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PR Newswire
28-01-2012, 06:16 AM
Sounds very serious.....
(Not Vested)
The Straits Times
Jan 28, 2012
Berlian Laju stops servicing debt of $2.5b
Shipping firm halts trading of shares
By Robin Chan
A BIG Indonesian shipping company is the latest in the industry to fall victim to the slowdown in global trade and a glut of new vessels.
Berlian Laju Tanker, the world's third-largest chemical tanker operator, said on Thursday that it will stop servicing its debt of about US$2 billion (S$2.51 billion).
The company also halted trading of its shares on the Singapore and Jakarta stock exchanges, and Fitch Ratings immediately downgraded its long-term and foreign and local currency issuer default ratings from CCC to C.
Talks are under way to restructure the company's debts, which, according to its September financial statement, stood at US$1.9 billion.
About US$418 million in scheduled principal payments for bank loans, bonds and financial leases are due this financial year.
Financial director Kevin Wong said the standstill would be temporary and that creditors were supportive, according to Reuters.
'Debt standstill is just a temporary solution. We still need to do a lot of work,' he said.
Berlian Laju, which operates 98 tankers with a total capacity of 2.4 million deadweight tonnes, blamed falling freight rates and higher bunker fuel costs for its financial problems.
President director Widihardja Tanudjaja said in a statement: 'While we expect that freight rates will recover in the coming periods, we have to take measures to enhance the efficiency of the company's capital structure and augment its working capital to focus on ensuring uninterrupted quality operations and services to its customers and timely payments to its suppliers.'
The statement added that the company will carry on with its normal operations and give the highest priority to servicing its obligations to its suppliers and creditors.
Berlian Laju, whose shares were last traded at 2.7 cents on the Singapore Exchange, has appointed FTI Consulting as its financial adviser.
Analysts said that Berlian Laju's leverage was particularly high compared with the rest of the industry.
The company has been struggling with debt after buying American shipping firm ChemBulk for US$850 million in 2007.
'It has been surviving by refinancing, to keep the debt going in the hope that the industry would turn to generate enough cashflow to pay off the debt,' said one industry analyst.
Mr Jayendu Krishna, senior manager at Drewry Maritime Advisors, said the over-ordering of vessels in 2006 to 2008, when freight rates were rising, has resulted in too many ships chasing too little cargo now.
'The tanker sector was in a pretty bad state in 2011 as well, and that is what is continuing,' he said.
'But the external factor which has aggravated the problem is the negative outlook on the global economy front. It has moderated the demand for energy. The oil demand grew at a meagre 0.8 per cent in 2011.'
He said that with higher capital requirements and the ongoing euro zone debt problems, banks are cutting back their credit lines, with ship owners particularly hard hit, as one of the biggest consumers of credit.
General Maritime Corp, a crude oil and refined petroleum products shipper based in New York, filed for Chapter 11 bankruptcy protection in November.
Frontline of Norway, the world's largest independent oil tanker operator, has also split into two after restructuring.
'What you saw in General Maritime is an impending trend. We are likely to see more of that,' Mr Krishna said.
chanckr@sph.com.sg
(Not Vested)
The Straits Times
Jan 28, 2012
Berlian Laju stops servicing debt of $2.5b
Shipping firm halts trading of shares
By Robin Chan
A BIG Indonesian shipping company is the latest in the industry to fall victim to the slowdown in global trade and a glut of new vessels.
Berlian Laju Tanker, the world's third-largest chemical tanker operator, said on Thursday that it will stop servicing its debt of about US$2 billion (S$2.51 billion).
The company also halted trading of its shares on the Singapore and Jakarta stock exchanges, and Fitch Ratings immediately downgraded its long-term and foreign and local currency issuer default ratings from CCC to C.
Talks are under way to restructure the company's debts, which, according to its September financial statement, stood at US$1.9 billion.
About US$418 million in scheduled principal payments for bank loans, bonds and financial leases are due this financial year.
Financial director Kevin Wong said the standstill would be temporary and that creditors were supportive, according to Reuters.
'Debt standstill is just a temporary solution. We still need to do a lot of work,' he said.
Berlian Laju, which operates 98 tankers with a total capacity of 2.4 million deadweight tonnes, blamed falling freight rates and higher bunker fuel costs for its financial problems.
President director Widihardja Tanudjaja said in a statement: 'While we expect that freight rates will recover in the coming periods, we have to take measures to enhance the efficiency of the company's capital structure and augment its working capital to focus on ensuring uninterrupted quality operations and services to its customers and timely payments to its suppliers.'
The statement added that the company will carry on with its normal operations and give the highest priority to servicing its obligations to its suppliers and creditors.
Berlian Laju, whose shares were last traded at 2.7 cents on the Singapore Exchange, has appointed FTI Consulting as its financial adviser.
Analysts said that Berlian Laju's leverage was particularly high compared with the rest of the industry.
The company has been struggling with debt after buying American shipping firm ChemBulk for US$850 million in 2007.
'It has been surviving by refinancing, to keep the debt going in the hope that the industry would turn to generate enough cashflow to pay off the debt,' said one industry analyst.
Mr Jayendu Krishna, senior manager at Drewry Maritime Advisors, said the over-ordering of vessels in 2006 to 2008, when freight rates were rising, has resulted in too many ships chasing too little cargo now.
'The tanker sector was in a pretty bad state in 2011 as well, and that is what is continuing,' he said.
'But the external factor which has aggravated the problem is the negative outlook on the global economy front. It has moderated the demand for energy. The oil demand grew at a meagre 0.8 per cent in 2011.'
He said that with higher capital requirements and the ongoing euro zone debt problems, banks are cutting back their credit lines, with ship owners particularly hard hit, as one of the biggest consumers of credit.
General Maritime Corp, a crude oil and refined petroleum products shipper based in New York, filed for Chapter 11 bankruptcy protection in November.
Frontline of Norway, the world's largest independent oil tanker operator, has also split into two after restructuring.
'What you saw in General Maritime is an impending trend. We are likely to see more of that,' Mr Krishna said.
chanckr@sph.com.sg
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