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Sailing and Staying Ahead–Enhancing the Maritime Sector
By: Ho Mui Peng
In a departure from his usual practice, the Finance Minister chose to release most of the tax changes affecting specific industries through an Appendix attached to his speech.
Hence it was quite a surprise to find a number of important tax changes relevant to the shipping and offshore oil and gas sector here. This article sets out what these changes are and why they were made. The changes mentioned below which affect a ship owner will apply equally to a rig owner as Singapore has awarded the same Maritime Sector Incentives (MSI) to rig owners. Continue Reading
Equity for Ezion
Ezion Holdings in the past two weeks announced two transactions that together should yield around USD 100 million in equity to support the company’s ongoing growth and construction projects. At a time of tight liquidity and uncertain global economics, Ezion Chairman Lee Kian Soo and CEO Chew Thiam Keng have shown persistent creativity and resourcefulness as they continue to build their offshore business.
This week, on February 22nd, the company entered into a placement agreement with CLSA in order to issue 110,000,000 new shares at a price of SGD 0.88 per share, a discount of 6.6% to the weighted average trading price of shares the day prior. Seventy to ninety percent of the anticipated SGD 94.6 million in proceeds of the offering are intended to be used for the acquisition of
offshore and marine assets, with the remainder designated as general working capital. Continue Reading
Marco Polo Seeks Jakarta listing for Indonesian arm
Singapore listed Marco Polo Marine has announced plans to list its 49% owned subsidiary PT Pelayaran Nasional Bina Buana Raya (“BBR”) on the Jakarta Stock Exchange. The objective is to “make BBR a financially self-sustaining enterprise and one of the avenues to achieve that is to seek a listing of BBR on a reputable regional stock exchange.” PT OSK Nusadana Securities have been appointed as the manager and lead underwriter for the fund raising exercise. Marco Polo Marine cautioned its investors that there is no assurance on the success of the proposed listing and did not reveal the target amount to be raised from the IPO.
Hi Investment & Securities Rolls out New Shipping Fund
Following the success of its first two shipping funds, the affiliate of Korean shipbuilder Hyundai Heavy Industries – Hi Investment & Securities will be rolling out its third public shipping fund “Hi Gold Ocean 3” from February 27. The fund will be offering 16.1 million shares at KRW 5,062 apiece to raise gross proceeds of KRW 81.7 billion (USD 72.5 million) for the acquisition of two 57,000 dwt supramax bulkers. Kukje Maritime Investment Corporation has been appointed as the lead manager while Hi Investment & Securities will underwrite the offering.
The supramax vessels were ordered at Jiangsu Hantong Ship Heavy Industry in China last year, at a price tag of USD 29.4 million per vessel. The first ship is expected to be delivered in April and the second in August. Upon delivery, the vessels will be placed on five year charters with Hyundai Merchant Marine (“HMM”) and SK Shipping respectively and will each provide the fund with an expected charter revenue of USD 81.5 million. In addition, HMM and SK Shipping have the options to extend the charters for another two and four years respectively. Investors can look forward to a non-guaranteed 7% annual dividend. Continue Reading
Dryships Seals Chinese Finance
When Chinese premier Wen Jiabao made his maiden state visit to Greece in 2010, there was rising optimism among the Greek shipping community that Chinese banks would loosen their purse strings and expand their loans in Greek ship finance. And indeed, there were promising signs that there could be more deals in the making. During the visit, a USD 5 billion Sino-Greek shipping finance fund was established to facilitate the sale of Chinese built ships to Greek shipping companies and shortly after, the Angelicoussis Group and Diana Shipping became the first two Greek shipping clients of China Exim Bank. Cardiff Marine also announced the signing of a USD 74 million loan from China Development Bank (“CDB”). This could be the first transaction entirely provided by a Chinese bank. But since then, the pace has been rather unhurried, with only a few shipowners – Costamare, Danaos and Toisa securing financing from the Chinese lenders, mainly the policy banks.
On February 13, George Economou-led Dryships sealed a USD 122.58 million export buyer credit syndication facility from CDB. The facility is part of the USD 5 billion shipping fund and proceeds will be used to finance three 206,000 dwt very large ore carriers (“VLOCs”) that will be built in Shanghai Jiangnan Changxing, a subsidiary state-owned shipbuilding conglomerate CSSC. CDB will provide Dryships the bulk of the facility, but Bank of China – Ningxia branch and Zhejiang branch will also participate as a minor lender for an undisclosed sum. OceanFreight, acquired by Dryships in November 2010, ordered three VLOCs at USD 68 million apiece due for delivery between 2012 and 2013. XRTC acted as Project Advisor while the law offices of Norton Rose and Papadimitriou & Partners were the legal advisors. This transaction also marks the successful closing of the
first syndicated loan facility between two Chinese banks, without the involvement of a Western bank. Continue Reading
Precious Shipping Raises USD 145 million from Thai Banks
It is common knowledge that the global shipping industry is facing an increasing scarcity of traditional debt financing. The lethal combination of low freight rates, high bunker costs and overcapacity are pushing more owners closer to the edge, especially those who are overleveraged and/or have depleted equity accumulated during the heydays. Shipowners who face finance shortage over their committed ship orders are searching for alternative sources of capital. Export finance and private equity come into mind, but it is not easy for owners to meet the demanding requirements imposed by these capital providers. Capital markets on the other hand provide some fund-raising opportunities, but they are largely restricted to the bigger names and issuers are subjected to the mercy of the broader market sentiments.
