tag:blogger.com,1999:blog-31580519143110337762024-02-19T05:14:41.215-08:00Spidey SailThis blog is created to discuss and review the chemical tanker market development within the shipping industry and all related aspects and factors affecting the supply and demand in this sector.Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.comBlogger432125tag:blogger.com,1999:blog-3158051914311033776.post-46088416363483950962012-09-16T18:51:00.001-07:002012-09-16T18:51:23.911-07:00Proposed 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.<br />
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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. <br />
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Basically this proposed plan will align the practice that has been done in the US and Spore market. <br />
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Stock Price Effect<br />
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. <br />
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Timeline<br />
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.<br />
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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!!!!<br />
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Have a nice day! Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-62360478614109524342012-09-11T22:33:00.000-07:002012-09-11T22:33:08.810-07:00Chemical Tanker Explodes Off Malaysia<br />
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<span style="mso-fareast-font-family: "Times New Roman";"><span style="font-size: large;"><span style="font-family: Georgia;">Chemical
Tanker Explodes Off Malaysia, Fire Now Threatens Nearby Methanol Silo [UPDATED]<o:p></o:p></span></span></span></h1>
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<span style="color: black; font-family: "Lucida Sans Unicode","sans-serif"; font-size: 6pt; letter-spacing: 1.2pt; line-height: 155%; text-transform: uppercase;">By <span class="fn"><a href="http://gcaptain.com/author/rob/" title="Posts by Rob Almeida"><span style="border: 1pt windowtext; color: #225e9b; mso-border-alt: none windowtext 0in; padding: 0in;">Rob Almeida</span></a></span> On July 26, 2012 <o:p></o:p></span></div>
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<span style="color: black; font-family: "Georgia","serif";"><span style="font-size: xx-small;">The Bunga Alpina ablaze in Labuan, Malaysia<o:p></o:p></span></span></div>
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<strong><span style="color: black; font-family: "Georgia","serif"; font-size: 7pt; line-height: 155%;">UPDATE
(7/27/12): <a href="http://gcaptain.com/bunga-alpinia-explosion-death-toll/" target="_blank"><span style="font-family: "Times New Roman","serif";"><span style="color: blue;">Bunga
Alpinia Death Toll Rises to Three</span></span></a></span></strong><span style="color: black; font-family: "Georgia","serif"; font-size: 7pt; line-height: 155%;"><o:p></o:p></span></div>
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<strong><span style="color: black; font-family: "Georgia","serif"; font-size: 7pt; line-height: 155%;">Original
(7/26/12):</span></strong><span style="color: black; font-family: "Georgia","serif"; font-size: 7pt; line-height: 155%;"> 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, <em><span style="font-family: "Georgia","serif";">Bunga Alpinia</span></em>, 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.<o:p></o:p></span></div>
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<span style="color: black; font-family: "Georgia","serif"; font-size: 7pt; line-height: 155%;">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.<o:p></o:p></span></div>
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<span style="color: black; font-family: "Georgia","serif"; font-size: 7pt; line-height: 155%;">Fires raged
throughout the night as offshore supply vessels doused the fires with their
water cannons.<o:p></o:p></span></div>
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<span style="color: black; font-family: "Georgia","serif"; font-size: 7pt; line-height: 155%;">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.<o:p></o:p></span></div>
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<span style="color: black; font-family: "Georgia","serif"; font-size: 7pt; line-height: 155%;">Authorities fear
that if the flames from the tanker ignite the methanol silo, it could result in
massive destruction of the surrounding area.<o:p></o:p></span></div>
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<span style="color: black; font-family: "Georgia","serif"; font-size: 7pt; line-height: 155%;">“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.<o:p></o:p></span></div>
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<span style="color: black; font-family: "Georgia","serif"; font-size: 7pt; line-height: 155%;">Additional images
via <a href="http://www.perkapalanmalaysia.com/"><em><span style="color: #225e9b; font-family: "Georgia","serif"; text-decoration: none; text-underline: none;">perkapalanmalaysia.com</span></em></a><o:p></o:p></span></div>
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Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-59643018266610063332012-03-11T07:08:00.001-07:002012-03-11T07:09:11.827-07:00Shipping crisis to extend into 2013, says Moody'sDefaults among ship firms set to gather pace with tighter financing<br />(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.<br /><a href="javascript:openwindow("></a><br />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<br />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.<br /><br />'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.<br /><br />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.<br /><br />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.<br />'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.<br /><br />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.<br />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.<br /><br />The ratings agency downgraded the shipping sector to negative from stable in July last year.<br />The crisis has already claimed casualties including Malaysia's Swee Joo Bhd, which went into bankruptcy last year.<br /><br />PT Berlian Laju Tanker, Indonesia's largest oil and gas shipping group, last month defaulted on its US$2 billion debt.<br /><br />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.<br />Mr Vetulli said a sector recovery was more likely to take 15 months. 'It will be a painful process,' he said in an interview.<br /><br />Soaring fuel costs and the eurozone crisis have also added to pressures faced by ship owners.<br />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.<br /><br />'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.'<br /><br />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.