engage in joint ventures or spend money on new business, although investment into existing core business is allowed. And lest anyone forget, it is the dividend paying shipping stocks that are commanding the highest valuation.
In order to be relieved of this liability, Stolt-Nielsen would have to call the bonds and pay its bondholders a make whole premium of about $20 million. This tends to imply that the company would have to be pretty well set on either wanting to pay dividends or invest in new business in order to pay the make whole. But there’s another variable: Stolt is looking at an annual extra cost of capital in the realm of 400 basis points if it does not buy back the existing bonds. So the company still has some important post-sale determinations to make about its financing. What will happen? The company and its bondholders have proven that they can negotiate with each other, so look for a deal that’s somewhere in between the make whole and par.
Another interesting aspect of the deal is speculating on the identity of the buyers. According to press releases, the shares were sold through Lehman, Fearnley and Pareto to qualified institutional investors. The sale, however, still echoes the company’s legal issues. It was not registered in the US, as is true of many international transactions, but it was also not registered in the UK, Sweden, or Norway, which leads us to conclude that the Stolt Offshore shares most likely have gone, somewhat appropriately, to offshore interests.
Stolt-Nielsen Proves itself to Oslo Analysts –
How about New York
Whatever the details of the deal, it seems that Stolt-Nielsen’s ability to overcome daunting obstacles and move forward for a solid year in its reconstruction has won the hearts and minds of a number of analysts. Norwegian analysts expect the company’s share price to rise rapidly, with Enskilda pointing out that the sale of Stolt Offshore shares increases the possibility of an extraordinary dividend (if they pay off bondholders). DnB NOR Markets expects a strong chemical tanker market going forward and believes both Stolt-Nielsen and Odfjell’s share prices will continue to rise, also commenting that the sale has the potential to release about $480 million in cash for Stolt-Nielsen and reduce its debt by 40%. Enskilda has maintained its target price of NOK 210 per share while DnB NOR predicts Stolt shares will hit NOK 250 in the next three months. The future looks rosier now for the long-suffering company, which has officially become a pure chemical tanker operator with promising markets ahead. All the company needs now is research coverage from New York.
Written by:
carisk | Categories:
Equity,
Freshly Minted | January 13th, 2005 |
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In a scathing article on today’s front page of one of the world’s most trusted and largest newspapers, The Wall Street Journal indicted, publicly, the two largest chemical carriers in the world, Stolt Nielsen SA (OSE: SNI, NASDAQ: SNSA) and Odfjell ASA (OSE: ODF, ODFB) for collusion.
Yesterday and today Odfjell announced it was aware that it was being investigated by the EU and, in parallel by the US Department of Justice and announced clearly that it would cooperate fully with the investigation. Stolt acknowledged the same and stated clearly that it too would cooperate fully with the investigation. MARINE MONEY has been on the horn all day with people speculating about the investigation and it’s really a fruitless exercise.
At this time no one knows the depth of the investigation or what penalties might be incurred if both or either are found to be in breach of the law. However, if the information that the Wall Street Journal printed is indeed true and there is no exculpatory evidence, Odfjell, Stolt-Nielsen and Jo Tankers, also named in the EU probe, are likely in some hot water.
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Written by:
carisk | Categories:
Marine Money | March 1st, 2003 |
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