Sunday 16 September 2012

Proposed Plan to Change Rights Issue Timetable

The regulators is going to change the timetable for the Rights Issue especially on the schedule to get the vote from shareholders (AGM). Previously there has been a lot of problems with the AGM process because the AGM is conducted only after the regulators have approved on the content of the prospectus and therefore if regulator delayed the process, then the AGM timetable will need to change. As such, there are cases where one company has to revise its AGM dates for time and time again as there has been some changes on the content of prospectus.

This new plan will allow the company to announce and to conduct AGM on their intention to do Rights Issue first before any submission of prospectus is done. This will eliminate the change of AGM dates and will create more certainty on the AGM process and more certainty that the Rights Issue will be conducted before any submission to Regulator.

Basically this proposed plan will align the practice that has been done in the US and Spore market.

Stock Price Effect
The market was worried about the information effect on the announcement of Rights issue to the price of the stock and so far the announcement on the price of rights is only done prior to the AGM or just before the execution of the Rights Issue.

Timeline
We are yet to see the certainty on how long the AGM can be conducted prior to the Prospectus submission. In Spore case, a company can have blanket approval from shareholders and execute it within 2 years and the same goes to the US market. However, I would see such blanket approval may not be that long in this market. Most likely it will be 1 year as Regulator may worry that overspeculation in the stock can happen if the blanket approval is given too long. Well, we'll see.

The bottomline is we have been waiting for this regulation to be passed as it will shorten the process of Rights Issue by A LOT!!!!

Have a nice day! 

Tuesday 11 September 2012

Chemical Tanker Explodes Off Malaysia



 

Chemical Tanker Explodes Off Malaysia, Fire Now Threatens Nearby Methanol Silo [UPDATED]


By Rob Almeida On July 26, 2012


The Bunga Alpina ablaze in Labuan, Malaysia


Original (7/26/12): An explosion and fire, reportedly the result of a lightning strike, engulfed the Malaysian International Shipping Company (MISC)-owned, 38,000 DWT IMO II chemical/palm oil tanker, Bunga Alpinia, while inport Labuan, Malaysia. The fire broke out at approximately 2.30am (local time) while the vessel was loading methanol at the PETRONAS Chemicals Methanol Sdn Bhd terminal in Labuan.

MISC reports that the ship had 29 crew members, made up of 23 Malaysians and 6 Filipinos.  MISC has confirmed that one crewmember has been killed and another 4 are still missing.

Fires raged throughout the night as offshore supply vessels doused the fires with their water cannons.

Sources from the Maritime Response Coordination Centre (MRCC) told a local newspaper that as of 11am local time, rescue personnel were still trying to put out the blaze on the tanker.  The MRRC spokesman also noted their main concern now is to prevent the tanker from hitting the nearby methanol silo, located a mere 150 meters from the now adrift, and burning vessel.

Authorities fear that if the flames from the tanker ignite the methanol silo, it could result in massive destruction of the surrounding area.

“That is our biggest fear at the concern at the moment. An outcome like that would be catastrophic, to say the least,” said the source.  As a precautionary measure, PETRONAS Chemicals Group (PCG) has shut down its 660,000 tonne/year methanol (PML) 1 unit.

Additional images via perkapalanmalaysia.com






















The Bunga Alpina ablaze


Sunday 11 March 2012

Shipping crisis to extend into 2013, says Moody's

Defaults among ship firms set to gather pace with tighter financing
(LONDON) The global shipping slump is expected to last well into 2013 as a glut of vessels and a growing credit squeeze will challenge even the toughest companies in the seaborne sector, Moody's Investor Service said on Wednesday.

Hard times: For crude tanker operators, sanctions imposed by the West over Iran's disputed nuclear programme would hurt as the country faces growing hurdles to sell its oil
Shipping companies, especially in the oil tanker and dry bulk sectors, already hit by worsening economic turmoil, weak earnings and oversupply ordered in the good times now face tighter financing as banks cut their exposure to risky and dollar denominated assets such as ship finance to meet tougher capital rules.