<br />'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.'<br /><br />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.<br /><br />Banks are expected to tighten credit lines to the sector.<br /><br />'A lot of problems are related to covenants and liquidity. So things are getting more and more difficult,' Mr Vetulli said. -- ReutersSpidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-36100226649331880062012-03-02T12:29:00.002-08:002012-03-09T00:42:39.126-08:00Sinochem Saves Dorval<strong>Bankrupt Japanese chemical tanker owner operator Dorval Shipping hasbeen offered a lifeline from Chinese petrochemical trader Sinochem.</strong><br /><br />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.<br /><br />Dorval will hold the remaining 49% stake. The deal includes Dorval’s in-house shipmanagement company.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com1tag:blogger.com,1999:blog-3158051914311033776.post-8700316535165825882012-02-17T11:13:00.001-08:002012-03-08T23:08:31.338-08:00Eitzen Chemical Losses Grow<strong>Norwegian tanker owner Eitzen Chemical has posted a bigger loss for 2011, but sees a slight improvement in the first quarter of this year.</strong><br /><br />The Oslo-listed company said the net deficit was $154m last year, up from$113.8m in 2010.<br /><br />Revenue climbed to $426.03m from$374.16m, but costs rose in line with this.<br /><br />It performed an impairment test at year-end relating to its fleet and booked a $62.5m charge as a result.<br /><br />The owner is still evaluating alternatives to ensure "adequate longer term financial strength and liquidity" ahead of a debt moratorium expiring in December.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />Eitzen Chemical has 53 vessels, of which 49 are owned or on financial lease and four are on operational lease.Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-70015498087814935482012-02-15T20:18:00.001-08:002012-03-09T00:23:26.686-08:00Chemical-tanker Trades Hit as Sanctions Halt Iran Veg Oil Imports<strong>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.</strong><br /><br />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.<br /><br />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.<br /><br />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).<br /><br />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.<br /><br />This large volume of palm oil is mostly shipped in handysize chemical tankers, brokers tell TradeWinds.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.<br /><br />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.Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-2887398403781128212012-02-09T17:05:00.003-08:002012-03-09T00:29:12.327-08:00Clean & Chemical Tanker Market<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnjtF6f98ey8pQe7M8gtlsnJ0QUesoedJQpBocS452D2EyR14IRo5zf4c-y5Ef0klvLNQG7iuSXknEv4L4JXFWoEZrNNBUdQe73vQe6wPYx2SvIFGNlmtUJQ29kv8K5DYOaxZjpL3dInA6/s1600/Chemical+Rate+-+Platou.jpg"><img style="WIDTH: 400px; HEIGHT: 350px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5717811250627510530" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhnjtF6f98ey8pQe7M8gtlsnJ0QUesoedJQpBocS452D2EyR14IRo5zf4c-y5Ef0klvLNQG7iuSXknEv4L4JXFWoEZrNNBUdQe73vQe6wPYx2SvIFGNlmtUJQ29kv8K5DYOaxZjpL3dInA6/s400/Chemical+Rate+-+Platou.jpg" /></a>Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-38762407894412990012012-02-06T15:26:00.001-08:002012-03-09T00:34:37.035-08:00Drewry - Charter Rates 2006 - 2011<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSOb42R9D9lm3dZa3RhL449oC3OnTdiHKMQIEcqTAhQHwnKNsGMxdris8pSQBTVR_ltZxEgOv8BEi41o0tnStFUEOaIX2q99d370JLeagShwW5fvNSBlvQ73gfttNqBRPcYTyfp4MXTRLu/s1600/Drewry+-+Charter+Rates+2006+-+20111.jpg"><img style="WIDTH: 393px; HEIGHT: 400px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5717811919282632162" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjSOb42R9D9lm3dZa3RhL449oC3OnTdiHKMQIEcqTAhQHwnKNsGMxdris8pSQBTVR_ltZxEgOv8BEi41o0tnStFUEOaIX2q99d370JLeagShwW5fvNSBlvQ73gfttNqBRPcYTyfp4MXTRLu/s400/Drewry+-+Charter+Rates+2006+-+20111.jpg" /></a>Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-28199360858501691632012-02-03T00:34:00.000-08:002012-03-09T00:37:19.439-08:00Clarkson - Bunker Price - 380CST<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8sPGoIDSNRtOJBsjq3Ppd756Ou4QDGLyoAFFpSA5MWBBVG7q33YgG_CnJEyMnjW2S4wuozjycSMXTOM1GDnIvcuFsq3XonKQmLUzeK5AH7cJ09vdihStE57LiNOTAYXfHKpy2B6OWS0c8/s1600/Clarkson+-+Bunker+Price+-+380CST.jpg"><img style="WIDTH: 400px; HEIGHT: 250px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5717813253716310834" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh8sPGoIDSNRtOJBsjq3Ppd756Ou4QDGLyoAFFpSA5MWBBVG7q33YgG_CnJEyMnjW2S4wuozjycSMXTOM1GDnIvcuFsq3XonKQmLUzeK5AH7cJ09vdihStE57LiNOTAYXfHKpy2B6OWS0c8/s400/Clarkson+-+Bunker+Price+-+380CST.jpg" /></a>Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-778720493222474892012-01-05T23:01:00.002-08:002012-03-09T00:16:24.337-08:00What’s in Store for 2012?<strong>Leading lights from across the industry share their thoughts on theoutlook for the next 12 months.</strong><br /><br /><strong>SHIPOWNERS</strong><br /><br /><strong>Morten Arntzen, chief executive of Overseas Shipholding Group (OSG):</strong><br />Arntzen can speak both from the perspective of a shipowner and a ship-finance professional after his earlier career as a banker.<br /><br />He sounds a little more positive on shipping markets than financial ones for 2012.<br /><br />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.”<br /><br />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.”<br /><br />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.<br /><br />“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.”<br /><br /><strong>Jan Hammer, chief executive of Odfjell:</strong><br />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.<br /><br />“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.<br /><br />“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.”<br /><br />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.<br /><br />“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.“<br /><br />At the moment the returns do not justify investing in the business and building new ships,” he explained.<br /><br />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.”<br /><br /><strong>Khalid Hashim, managing director of Bangkok-based Precious Shipping:</strong><br />The Precious chief shares the bleak outlook for 2012, describing it as a year he is looking at with trepidation.<br /><br />“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.<br /><br />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.<br /><br />“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.<br /><br />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.<br /><br />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.<br /><br />“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.