BLT Gets Lukewarm Response

It remains challenging for shipping companies to tap the capital markets in Asia, and many are still waiting for any window of opportunity to raise funds amid the uncertain global macro environment. In recent months, there have been a number of bond issues and share offerings, but deal sizes tend to be small and not more than USD 100 million. Kudos goes to Berlian Laju Tanker (“BLT”) for having concluded its latest rights offering, but it was not without any difficulties.

In May, the Indonesian chemical tanker owner and operator proposed a one-for-one rights issue to raise up to USD 131 million. The larger than expected discount offered (39.7% discount from its theoretical ex-rights price) surprised the market and led to the company’s share price tumbling by 18.6% in a single day. Investment bankers we spoke to pointed out that the large discount was not excessive and in line with the market conditions at that point of time. But it remains unclear why BLT continued with its rights issue despite the less than ideal valuation. We were told that BLT has no immediate issues with its lending banks and the rights issue was a part of the management’s continuous efforts in managing its balance sheet.

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