'Oversupply in both sectors is quite sizeable and we think that it will take 12 to 15 months to see the light at the end of the tunnel,' said Marco Vetulli, senior credit officer with Moody's, a ratings agency. 'All shipping companies sooner or later will be impacted by the situation,' he told Reuters.

Ship owners went on an ordering spree between 2007 and 2009 bolstered by earnings which saw rates in the bulk sector for larger capesize vessels, transporting iron ore and coal cargoes, reaching a peak of over US$230,000 a day in 2008 and over US$180,000 a day for crude oil supertankers.

Average capesize earnings reached just under US$6,000 a day this week and below operating costs, while supertankers have hit just over US$13,000 a day, slightly above operating costs.
'Companies were able to save liquidity thanks to very good years they had. But now, especially marginal players, will start to suffer and I am expecting an increasing number of defaults especially in dry bulk among marginal players,' Mr Vetulli said.

Mr Vetulli said despite reasonable iron ore and coal demand in China, one of the main drivers of dry bulk activity in recent years, fleet growth would continue to take its toll.
The Baltic Exchange's main index, which tracks rates to ship dry commodities, reached just over 780 points this week, off its peak in May 2008 of 11,793 points before financial turmoil battered the sector. 'I don't see the possibility for the main index to be above 1,500 points on average (this year),' Mr Vetulli said.

The ratings agency downgraded the shipping sector to negative from stable in July last year.
The crisis has already claimed casualties including Malaysia's Swee Joo Bhd, which went into bankruptcy last year.

PT Berlian Laju Tanker, Indonesia's largest oil and gas shipping group, last month defaulted on its US$2 billion debt.

Separately, General Maritime, which had filed for Chapter 11 bankruptcy protection in November, said in February that private equity firm Oaktree Capital Management will provide it with US$175 million in new capital under a restructuring plan.
Mr Vetulli said a sector recovery was more likely to take 15 months. 'It will be a painful process,' he said in an interview.

Soaring fuel costs and the eurozone crisis have also added to pressures faced by ship owners.
Mr Vetulli said ship scrapping had helped soak up some of the excess vessel availability in the dry bulk sector and the tanker market. Slow steaming, a method where ships slow their speed to cut fuel consumption, had also saved costs.

'Generally my perception is that tanker operators tend to be a little stronger from a (financial) liquidity point of view than dry bulk players but the level of problems in the market is very similar,' he said. 'For products tankers the fundamentals of the industry are a bit better and in 2013 it will be the first of the sectors to emerge from the crisis.'

For crude tanker operators, sanctions imposed by the West over Iran's disputed nuclear programme would also hurt as the country faces growing hurdles to sell its oil.
'It will change the normal trades globally. I think it may have a negative effect on the sector because this kind of geopolitical crisis is not, especially in that region of the world, a good scenario for this market,' Mr Vetulli said. 'Maybe some players will be able to make money out of it. But in general it will be negative for the industry.'

Danish shipping company Torm said last week its banks had agreed to extend until March 15 a suspension of repayments on its US$1.87 billion of debt to allow more time for talks aimed at finding a way out of its funding crisis.

Banks are expected to tighten credit lines to the sector.

'A lot of problems are related to covenants and liquidity. So things are getting more and more difficult,' Mr Vetulli said. -- Reuters

Friday 2 March 2012

Sinochem Saves Dorval

Bankrupt Japanese chemical tanker owner operator Dorval Shipping hasbeen offered a lifeline from Chinese petrochemical trader Sinochem.

According to Japanese financial reports, under a plan tabled this week Sinochem will take a majority 51% shareholding in a new joint venture company to be named Dorval Sinochem Tankers.

Dorval will hold the remaining 49% stake. The deal includes Dorval’s in-house shipmanagement company.

Dorval applied for court protection in December last year after collapsing with some JPY 15bn ($192m) in debt. Its failure was blamed on overinvestment in new tonnage amid a moribund chemical tanker market, rising fuel costs and an appreciating domestic currency.

It has been attempting to rebuild its business under the Tokyo district court. The new planned joint venture remains subject to the court and creditor approval. A creditors meeting is due to be held in Tokyo next week.

