07 Agustus 2015

[070815.EN.SEA] Singapore's NOL Seen As Sales Target Because Of Its Young Fleet

SINGAPORE sovereign wealth fund Temasek Holdings' planned sale of shipper Neptune Orient Lines (NOL) offers potential buyers a modern fleet at a comparative bargain price expected to be around US$2 billion, Reuters reports, citing industry and banking sources.

Industry sources say NOL's new ships and 2.8 per cent slice of the global container shipping business can be expected to appeal to players seeking an edge over rivals. Qatar-controlled United Arab Shipping Company (UASC) can be expected to join the likes of Germany's Hapag-Lloyd and Hamburg Sud in running the rule over NOL, they said.

Temasek, with nearly $200 billion in assets, recently hired Citigroup to seek buyers for the majority stake in NOL it bought in 2004 for S$2.8 billion (US$2 billion), they said, triggering the sale of the whole firm under Singapore rules.

NOL has made losses in five of the past six years, but the bank's task may have become easier after the carrier made a small net profit in April-June after six straight quarters of losses.

Buyers are expected to offer 30 per cent more than NOL's current market value of about $1.8 billion - the usual premium paid to acquire a publicly traded company, bankers said. Both Citi and Temasek declined comment.

While not ruling out a sale NOL chief executive Ng Yat Chung said: "Hypothetically, if I receive a good price for the business, we will always consider selling. What I can say now is that the company is totally focused on returning the liner business into profitability."

Adding to NOL's appeal is the fact that a buyer would gain a young fleet for around half the cost of new vessels, said Andy Lane, a partner at Singapore's CTI Consultancy.

"My favourite motivation for the buy remains fleet renewal," said Mr Lane. "There is global overcapacity, but shippers also need to keep their fleets right-sized, flexible and young."


Source : HKSG.

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