<br /><br /><strong>Benoit Timmermans, chief executive of Bocimar:</strong><br />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.<br /><br />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.<br /><br /><strong>Herman Billung, chief executive of Golden Ocean:</strong><br />Billung says dry-bulk players have rightly had a focus on the huge orderbook during the last couple of years.<br /><br />“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.”<br /><br />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.”<br /><br /><strong>CK Ong, president of Taiwanese bulker player U-Ming Marine:</strong><br />Ong is confident that the capesize market will not see the dark days it did in the first half of 2011.<br /><br />“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.<br /><br />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.<br /><br />“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.<br /><br /><strong>Tim Huxley, chief executive of Wah Kwong Shipping in Hong Kong:</strong><br />Huxley forecasts that the tanker sector will face another challenging year but thinks the shipping industry will have the ability to overcome the problems.<br /><br />“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.”<br /><br />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.”<br /><br /><strong>Dong Jin Jung, vice-president of South Korea’s Hyundai Merchant Marine (HMM):</strong><br />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.<br /><br /><strong>Soren Skou, chief executive of Maersk Line:</strong><br />According to the Danish liner boss, “2012 will be a hard year for Maersk Line, as it will be for the entire industry”.<br /><br />“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.<br /><br />“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."<br /><br />The end of 2011 saw a major partnership emerge between two of our competitors, MSC [Mediterranean Shipping Co] and CMA CGM.<br /><br />“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”.<br /><br />“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.<br /><br />“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.”<br /><br /><strong>Jorn Hinge, president and chief executive of pan-Arabian liner company United Arab Shipping Co (UASC):</strong><br />Hinge says there are no indications that this year will be any better for the container industry.<br /><br />“The world economy is not hot. I don’t think there is going to be much consumer demand in Europe this year,” he commented.<br /><br />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.<br /><br />“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.<br /><br />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.<br /><br />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.<br /><br /><strong>Captain NV Mudaliar, vice-president at Mumbai-based Five Stars Bulk Carriers:</strong><br />“Tankers will be affected more than dry bulkers because of the lack of demand in the West due to recessionary pressure,” Mudaliar said.<br /><br />“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.”<br /><br />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.<br /><br /><strong>Captain Sunil Thapar, senior director at state-owned Shipping Corp of India (SCI):</strong><br />Thapar, along with most Indian shipping players, expects the situation will worsen this year.<br /><br />“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.<br /><br />“SCI is not looking to rush into any fresh acquisitions but will rather preserve its cash reserves to overcome the crisis.”<br /><br /><strong>AR Ramakrishnan, managing director of Essar Shipping:</strong><br />Ramakrishnan is pinning his hopes on Europe getting to grips with the Eurozone crisis.<br /><br />“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.Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-16643466318089042012-01-05T23:01:00.000-08:002012-03-08T23:23:57.654-08:00Court sells Sejin Maritime Chemical Tanker for $3.7m<strong>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.</strong><br /><br />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.<br /><br />An attempt to auction the ship in mid-November also drew little interest.<br /><br />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.<br /><br />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.<br /><br />This could indicate that the Chem Orchid is destined to make one final voyage to the breaker’s beach.Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-65564384523157616962011-12-22T23:01:00.001-08:002012-03-08T23:12:17.790-08:00Chem-tanker Consolidation Gathers Pace<strong>Consolidation is seen by some as the silver bullet to carry financially stretched shipping companies through tough markets.</strong><br /><br />Tougher times are creating fresh impetus for a shake-up in the chemicals sector.<br /><br />The tanker sector is viewed by some as in most distress with Frontline, General Maritime Corp (Genmar) and Torm grabbing the headlines.<br /><br />But consolidation is also now being widely talked about as the most likely panacea for container shipping and other markets.<br /><br />Collaboration between CMA CGM and Mediterranean Shipping Co (MSC), the creation of Germany’s largest fleet capacity-wise with the pending Erck Rickmers-Komrowski merger and Peter Dohle taking a sizeable stake in Ernst Russ are all symptomatic of the fragile state of shipping.<br /><br />Some, like Dohle and Rickmers, see their relative stability as an opportunity to grow, while others believe strength in numbers is the key to safeguarding their future.<br /><br />One sector where consolidation began some time ago but has not received the same exposure is the chemical-tanker market. Being very much a barometer of the world economy, its fortunes are as much as any other shipping sector closely tied to gross domestic product (GDP).<br /><br />For example, Germany’s John T Essberger has already taken over Heinrich Schoeller’s United Chemical Transport (UCT) and Denmark’s Erria has merged with compatriot Uni-Tankers.<br /><br />UK-based private-equity group Triton has swallowed Jutland-based HerningShipping and is open about its ambitions to further consolidate the sector if the right opportunities arise.<br /><br />The gravity of the situation in the chemical market has been driven home by Eitzen Chemical withdrawing from its pool activities to preserve cash and Japanese parcel-tanker owner and operator Dorval Kaiun recently filing for court protection.<br /><br />Last month, Copenhagen-based Nordic Tankers — which says it wants to act as a market consolidator — left no doubt that much of 2011 has not been a good yearfor chemical tankers.<br /><br />Chief executive Tommy Thomsen stated in the company’s third-quarter report that the segment was no different from that of products tankers and large tankers (where Nordic Tankers is not a player) in being unprofitable, with very littleactivity and consequently historically low freight rates.