Dorval was building four 19,800-dwt newbuildings at the Fukuoka and Usuki shipyards in Japan for delivery in 2011 and 2012. However it is understood the company has disposed of all its assets as part of the administration process and that the new joint venture will act initially as a pure operator rather than tanker owner.

The move will give Shanghai listed Sinochem the chance to expand in the chemical logistics business through Dorval’s expertise in the Asian Pacific market.

The Dorval Sinochem Tanker board will have two representatives from Sinochem and three from Dorval. The company will be headed by Dorval’s current president Tomohiro Yanagi.

Friday 17 February 2012

Eitzen Chemical Losses Grow

Norwegian tanker owner Eitzen Chemical has posted a bigger loss for 2011, but sees a slight improvement in the first quarter of this year.

The Oslo-listed company said the net deficit was $154m last year, up from$113.8m in 2010.

Revenue climbed to $426.03m from$374.16m, but costs rose in line with this.

It performed an impairment test at year-end relating to its fleet and booked a $62.5m charge as a result.

The owner is still evaluating alternatives to ensure "adequate longer term financial strength and liquidity" ahead of a debt moratorium expiring in December.

It said that in the short term it expects a continued challenging chemical tanker market, but the first quarter of 2012 is expected to be moderately above the previous quarters.

The closure of its Team Tankers and City Class pools for vessels controlled by third parties should be completed during the first half of 2012 and is expected to improve cash flow.

The total book value of the company’s vessels was $995.1m as at 31 December, down from $1.08bn in the third quarter, while interest-bearing debt including finance lease obligations was $973.3m, down from $1bn in the previous three months.

Eitzen Chemical has 53 vessels, of which 49 are owned or on financial lease and four are on operational lease.

Wednesday 15 February 2012

Chemical-tanker Trades Hit as Sanctions Halt Iran Veg Oil Imports

Chemical-tanker players are about to take another hit as the once lucrative trade in edible palm and soya oils into Iran dries up because of sanctions being imposed on the country.

Reports from Singapore and Malaysia this week indicate that vegetable-oil traders have stopped supplying Iran with palm oil over fears that sanctions against its banking sector will hinder importers’ ability to pay for the product.

Local press says traders in Singapore, where most deals involving Indonesian palm oil take place, have stopped taking Iranian letters of credit since the beginning of the year. Similar reports are emerging from Malaysia.

The two countries are the largest suppliers of palm oil to Iran, which in 2011 imported 650,000 metric tonnes of the commodity, according to statistics released by the US Department of Agriculture (DoA).

Traders in Asia give a higher volume, claiming Indonesian exports average 50,000 metric tonnes per month to Iran, with Malaysia supplying about 30,000 metric tonnes per month, giving a total of 960,000 metric tonnes per year.

This large volume of palm oil is mostly shipped in handysize chemical tankers, brokers tell TradeWinds.

Fears of non-payment are also taking its toll on Iran’s soya-oil imports as banks and traders in Canada, Argentina and Brazil are also said to be reluctant to accept Iranian letters of credit.

Iran is the world’s sixth-largest importer of soya oil, with the DoA reporting that the country imported 400,000 metric tonnes in 2011, a 43% drop from the 2010 figure of 704,000 metric tonnes.

Iran, with its population of 74 million, is heavily dependent on agricultural imports as its arable land and farming industry is not capable of meeting domestic food needs.

Sanctions are already affecting the country’s ability to import other agricultural products. Last week, it defaulted on payments for 200,000 tonnes of Indian rice, which prompted the All India Rice Exporters’ Association to call on members to stop exports to Iran based on credit.

Indian news sources said Iranian rice importers had defaulted on payments worth about $144m for the shipments, which were loaded at Indian ports in October and November.

Some of the Iranian rice was diverted but most remains on bulkers said to be sitting off the Iranian coast waiting for the payment problems to be sorted out.

Some vegoil traders believe Iran may resort to securing some of its palm and vegoil needs through third-party countries. It has done so in the past, mainly through traders based in the United Arab Emirates (UAE), who transhipped the cargoes at UAE ports.

