Financial Daily from THE HINDU group of publications
Friday, Oct 14, 2005
Financial Daily from THE HINDU group of publications Friday, Oct 14, 2005 |
|
|
|
|
|
|
|
Logistics
-
Shipping Corporate - Overseas Borrowings Mercator's Singapore arm mulls $400-m GDR issue Amit Mitra
Mumbai , Oct. 13 MERCATOR Lines Singapore, the recently launched subsidiary of Mercator Lines Ltd (MLL), is planning a $400-million Global Depository Receipt (GDR) issue to fund its major acquisition plans. Sources close to the company told Business Line that the Singapore subsidiary, which at present has a fleet of nine vessels that it took on long-term charter from the Norweigian company, Klaveness, is planning to acquire tankers and offshore supply vessels. The company launched the Singapore subsidiary last month after the refusal of the Directorate-General of Shipping (DG-S) to allow it to execute the charter deal with Klaveness. In fact, the deal had created a split within the Indian shipping industry, with a majority of companies advising the DG-S against giving permission to MLL on the charter deal. It was following some pressure from the industry that MLL, a few days ago, decided to withdraw its application from the DG-S. As per the memorandum of agreement between MLL and Klaveness signed in July, the Indian company took nine geared vessels on long-term charter — MLL will be paying a daily charter rate of $11,500 per ship to the Norwegian company. MLL also made a lumpsum payment of $61.5 million. The company's Singapore subsidiary took possession of the nine Panamax vessels from the Norweigian company in August — while some have been put on time charter, the rest are carrying coal between foreign ports. According to the sources, MLL has some major plans for its Singapore subsidiary. It may shift some of its proposed acquisitions to the subsidiary. Seeing the tanker and offshore sectors as potential areas, the subsidiary is planning to launch the GDR to fund its new acquisitions — it will be listed in the Singapore stock exchange. Mr Shallab Mittal, MLL Director, will be heading the Singapore operations. Industry sources say that the refusal of DG-S to accord permission to MLL to take the nine vessels on charter could send some wrong signals to foreign companies that were looking to invest in India. And with the charter deal having a buy option, the acquisition could have boosted India's shipping tonnage, they say. The sources pointed out that such charter deals with buying option may be new in India, but these are commonplace in the international shipping industry. The deal certainly makes significant economic sense for MLL. For one, the company now has on its hands the nine ships, which have a combined asset value of $400 million — and this it could achieve by just making a lumpsum payment of $61.5 million. Secondly, it has contracted a daily charter rate of $11,500 with Klaveness for charter periods ranging from 18 months to five years, when the existing charter rate is between $20,000 and $ 23,000; translated, this means a healthy margin for MLL. MLL has the option to buy three of these vessels in October this year, February 2006 and in 2007 at rates that are about $10 million-$15 million cheaper than the market price of the vessels.
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2005, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|