<br /><br />Since then things have improved but for how long? Fears that leading economies are heading into recession again is a shadow hanging over the industry.<br /><br />Certainly, long-haul voyages from Houston to the Far East have been rising due totight tonnage supply and firm Asian demand. Shipbroker Clarksons reported recently that rates for a 10,000-tonne parcel on the route were, at $118 pertonne, a 38% improvement on the November average.<br /><br />This has had a knock-on effect, with a 5,000-tonne parcel from Rotterdam to the Far East ahead $28 in just a week to $115 per tonne.“With many owners now involved in long-haul voyages, the tonnage-supply situation could mean a very merry Christmas for owners still looking to fix cargoesin the Atlantic,” said the broker.<br /><br />But to put in perspective a report by Bloomberg that chemical tankers may earn more in 2012 than for several years, the fact is earnings have hardly been anything to shout about in recent times, even for big players like Stolt-Nielsen whose chief executive Niels Stolt-Nielsen as recently as October was talking about no significant improvement in the parcel-tanker market before 2013.<br /><br />Asked about the more recently improved market to the Far East, initially from Houston and subsequently drawing in Rotterdam, one analyst cautioned against getting carried away.“Longer term, chemical trades are dependent on world industrial production,” he said, adding that the sector’s fortunes hinge on whether the world falls back into recession.<br /><br />One owner/operator describes conditions as still “very difficult” and this has been reflected in the collapse of Dorval.“I don’t think I have seen a market as tough as this before and that comes from 30 years of experience,” he said. “That is why it is a good time to consolidate."<br /><br />“In general, you will find all industrial players are open to discussion about consolidation but that is typical in times of tough markets.<br /><br />“You only have to look to other shipping segments to see that happening. Take the Maersk VLCC pool, which is one way of consolidating.”<br /><br />He describes chemicals as a “complicated” sector where a strong industrial player “can make a difference.”<br /><br />Certainly, there are close relationships between owners and chemical companies, with the market dominated by contracts of affreightment (COAs). A lot of cargoes are arranged on a long-term basis and owners tell TradeWinds that it isencouraging customers are recognising that as COA renewals for 2012 come upfor renewal they must reflect the increase in spot-market activity.<br /><br />One challenge facing the industry is the number of tankers able to swing between chemicals and products. Many medium-range (MR) tankers have been built in the last few years that are also able to take IMO II cargoes because the yards were willing to do so for just a couple of million dollars more.<br /><br />According to Clarksons, there are still 277 IMO II tankers to be delivered out of a total chemical-tanker orderbook of 365 vessels.<br /><br />Early 2007 saw regulatory chemical-classification changes trigger the ordering of many IMO II vessels as owners anticipated steady and strong demand from Asia.<br /><br />Many newbuildings, however, were delivered ahead of chemical production capacity coming on stream, as well as coinciding with weak demand, which depressed the market through 2010.<br /><br />On the plus side, owners have been more conservative than some of their peers, particularly bulker owners who, despite already having a massive orderbook, wenton another orders spree to “celebrate” a temporary pick-up in the market a year or so ago, comments one cycnical broker.<br /><br />He says the chemical sector is currently better positioned in terms of tonnage overhang but another recession in 2012 could easily create another oversupply situation.Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-43940014364189558172011-11-18T19:16:00.000-08:002011-11-18T19:27:37.774-08:00Oil & Product Tankers Show Signs of StrainLately there has been news about bamkrupties because it has been at least 4 years since the crisis as worse as the great depression has collapsed the economy. since then there has been no sign of recovery for tanker market. Oil tanker market has been the worst hit as we have seen the big boys succumb to market pressures and stain in the industry.<br /><br /><br />Oil tanker company General Maritime Corp filed for bankruptcy protection and Denmark's Torm said it was in talks with creditors on Thursday as both fell victim to a glut of ships in the world fleet and gathering global economic gloom. Torm's biggest problem is a huge debt, piled up from paying out quite high dividends in the years when things went well -- 2004 to 2007," Sydbank equity analyst Jacob Pedersen said. In June, the company said it had agreed an amendment of its $900 million revolving credit facility with Danske Bank , BNP Paribas, HSH Nordbank AG and SEB. That deal postponed most of a repayment of $630 million due in 2013 to 2015 on condition that it raise $100 million in new capital from shareholders by mid-December. If the debt extension is not carried out as agreed in June, payments of $510 million due in 2015 and $60 million due in 2014 would fall due in 2013 instead.<br /><br /><br />Bankers expect more bankruptcies and restructuring in the sector as companies struggle with a worsening world economic crisis and lower earnings driven by a build-up of ships ordered when times were good. In a related sign of sector stress, a second major Chinese shipping firm has halted payments to foreign ship owners because of the downturn in the freight market. General Maritime, a leading crude oil tanker company, elected to file for Chapter 11 bankruptcy with a New York court as part of a restructuring agreement that includes a $175 million equity investment from Oaktree Capital management and extensions on debt repayments.<br /><br /><br />Despite such a gloom, we have seen the results of chemical tanker players (a niche market in the tanker industry) continue to be resilient as the market expect a recovery next year and there has been sign of recovery. Take for example the results of Stolt Nielsen, Odfjell and to some extent Berlian Laju Tanker have seen the strength of chemical business by showing relatively strong results. market has predicted the recovery in chemical tanker business within 3-12 months down the road given the level of supply being subdued given the limited orders in 2009 and the cancellations coupled with scrapping of chemical tankers.<br /><br />Hope this gives a sign of hope for chemical business.