Tanker brokers caution that while Iran might indeed be able secure supplies through third parties, it will still have trouble getting the oil into Iranian ports as most tanker operators nowadays are specifying no calls in charter contracts.

They also point out that the Iranian tanker fleet is geared toward crude-oil exports and therefore does not have the necessary IMO-II type chemical/products tankers required to carry vegoil cargoes by the International Bulk Chemicals Code.

The predicted growth in global demand for vegetable oils this year will help cushion the Iranian blow somewhat but brokers say the sudden loss of the country’s large volume of imports will still be hard for the chemical-tanker market to digest.

Thursday 5 January 2012

What’s in Store for 2012?

Leading lights from across the industry share their thoughts on theoutlook for the next 12 months.

SHIPOWNERS

Morten Arntzen, chief executive of Overseas Shipholding Group (OSG):
Arntzen can speak both from the perspective of a shipowner and a ship-finance professional after his earlier career as a banker.

He sounds a little more positive on shipping markets than financial ones for 2012.

On the clean-products front, he said: “I’ve been pretty consistent in saying the products market is on a cyclical upturn, although with some volatility. We expect 2012 to be better than 2011. We’ve invested more in products than in crude in the last four years and we think it’s going to pay off.”

As for crude tankers, Arntzen commented: “We think the crude market will be somewhat better than last year. In 2011, every surprise in the market hurt us: the tsunami in Japan, Libya, the Brent-Dubai spread. And inventories across the globe went to five-year lows. There were a lot of negative factors that are unlikely to repeat themselves, and some surprises might help us. That said, we’re not gambling on a big improvement. We’ll be conservative and run the business as if things are going to stay bad.”

On the outlook for finance, he said: “I think we’ll have the tightest ship-finance market in my lifetime: as bad as the 1980s, if not worse. In the 1980s, banks stayed away because shipping markets were a disaster. Now the banks are introuble themselves. I don’t see capital markets picking up. Junk bonds will be too expensive for all but a handful of owners. The equity markets will be bystanders until they’re convinced that segment in shipping has clearly turned around.

“Private equity will play a role. It’s smart money and buys when things are really crappy, which they are. There will be more bankruptcies. If rates stay as they are— if the FFA [forward-freight-agreement] markets are right — companies can’t sustain themselves for a long period. There are too many strained balancesheets.”

Jan Hammer, chief executive of Odfjell:
The boss of one of the chemical-tanker sector’s leading players says there is no telling which way the market will go but it is aiming to tighten up on fleet efficiency in preparation for a difficult year.

“I can’t remember a year when we have been so uncertain primarily because of the financial unrest and the crisis in Europe,” he commented.

“It could kick both ways. There could be growth that gets us back on track but recession will be very negative for the chemical-tanker industry.”

Hammer says the problem for chemicals players is not only one of freight rates but also one of escalating costs from fuel bills and crewing.

“The chemical-tanker business is not sustainable at the current level of rates. They need to be brought to a new level for us to continue.“

At the moment the returns do not justify investing in the business and building new ships,” he explained.

Hammer says there are limited options open to the company should the recession deepen but it is trying to keep a tight control on growing costs. “We are a global operation and from now on we will be looking even more closely at how we utilise our fleet and allocate ships to try to make a difference.”

Khalid Hashim, managing director of Bangkok-based Precious Shipping:
The Precious chief shares the bleak outlook for 2012, describing it as a year he is looking at with trepidation.

“I fear for 2012. It is going to be much worse than 2011, which was challenging enough for everyone in shipping with maybe the exception of gas-carrier operators,” he said.

Hashim expects market conditions in the dry-bulk sector to worsen as the economies of China and India slow, as will the pace of rebuilding in Japan.

“The macro-economic numbers coming out of these countries are not good for 2012, which is bad for us in the dry-bulk market because we depend on these countries for cargo,” he added.

Hashim predicts there will be many more bankruptcies in 2012 as loss-making companies continue to deplete their cash reserves. “Counterparty risk is going tobe a very important factor,” he said.

