Priced to Sell

Last Wednesday, Berlian Laju Tanker sold USD 100 million five year convertible bonds with joint bookrunners J.P. Morgan and RS Platou Markets. The bonds were priced to sell with an attractive coupon fixed at 12% and come with a conversion premium of just 10% and a one time reset after six months. The modest conversion premium could well suggest that BLT and its advisors are looking for a more equity like transaction, which will help improve its leverage risk profile in the medium term, should the bonds be converted into shares.

The proceeds from the offering will be used for, among other things, investments in the expanding cabotage trade in Indonesia, based upon its long-standing relationship with Pertamina and other oil and gas operators in Indonesia. The proceeds may also be used to repay or redeem existing debt, including outstanding convertible bonds guaranteed by the company, and for general working capital. BLT needs fresh capital to cover a potential put on its outstanding USD 125 million convertible bonds in May 2010. As we understand from RS Platou Markets, these proceeds are not expected to be used for the on-going acquisition of Eitzen Group.

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