<br /><br />SSSpidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-81236410575990906912011-11-01T09:38:00.000-07:002012-03-08T23:04:00.572-08:00Change on Law Regarding Material Transaction<div><div>1 Nov 2011</div><div> </div><div>am back again folks! Just to report that I have just noticed from the Capital market supervisory agency portal and learned that there is a new draft law being processed right now. The draft regulation will superseed the existing rule IX.E.2 on material transaction. Took a quick look at the new draft rule and it seems an improvement from the existing one - although i think the wording of the draft rule must need to be refined as some of the sections especially on the para 4 (e) and (f) regarding the details of the disclosure was not very clear. </div><div> </div><div>Some of the improvement that can be reported here is taht existing rule on material transaction requires listed companies intending to issue securities to conduct EGM with detailed disclosures including the name of the underwriters, selling price, size, the object and parties involved in the deal. The problem with this is that in many cases, at the point of the EGM many corporates may not know exactly some of this information including the name of the underwriters and the terms of the transaction yet. This renders some difficulties to the corporate that intend to issue such securities. </div><div> </div><div>This draft regulation if published as it is will allow the corporates to conduct the EGM without first knowing all the specifics or details of the transaction including the name of the standby buyer(s) or the size of the deal. New information can be added or revised after the EGM is conducted. </div><div> </div><div>The draft regulation also allows for non-disclosure of certain information if the issuance of the securities is related to debt securities offered to the QIBs via public offering in the international market. The non-disclosure items include the parties involved in the securities, the size of the deal, coupon rate and the requirement to have third party appraiser of the transaction. </div><div> </div><div>Another thing that is made clear on this new piece of rule is that direct lending to corporates from local or foreign banks or financial institutions will be exempted from being considered as material transaction. Exemption from the rule is also given to those companies conducting material transaction under a restructuring process so long as those company suffers from negative working capital or negative equity. Banks which are currently being assisted or under a lending program by central bank or other government owned financial institutions which lending amount exceeds 100% of the equity of the corresponding bank or in any event that such a bank is currently under certain restructuring process will also be exempted from this rule. </div><div> </div><div>there are some other changes include the definition of sale of shares that can be classified as material transaction. The type of sale of shares that falls under this category is the sale of shares due to a divestment process and not other type of sale of shares. The definition of main busiiness activity of a company has also been subject to many interpretation and corporates tries to link whatever businesses they have as their main business activity and thus avoid the rule. In this new regulation, the authority tries to define it further by stating that the MAIN businesses are only those businesses that are DIRECTLY operated by the company. Am not sure whether it makes things clearer on this one. Anyway, at least we have some clarity on other matters.</div><div> </div><div>So, thats all for now. hope the above makes sense. Anyway, lets discuss if there is any concern.</div><div> </div><div>Always</div><div>SS </div></div>Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-64550759540645210952011-10-28T20:51:00.000-07:002011-10-28T20:52:04.026-07:00Veson signs up Odfjell(Oct 28 2011)<br /><br />Bergen-based parcel tanker owner and operator Odfjell is to manage its entire fleet using Veson Nautical’s IMOS (Integrated Maritime Operations System).<br />I*n addition, the company will be installing Veslink, Veson's automated system for ship-to-shore communications.<br /><br />Odfjell’s shipping division - Odfjell Tankers - operates a fleet of about 100 chemical tankers, ranging in size from 4,000 dwt to almost 50,000 dwt.<br />When Odfjell’s management decided to replace the company’s in-house software system with a fully integrated solution, they short listed companies that could address Odfjell’s biggest ‘pain points.’<br /><br />The management sought to automate routine tasks, streamline communications between departments, increase productivity and to use real-time voyage data to make the most profitable decisions.<br /><br />Einar Øye, Odfjell’s senior project manager, explained; “From our first meeting, the Veson team demonstrated an in-depth understanding of our business processes and a holistic and advanced approach to voyage management and software design. That combination was an important factor when we chose Veson.”<br /><br />John Veson, president of Veson Nautical said; “We are excited that the combination of IMOS and Veslink will bring unprecedented connectivity to the company’s entire operations, from vessels and crew on board, to onshore staff and external service providers.<br /><br />"The Odfjell team has a sophisticated understanding of how advanced software can help control costs and create profit, and we look forward to a long and productive partnership,” he said.<br />Odfjell has begun the implementation phase and expects to go live with IMOS by the end of 2012 for the shore based organisation, including about 15 global sites, while Veslink is scheduled to be deployed on board 100 vessels. The company is also integrating IMOS into its corporate accounting package.<br /><br />Øye concluded; “IMOS and Veslink give us the ability to capture voyage related information at the source and automatically utilise that information throughout our work processes. It’s our goal to provide Odfjell employees with tools which enable them to easily access information relevant to their work. We believe the Veson solution supports this goal and this will be incredibly beneficial for us.”Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-78838531722965067842011-10-26T19:05:00.001-07:002011-10-26T19:38:31.537-07:00Why do institutional investors stay away from small cap companies?This is always a question when someone is doing an IPO or other fund raising exercise. This is especially so when they have a very good story to tell but small number of investors turn up. This is always a problem for smaller cap companies. Why?