Despite his fears, Hashim points out that shipping is, and always will be, a cyclical market, and operators who have been prudent with their cash will find opportunities despite the tough times.

“Shipping prices are back to what they were in 2002, long before the bulk boom. It will be a great year for going out to buy ships so we can be ready for the next upswing,” Hashim concluded.

Benoit Timmermans, chief executive of Bocimar:
Timmermans says there are a number of negative elements right now, such as too many vessels still to be delivered, some shipyards becoming very hungry, a slowdown in the world economy particularly in China, plus a slowdown in the steel market and the influx of very large ore carriers (VLOCs). On the other hand, he says slow steaming has still big potential, scrapping prices remain attractive, more expensive docking and more regulation will lead to scrapping, while restricted access to finance will lead to a slippage and slowdown in ordering.

For Bocimar, he said: “We still have good contract coverage for our fleet. In a very volatile market, timing of “fixing” will be of the essence. Maybe 2012 will provide some buying opportunities. All in all, we do not expect a “Grand Cru” but a positive year nevertheless, with lots of opportunities.

Herman Billung, chief executive of Golden Ocean:
Billung says dry-bulk players have rightly had a focus on the huge orderbook during the last couple of years.

“Due to the solid increase in demand for coal and iron ore, and other factors like slow steaming, congestion and large growth in Chinese coastal trade, there has been better balance in the market than most analysts had expected. As regards 2012, we will still have to struggle with a too-large orderbook that will put downward pressure on the spot market, as well as values somewhat. But the market is likely to bottom out soon.”

He says Golden Ocean is well placed to benefit from the opportunities 2012 is likely to offer. “The company has strong liquidity, we are fully financed and have good contract coverage. Personally, I believe 2012 will be an exciting year for our company.”

CK Ong, president of Taiwanese bulker player U-Ming Marine:
Ong is confident that the capesize market will not see the dark days it did in the first half of 2011.

“We won’t see a repeat of the problems we did then,” he said. Nevertheless, he remains pessimistic on the performance of the dry-bulk sector this year. “I doubt there will be any significant improvement. The overcapacity situation will continue to plague us throughout the year,” he explained.

Although he expects 2012 to be a difficult year for dry bulk, Ong reckons owners that have their finances in order will be able to tough it out.

“But there will be problems for owners who have overcommitted with expensive newbuildings. They will continue to face financial issues and may have a hard time surviving,” he concluded.

Tim Huxley, chief executive of Wah Kwong Shipping in Hong Kong:
Huxley forecasts that the tanker sector will face another challenging year but thinks the shipping industry will have the ability to overcome the problems.

“Shipping always has the ability to ride out tough periods through self-correcting processes. We might see a lot more scrapping this year and will continue to see delays in the delivery of newbuildings, and owners swapping tanker orders into LNG ships.”

On the dry-bulk side, Huxley thinks this year will be slightly better. “The big theme for 2012 will be the availability of credit from shipping banks. Owners will have to come to terms with paying more for credit if they manage to get it.”

Dong Jin Jung, vice-president of South Korea’s Hyundai Merchant Marine (HMM):
The tanker market will continue to experience a tough time due to the large number of newbuildings rolling out of yards, says the HMM executive. “Even if we include some slippages we may still have as many as 60 VLCCs delivered,” he said.

Soren Skou, chief executive of Maersk Line:
According to the Danish liner boss, “2012 will be a hard year for Maersk Line, as it will be for the entire industry”.

“There is likely to be further consolidation in the industry as the need to reduce capacity becomes more urgent. As Maersk Line is the biggest player out there I welcome this.

“It is a year when we will work hard to ensure we retain our position as the undisputed leader in container shipping and come out the other side stronger, leaner and even more customer focussed."

The end of 2011 saw a major partnership emerge between two of our competitors, MSC [Mediterranean Shipping Co] and CMA CGM.

“This partnership agreement actually reduced their combined capacity, giving Maersk Line the opportunity to increase its market share.”Skou adds that the global economy is on a fragile and slightly upward trajectory but even if this is maintained it “will not be enough to allow the container-shipping industry to continue as it is”.

