A Noble Breed

Last week, our sister publication Freshly Minted reported on Maersk’s successful EUR 750 million (USD 1.3 billion) five-year bond. This was the shipping conglomerate’s first bond issuance, following a recent equity offering of USD 1.7 billion. In Asia, commodity trading house Noble Group has likewise found tremendous success in raising funds, suggesting that investors and bankers are getting warmed up to investing cash again. 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

Yujin International Goes to London

If there’s one thing that’s receded into the distant past, it’s the boom of shipping IPOs. A product of highly liquid capital markets and robust shipping markets, those days already command a bit of nostalgia even as we pay dearly for their excesses. As large operations with major ships plied the major international exchanges, a few smaller deals got through, most notably on the London AIM (Alternative Investment Market). One of these has already been privatized but a couple quietly remain.

It was rather unexpected, however, to see Singapore-based bunkering company Yujin International announce admission to the London AIM this month in a deal organized by nominated advisor and broker Seymour Pierce.

The company listed with 30,000 shares priced at GBP 0.33 each, making its total market capitalization after expenses just shy of GBP 10 million. Of this amount, Company Director and Joint Managing Director Captain Joseph Ting Siew Chiong holds 18%, while Company Director and Joint Managing Director Captain Liew Chin Chye holds  another 18%. Non-Executive Chairman Lee Keen Whye and Company Director and CFO Lim Kay Yi Bernard hold another 2.92%, while primary shareholder Kavita Capital holds 51.3%. You don’t need a calculator to tell you this doesn’t leave much in public hands – less than 10% or GBP 1 million. Continue Reading