<br /><br />The reasons is probably as follows:<br /><br />1. Every investor's appetite is different. An investor with US$200mio of funds on hand would want at least US$5mil of investment to call it sizeable. they do not want to invest in a small company with say market cap of $10mil. Their position will be too significant where they can not get out so easily. That's why certain investor wants to invest in a company with a certain minimum amount of market cap. In the case for smaller company, it should find investor with relatively smaller size and appetite of investment amount and works its way from small cap to mid cap to get the attention of the investors. Some really small cap must concentrate on retail investors only.<br /><br />2. Every investor has his/her own compliance office. He needs to consult with his/her compliance office and if he fails to do so then the investment will be scrapped no matter how good and potential the project is.<br /><br />3. Some investors avoid investing in small cap because of their perceived lack of quality of small cap companies. Some of the belief are as follows:<br /><br />a. lack of transparency of management<br />b. lack of adequate research by fund houses and brokers<br />c. lack of financial muscle<br />d. low liquidity<br />e. high volatility<br /><br />The management must work hard to deliver values and continue to comply with the good governance to avoid the above perception. One thing to remember is that many of the larger cap companies nowadays are small cap 10 or 15 years ago.<br /><br />4. The Company' share is not liquid enough to buy. Investors sometime require that the company would have certain minimum average trading volume so that their entering and exiting strategy would not be so difficult. The company management should continue to deliver liquidity in the market and performing frequent corporate actions which give value to investors.<br /><br />5. In many cases for small cap, management is too busy concentrating on operation and they can not look after investor relations and proper communication of plans.<br /><br />just some of my thought today....<br /><br />Cheers,<br />SSSpidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-10275836209883091312011-10-25T02:53:00.000-07:002011-10-25T03:13:45.302-07:00Capital Increase Without Pre-emptive Rights IVHello All,<br /><br />We have come to the final discussion on the above topic which will be on the requirement for shareholders approval with regard to the debt to equity conversion and part of the Capital Increase Without Pre-emptive Rights.<br /><br />Well, as requested under the capital market authority, this kind of transaction is subject to shareholders' approval. The procedure for the EGM is basically the same as in any corporate actions in which EGM Announcement should be done 14 days prior to the EGM Notice and the EGM Notice must be done 14 days prior to the EGM.<br /><br />One thing to note for the creditor about the debt to equity conversion is about the lock up period. Those creditors that receives the shares in consideration of the debt converted must be subject to a lock up period of 1 (one) year from the moment the shares are listed on the exchange. This is regulated under the Exchange and intended to mitigate sudden significant decline in the share price of such company following the provision of the shares to creditors especially considering the size of the shares issued which at times can be substantial and more than the existing shares. For example: the debt to equity conversion conducted by Langgeng Makmur Industry and Sekar Laut in 2005 where the shares outstanding in the market suddenly increase by 91% and 814% due to such undertaking. On the debt to equity conversion by Surabaya Agung in 2007 the outstanding shares increased by close to 1,100% from the existing outstanding shares.<br /><br />Okay now. Seems we have covered some issues on the debt to equity conversion. lets see if we can discuss other more interesting matters in the coming weeks.<br /><br />Chao....<br />SSSpidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-77485878252340091542011-10-21T21:36:00.000-07:002011-10-21T21:38:11.356-07:00Ocean Tankers' in DifficultyOcean Tankers' assets go under the hammer(Oct 21 2011)<br /><br />Another vessel operated by Cyprus-based Ocean Tankers and managed by Admibros is to be auctioned.<br /><br />According to Lloyd’s List, the 1998-built 15,558 dwt chemical tanker ‘Anefani’ is to go under the hammer before the Rotterdam district court on November 22, on an ‘as is, where is’ basis, at the request of Royal Bank of Scotland, Dutch law firm AKD Prinsen van Wijmen confirmed to the daily shipping newspaper.<br /><br />It was thought that the crew claimed nearly $200,000 on back wages, leading to a judgement to sell the vessel.<br /><br />Earlier this week, the UK Admiralty Marshall opened bidding on the 1997-built, 15,885 dwt sister vessel ‘Frachtis’, currently lying off Falmouth, which had also been arrested.<br />Towards the end of last month, Lloyd’s List established that 1999-built, 14,441 dwt ‘Skledros’ and her sistership ‘Hartzi’ were being held off Skagen. The 2007 -built, 4,285 dwt ‘Marim’ was also being held in Rotterdam, while the 1999-built, 19,831 dwt ‘Eleousa Trikoukiotisa’ was lying in Ghent.<br /><br />In addition, the 2001-built, 19,831 dwt, ‘Berengaria’ was alongside Gibraltar’s detached mole awaiting her fate, during Tanker Operator’s visit to the Rock last week.<br /><br />Taken from Tanker Operator<br /><a href="http://www.chemicaltankers.blogspot.com/">www.chemicaltankers.blogspot.com</a>Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-59172371375710468642011-10-21T20:19:00.000-07:002011-10-21T20:21:42.510-07:00Saga Tankers pushes the exit buttonSaga Tankers pushes the exit button(Oct 21 2011)<br /><br />Saga Tankers is to withdraw from shipping and sell its remaining VLCCs.<br />A proposal to cease shipping operations will be put to an extraordinary general meeting to be held on 10th November.<br /><br />Saga Tankers has already agreed the sale of the VLCCs ‘Saga Julie’ and ‘Saga Agnes’ (built 2000) to Greek interests for $30.5 mill net each. The sale of the ‘Saga Julie’ is outright and free from any subjects, while the sale of the ‘Saga Agnes’ is subject to approval of Saga Tankers’ general meeting.<br /><br />The full sales proceeds from both vessels, plus the value of bunkers and lubes, will be used to deleverage the company. The first vessel will be delivered to the buyer during November 2011, while the second will be delivered upon completion of her timecharter in July/August 2012.<br />The buyer will lodge a deposit of 15% of the sales price in a joint account until the vessel is delivered.<br /><br />As a result, Saga Tankers will make an extraordinary repayment under its loan facility of $13 mill. Following the sale of the vessels and repayments of the loan, total outstanding debt under the company's loan facility will be $21 mill attributable to the company's remaining VLCC, ‘Saga Agnes’.