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Taiwanese Lenders Back TMT
Moving on to bank debt, F Elephant, a subsidiary of Taiwan Maritime Transportation (“TMT”), has concluded a USD 81 million seven-year term loan earlier this month via four mandated lead arrangers: Cathay United Bank, Chang Hwa Commercial Bank, First Commercial Bank and Yuanta Commercial Bank. Four other domestic lenders, King’s Town Bank, Shanghai Commercial & Savings Bank, Taishin International Bank and Taiwan Business Bank also participated in this transaction, which was said to be priced at around 230 bps over LIBOR with a commitment fee of 50 bps.
As a private company owned by the enigmatic Nobu Su, we note that TMT has been extremely successful in tapping finance from domestic lenders. It was not too long ago in November when two other subsidiaries of TMT, D Whale Corp and E Whale Corp, secured seven year term loans of USD 184 million from 18 Taiwanese banks. The ship financing loan facilities were priced at 210 bps over LIBOR at that time.
FSL Seeks to Widen Investment Mandate
First Ship Lease (“FSL”) Trust is seeking new changes to its initial strategy policies that will allow the trust to look at time charters and offshore assets. In a circular, FSL Trust is seeking unitholders’ approval to give the trust the flexibility to enter into time charters of any duration in addition to bareboat charters. The trust is currently restricted to long-term charters with a minimum initial charter term of seven years and could only consider short-term or voyage charter contracts if vessels are redelivered in weak market conditions.
FSL Trust pointed out that the current market downturn has meant that asset prices have decreased and are now below the historical averages for some market segments and therefore there are opportunities to benefit from the expected recovery of asset prices and freight rates by entering into shorter term charters. And should time charters be chosen, unitholders are assured that measures will be put in place to properly manage risks associated with operating and maintaining vessels on time charters. Continue Reading
Hi Investment Launches 2nd Pure Equity Shipping Fund
Meanwhile, in a more positive development, Korean media have reported that Hi Investment Bank, a Seoul based affiliate of Hyundai Heavy Industries, has rolled out its second pure equity shipping fund. This follows the success of its first shipping fund, Hi Gold-Ocean Shipping Fund No.1, which was introduced to domestic investors mid last year. The maiden fund invested in two 56,000 dwt bulkers which will be bareboat chartered for five years.
Its second fund Hi Gold-Ocean Shipping Fund No.2, hopes to raise KRW 67.9 billion (USD 60.4 million) to build two 37,000 dwt handy size bulkers at Hyundai Mipo Dockyard at USD 26 million apiece. According to unconfirmed reports, the vessels upon delivery in early 2012 and are fixed on bareboat charter to Hanjin Shipping for five years at a daily rate of USD 7,824. Continue Reading
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
Apexindo Offshore Taps Ship Finance
Apexindo Offshore has concluded a sale and leaseback transaction with New York listed Ship Finance International (“Ship Finance”). The Singapore subsidiary of Indonesia’s largest independent drilling contractor P.T. Apexindo Pratama Duta Tbk has agreed to sell a 2007 built 375 ft Baker Marine Jack-up constructed at PPL Shipyard in Singapore to Ship Finance International for USD 151.5 million including a USD 5 million seller’s credit. The rig will be bareboat chartered back for a term of seven years.
The rig has been contracted to Total E&P Indonesie since it was delivered from the shipyard and the current charter runs until March 2012 with an option for Total to extend until March 2013. Should Total extend, the initial bareboat charter rate of USD 72,500 will increase to USD 75,000 and the seller’s credit will be paid. At the end of the bareboat, Apexindo will have the
option to purchase the rig for USD 70 million plus an amount equal to 25% of the excess of the charter-free fair market value over the option price. Continue Reading
Standard Chartered Inks Sale and Leaseback with BLT
On Wednesday, Berlian Laju Tanker completed a sale and leaseback transaction with Standard Chartered Bank’s leasing division, involving four stainless steel chemical tankers. This transaction follows BLT’s recent USD 685 million landmark refinancing facility in which Standard Chartered was one of the six participating banks.
The transaction value of USD 93.5 million entails the lease of four chemical tankers for 7 to 11 year bareboat basis of which three of them are already in operation with the remaining one to be delivered within the coming weeks. Kevin Wong, Finance Director of the Company, remarked in an announcement to the stock exchange that the transaction reflects the company’s unremitting commitment to continuously improve its balance sheet and cement its relationship with Standard Chartered which he described as “a rare bank that combines a strong balance sheet with a depth of knowledge in the shipping industry with a broad financial portfolio.” Incidentally, Standard Chartered was also one of four bookrunners in the company’s rights issue in 2010. Continue Reading
Full Steam Ahead!
It is not exaggerating to say that investors are infatuated with Hong Kong Tycoon Li Ka-shing. In 2000, hundreds of thousands of people queued outside banks hoping to cash in on the Internet mania generated by the offer of shares in his Tom.com venture. Fast forward to today and you will read that the institutional book of his USD 5.8 billion business trust in Singapore, Hutchison Port Holdings (HPH) Trust, is also oversubscribed by strong demand. Perhaps this has to do with his philosophy in making sure that money is always left on the tables for his business partners.
In a Fortune magazine article years ago, Mr. Li was quoted advising his sons in the following fashion: When you enter into a partnership with somebody and you expect to make a dollar and your partner expects to make a dollar, too, then when the deal is over, why don’t you just take 80 cents? And if you take 80 cents, maybe he will offer you 90 cents, and you still have a good partnership. But even if he doesn’t offer you 90 cents and you take your 80 cents, that’s okay. But never, never should you try to take $1.10. If you follow my advice, he told his sons, you will never lack partners. Continue Reading
Asian Shipping Bond Volume Falls 46% in 2010
In 2009, bonds came back in financing vogue for the shipping industry, with total volume in Asia reaching a record USD 7.6 billion. But a few questions have since been lingering at the back of our minds: “Will this trend continue in 2010? And have the investors gotten too far ahead of themselves and forgotten about the painful corporate bond defaults in 2000/2001?”
As we compile our list of shipping bonds concluded in 2010, some interesting findings are revealed. Total shipping bond volume in Asia has surprisingly declined at a larger pace than expected, down by close to 46% to USD 4.1 billion last year from USD 7.6 billion the year before. But before we hastily conclude that the access to bond money is fast disappearing, the sharp decline can partly be attributed to a number of market specific reasons. Continue Reading
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.
Aoyama Sogo’s Shipping Fund Ambition
Japanese accounting firm, Aoyama Sogo Accounting Office (“ASAO”) is planning to expand beyond conventional accounting into shipping funds and tax advisory in Singapore. The announcement comes shortly after the appointment of veteran banker Tomomi Kihara as the leading advisor in ASA’s Maritime Group in January 2011. Since 1984 and prior to joining ASAO, Mr. Kihara has been actively involved in ship finance in Shinsei Bank and Tokyo Star Bank, and was the General Manager of the Transportation Finance Group at Tokyo Star Bank, a division that he established in 2005.
ASA Group prides itself for having a dedicated division for the shipping industry, which is currently seeing a growing interest from Japanese ship owners in relocating and operating their assets out of Japan to countries such as Singapore. For this reason, ASAO is seeking to expand its presence in the city state, especially in providing advisory services to Japanese companies venturing overseas. Continue Reading
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