“Most container-shipping companies responded to the economic booms of the recent past by ordering downstream increases in capacity while maintaining a business-as-usual approach. This increased capacity is now coming into play at a time when the global economy is subdued and is likely to remain so.

“There is a huge increase in supply, while demand for containers to be shipped remains stagnant from a global perspective. This has led to a price competition where the rates the industry is charging are unsustainable.”

Jorn Hinge, president and chief executive of pan-Arabian liner company United Arab Shipping Co (UASC):
Hinge says there are no indications that this year will be any better for the container industry.

“The world economy is not hot. I don’t think there is going to be much consumer demand in Europe this year,” he commented.

Hinge adds that the performance of the liner trades in 2012 will depend on whether owners are prepared to scale back their fleets so supply matches demand.

“We need to lay up ships. We ended 2011 with freight rates on the Asia-to-Europe trade at around $500 per box. That doesn’t even cover your bunker costs. Smallerships on the main trades need to either go find a new trade or go into layup,” he said.

But it won’t all be doom and gloom for 2012, notes Hinge. While the east-west trades such as Asia to Europe, transatlantic and transpacific continue to suffer because of overcapacity, he points out that routes to destinations such as SouthAmerica, Africa and Australia continue to perform well.

When asked whether he expects to see any of his competitors collapse in 2012, Hinge declined to comment. “That is not something I’d like to speculate on,” he said.

Captain NV Mudaliar, vice-president at Mumbai-based Five Stars Bulk Carriers:
“Tankers will be affected more than dry bulkers because of the lack of demand in the West due to recessionary pressure,” Mudaliar said.

“Capesize freight rates look set to improve due to the increase in Chinese demand for Brazilian ore as Indian ore exports to China have dropped but smaller bulkers will not see any improvement in rates.”

Similar to other Indian players that are holding on to cash to tide them over and delaying fleet expansion, he is non-committal on his company’s growth plans, saying only that it will watch the market closely.

Captain Sunil Thapar, senior director at state-owned Shipping Corp of India (SCI):
Thapar, along with most Indian shipping players, expects the situation will worsen this year.

“Freight rates do not look as though they will improve nor is the pace of scrapping expected to offset the influx of new tonnage into the international shipping industry,” he said.

“SCI is not looking to rush into any fresh acquisitions but will rather preserve its cash reserves to overcome the crisis.”

AR Ramakrishnan, managing director of Essar Shipping:
Ramakrishnan is pinning his hopes on Europe getting to grips with the Eurozone crisis.

“If the European economy responds postively to the measures taken by European national governments, there is some hope that demand might pick up in the second half of next year,” he said.

Court sells Sejin Maritime Chemical Tanker for $3.7m

Creditors of failed South Korean tanker operator Sejin Maritime have decided to cut their losses and sell after receiving an offer below appraised value for a handysize chemical tanker that received just onelow bid in early December.

The Singaporean courts have approved the sale of the 29,000-dwt chemical/products tanker Chem Orchid (built 1993) to a Panamanian entity called Providence Shipping for SGD 4.8m ($3.7m). The arrested vessel went under the hammer in early December but Providence was the sole bidder. Tanker sources at the time said they were not surprised that the vessel attracted little interest given the poor state of the chemical-tanker trades.

An attempt to auction the ship in mid-November also drew little interest.

The Chem Orchid was on bareboat charter to South Korean tanker operator Sejin Maritime from Han Kook Capital Co when it was arrested because of an unpaid bunker bill in July last year. At the time of its arrest, it was en route from Indonesia to Russia with a cargo of palm oil belonging to Frumentarius of Cyprusand Mercuria Energy Trading of Switzerland.

Panama City-based Providence, which has no connection to a California-based shipmanager of the same name, appears to be a cash buyer in the demolition trades as all vessels purchased by the company over the past year were immediately sold on for scrap.

This could indicate that the Chem Orchid is destined to make one final voyage to the breaker’s beach.