<br /><br />The loan will be amortised by $1.2 mill per quarter until delivery in July/August 2012.<br />In the third quarter 2011 financial report, the company said that it will make a write down on the book value of ‘Saga Julie’ of $27.5 mill following the sale, and the same amount following the forward sale of ‘Saga Agnes’.<br /><br />The sale of ‘Saga Unity’, reported in Tanker Operator news of 17th October, will result in a write down of $28.6 mill.<br /><br />Saga Tankers said that the steps taken following the decline in ship values saved the company from breaching financial covenants under its loan agreement. As a result, the company is no longer in discussions with its lenders over its debts.<br /><br />The board said that it unanimously recommended the general meeting to approve the sale of ‘Saga Agnes’. Following the sale, the company will no longer be involved in shipping.<br />The sale will only be completed if two thirds of the votes cast are in favour of the proposal, the company pointed out.<br /><br />Following the completion of a potential sale of the vessel ‘Saga Agnes’, the board said that it will make proposals regarding the company's future business and operations.<br />This may relate to the development of a new strategy, a change of the description of the business in the articles of association since it will no longer be engaged in the shipping business, or possibly dissolve the company and consequently pay out shareholder values as a dividend.Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-81006896689995344882011-10-20T03:39:00.000-07:002011-10-20T04:03:28.768-07:00Capital Increase Without Pre-emptive Rights IIIOkay, in the previous discussion we have covered the two criteria for an eligible debt to equity conversion being part of the Capital Increase Without Pre-emptive Rights. One being the type of company that is allowed to do the debt to equity conversion, second is the type of debt that can be converted and as to whether the interest, coupon and penalty from the debt is part of the amount eligible for conversion.<br /><br />Now in this session, I am going to cover the determinant for the conversion price.<br /><br />One thing to also note in the debt to equity conversion when performing this capital increase without pre-emptive rights is to consider how much debt that can be converted into share and by how many shares. The debtor has the interest of making sure his money worth as many shares as possible while the creditor prefers to part way with as little shares as possible. The good news is, there is a mechanism to address this.<br /><br />The other thing to consider is the share price of the company. In any typical scenario, normally the share price of this kind of company is pretty low and as one can imagine, the lower the share price of such public company, the more shares the creditor have to forgo its shares to the party it owes to in order to pay down the debt. This in turn will result in higher dilution effect to the other existing shareholders.<br /><br />Due to this dilution effect and in order to mitigate minority shareholders being unnecessarily worse off due to the conversion as well as to regulate the conversion mechanism, poin V.1.1 of IDX Rule No. 1-A stipulates that the conversion price must not be lower than the average 25 days of the share price in the stock market before the EGM is conducted.<br /><br />On the conversion price, we also need to note whats the Corporate Law has to say about it. Article 33 of the prevailing rule says that the share issuance for the paid-in capital of a company must be paid in full amount. With such requirement that the share issuance must be paid in full, then it requires both parties to make sure that the conversion is done at least equal to the nominal value of the share as stated in the company's article of association. From here, we can conclude that the conversion price must be either the average share price of 25 days prior to the EGM or the nominal value of the share whichever is higher. If it happens that the average 25 day share price is lower than the nominal value of the share, then we should use the nominal value.<br /><br /><br />thats all for now, folks! be back with another topic which is the shareholders' approval for this corporate action.<br /><br />Cheers<br />SSSpidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-62467565225908298072011-10-18T22:05:00.000-07:002011-10-18T22:10:05.952-07:00Ending Greece CrisisSince we have been discussing about debt to equity conversion as part of Capital Increase Without Pre-emptive Rights, I come to realize that world can end Greece problem using the debt to equity conversion instead of providing aid or some other form of assistance. Greece debt is so huge and it may take forever to repay them all. And by the way, the longer we wait the deeper and wider the problem and it is not going to be good for everyone. Sigh!<br /><br />Cheers<br />SSSpidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-34549998112385862612011-10-18T21:02:00.000-07:002011-10-18T21:42:53.729-07:00Capital Increase Without Pre-emptive Rights IIOkay, lets continue yesterday's discussion on Capital Increase Without Pre-emptive Rights. Yesterday we stopped at the criteria of debt that can be converted into equity and in order to fulfill the requirement of the type of debt that can be swapped into equity, we need to see the debt from its Collectible Rights to the payee. Based on para 2 Article 35 of the existing Corporate Law No. 40 year 2007, a debt is considered to have Collectible Rights and therefore can be compensated or converted into equity if such debt arise due to:<br /><br />1. The Company has received funds in consideration for the tangible or intangible goods/services provided;<br /><br />2. A guatantor of such debt has paid down all of the Company's debt; or<br /><br />3. The Company acts as the guarantor for some third party and the Company has recieved some benefit either monetary benefit or in kind benefit that can be valued in monetary terms.<br /><br />Based on the above, so basically debt that can be converted into shares or capital injection are those debts which benefit have been enjoyed by the Company. In the explanation of such article, it was mentioned that interest or coupon or penalty arising from the debt are not part of the definition of debt although such interest, coupon or penalty may be already overdue. This is because the Company did not enjoy anything out of the interest or coupon or penalty. In essence, the debt portion that can be converted into share capital is only the principal amount only.<br /><br />Okay... now lets continue tomorrow for more detailed discussion on this debt to equity conversion. again, if you find this writing is useful, please encourage me to continue to write. Or if it is not, I would like to hear from you as well....