But for the owners in Asia, it’s not all doom and gloom. Many European banks are seeking to rebalance their lending portfolios, through reducing exposure in Europe and increasing lending activities in Asia. Asian banks are also expected to continue supporting shipping clients with good track records, business models and manageable debt levels. Continue Reading
Stanford Marine Goes Islamic with Standard Chartered
In December 2011, Standard Chartered led and participated in a USD 175 million senior secured club loan facility for United Arab Emirates based Stanford Marine Group and its subsidiary, Stanford Asia Holding Company. The transaction was closed amid critical challenges with most European shipping banks retreating, on the back of the Eurozone crisis, which led to a tightened USD liquidity pool and rising USD cost of funding. In order to overcome the difficulties, this club deal was uniquely structured to accommodate for Islamic and conventional dual currency (USD and AED) financing to attract regional liquidity.
The transaction combined a conventional ship finance term loan and a commodity Murabaha Shariah compliant facility, sharing a security pool of 21 vessels through a security trustee arrangement and a set of common terms agreement. Murabaha financing is widely used by the Islamic banks as a contract of sale between the bank and its client for the sale of goods at a price plus an agreed profit margin for the bank. This form of cost plus financing circumvents the restrictions in Islam, whereby banks are not allowed to operate on the basis of interest. Continue Reading
Judicial Sale – The Mechanics
By Jim James
Norton Rose, Hong Kong
Mortgagee banks possessing little experience of mortgage enforcement sometimes ask what is actually involved in a judicial sale
of a vessel. In this article – the last article in a series of three on this subject – we summarise the procedure in a typical undefended action using Hong Kong and Singapore as examples of two jurisdictions in Asia where these actions are not uncommon. For convenience the procedure is described in two parts although in practice the parts often overlap.
Perfecting the claim, arrest, default and judgment
- After notice of default and acceleration has been given, thereby perfecting the mortgage claim, a writ in rem (or claim document) is issued and an affidavit leading to warrant of arrest is sworn and filed. The affidavit is read by the Admiralty judge or the Registrar, who may double as Chief Bailiff (“CB”), and, if he is satisfied with the application, a warrant of arrest is issued. In Hong Kong the CB will execute the warrant and serve the writ on the vessel while it is present in Hong Kong waters. Similarly in Singapore, the CB will issue a letter of authority for the claimant mortgagee’s solicitors to effect service on the vessel in Singapore. In both jurisdictions the solicitors provide the CB with an undertaking to pay arrest expenses; they also place an initial deposit with the court and may be asked to supplement that deposit later. Arrest costs accrue throughout the period of arrest, until the vessel is either release or sold.
In Conversation with Dagfinn Lunde, DVB Bank
Marine Money Asia is privileged to have an opportunity to interview Mr. Dagfinn Lunde, Member of the Board of Managing Directors at DVB Bank. Mr. Lunde has played an instrumental role in transforming the bank from a regional geographical model to one that is built around teams of specialists who follow specific industry sectors: a) container business, b) cruise & ferry, c) crude oil & LNG tanker, d) chemical, LPG and product tanker, e) dry bulk, f) offshore drilling & production, and g) offshore support. In this interview, the third since 2010, Mr Lunde speaks to us on the development of ship finance in 2011, and his vision for DVB in 2012, a year where he expects to see bottoming in most shipping sectors.
Marine Money Asia: What would you say is DVB’s top priority for this year – reducing, stabilizing or expanding the lending portfolio?
Precious Words
Avid readers of Marine Money should find Khalid Hashim-led Precious Shipping a familiar name. This is a company which has been consistently ranked within the top 10 under the financial strength category in our annual rankings of global listed shipping companies. Such an achievement is a clear reflection of the prudent policies and financial discipline that the management has put in place. We reproduce excerpts from Precious Shipping’s latest annual review, in which one can find bountiful blunt and valuable insights on the challenging shipping market we are in today.
Demand: With the current business climate of a very fragile banking system coupled with demand from three of the largest markets in the world (US, EU and China) looking a bit shaky, the environment for the next 2 years is going to be extremely challenging. The demand destruction, that has taken place in large part due to the shaky position of the financial infrastructure of the world, has been reversed to a large extent by the massive and globally coordinated Government bailouts, as well as stimulus packages liberally employed during 2009, 2010 and 2011. Most importantly, banks need to re-open to the world their collective windows on trade finance which they had shut at the peak of the financial crisis in the middle of 2008, and which have still some way to go before they could be termed as “normal”. The danger marker is, of course, the reaction of world GDP when the life-support-drug to the economy of massive coordinated Governmental stimuli starts to wear off. The fear, which is still largely in the background, is that world GDP may stumble which would have an adverse impact on demand growth. These will be the key trigger points to watch out for to indicate if better times are just around the corner. Continue Reading
The Official Guide To Marine Finance Providers
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