<br /><br />Cheers,<br />Spidey SailSpidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-15914143751382169732011-10-18T01:25:00.000-07:002011-10-18T23:52:27.430-07:00Capital Increase Without Pre-Emptive RightsAs you can see, I have mixed up chemical tanker news and the corporate finance news recently. Basically shipping is capital intensive and therefore the capability to raise financing is really critical for certain shipping company and therefore the role of raising funds is paramount for the success of the organisation. So from now and then please dont be surprised of this mix news. Please tell me if you want me to stop from writing about financing news.<br /><br />So this time, I am going to discuss about Capital Addition or Increase without Pre-emptive Rights.<br /><br />In general, issuance of securities to a particular party from Indonesian point of view must all be offered to the existing shareholders first (Rule IX.D.1). So the existing shareholders have the first option to subscribe to such securities. Offering such securities to all shareholders require a tedious process and normally will require shareholders approval among other things.<br /><br />Do we have exemption on such requirement, some corporates ask?<br /><br />The good news is yes we do. The bad news is there is only a limited option companies can do it. Based on the existing Corporate Law, exemption applies to such offering but limited only on the following circumstances i.e.<br /><br />1. If the issuance of securities is in relation to a debt to equity conversion (in cases where a company cannot pay its obligors).<br /><br />2. If the issuance of securities is in relation to an ESOP or MSOP<br /><br />3. If the issuance of securities is in relation to or part of a restructuring process<br /><br />The process of offering securities without first offering to the existing shareholders is called a PMTHMETD process (what a complicated abbreviation, huh!) basically that means a process of issuance of securities for capital increase or addition without pre-emptive rights). However the amount of shares issued is capped at 10% and must be exercised within 2 years after its announcement based on the existing regulation (Rule IX.D.4). Such plan must also be published to the market as required by the capital market authority so corporates must have known the use of proceeds of such understaking prior to doing the transaction.<br /><br />Having regard to several corporate cases on the debt to equity conversion such Lippo Karawaci, Argo Pantes, Kedaung Setia, Teijin Indonesia Fiber, Surabaya Agung, Suparma, etc lets focus more on the debt to equity conversion as it seems more frequently performed by domesstic corporates than any other exemptions above.<br /><br />One thing to note on debt to equity conversion is the criteria who can actually do this. First thing to check is as to whether such conversion is already stated and permitted under the ariticle of association of the company. If no such provision provided, then there is no way a company can do so. If the article of association allows for capital addition under a certain restructuring process to improve the company's financial position, then the company can use this basis for the conversion.<br /><br />The criteria of companies eligible to apply for the debt to equity conversion is as follows:<br /><br />1. It borrows from the Central bank or other government linked financial institutions and such borrowing is 100% more than its current share capital (basically this clause is pertained to domestic banks that are under restructuring process which happenned a lot during the Asian Financial Crisis)<br /><br />2. Companies other than banks which have negative working capital AND with total liability 80% more than its assets value at the time the EGM is conducted (this is kind of difficult to fulfill because even if a company is declared bankrupt, it may have assets more than its liability. Probably because of this condition, there is the 3rd item below which helps companies which are really in need of debt reduction and equity infusion to continue operating.)<br /><br />3. Companies that fails to fulfill its debt obligation and the debt is from a third party (non affiliated party) and such third party agree to that debt to equity conversion.<br /><br />Basically the third point above doesnt require the company to provide certain financial reviews and ratios from any third party to fulfill the requirement for such debt to equity conversion and therefore have been the most widely used criteria by corporates. One thing to note that such debt should not be from any affiliated parties. This is to avoid cases in the past whereby the debt to equity conversion have been used by the existing shareholders to increase its shareholding without the need to offer its securities to the other shareholders and therefore cornering and diluting the the shareholding amount of the existing shareholders.<br /><br />The other criteria to be noted is the type of debt which is allowed for equity conversion. As you can see, not all type of debt can be converted. We need to refer to the existing corporate law on the meaning of Rights to Collect (Hak Tagih).<br /><br />If you would like to continue to hear about this blog, please give comments or give me high five or at least say Hi...<br /><br />Cheers<br />PCSpidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-1479210899424572492011-10-18T00:29:00.000-07:002011-10-18T01:00:26.255-07:00Quasi ReorganisationQuasi Reorganisation requirements from Indonesian regulator point of view:<br /><br />1. Coys must have suffered from negative retained earnings for 3 consecutive years in material amount<br />2. Have good liquidity and business prospects<br />3. Deficit must be totally zero - not just reducing the deficit<br />4. Should not resulted in positive retained earning.<br />5. Tax implication after the quasi organization and whether needs approval from DGT<br />6. Depreciation Effect<br />6. The asset revaluation still needs to be conducted if the revaluation results in lower asset value<br />7. Priority for accounts to be netted off -<br />a. General Reserve, b. Specific Reserve, c. Revaluation Reserve d. Effect of Translation e. reducing the nominal share price to reduce Share Capital (if all of these not fully netted off - then no quasi reorganisation)<br /><br />From PSAK no. 51Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0tag:blogger.com,1999:blog-3158051914311033776.post-53823686429619944652011-10-17T23:07:00.000-07:002011-10-17T23:11:38.364-07:00Market DevelopmentGlad to hear that there is an encouraging sign of improvement in the chemical tanker market. For the last couple of weeks market continue to hold up where rates continue to see an improvement. Lets see how it goes in the coming week. Fingers crossed!Spidey Sailhttp://www.blogger.com/profile/09483971637562012507noreply@blogger.com0