Malaysian Merchant Marine Bhd to buy new double-hulled tankers
Malaysian Merchant Marine Bhd (MMM) is selling two of its hybrid tankers and the sale proceeds will be used to acquire new double-hulled tankers.
Executive deputy chairman Datuk Ramesh Rajaratnam said the hybrid vessels could be traded for higher returns.
“Both Dayton and Kingston are hybrid vessels where two of their tankers are double hulled and the remaining two tanks are single hulled,” he told StarBiz.
He said MMM planned to utilise the sale proceeds to acquire tankers possibly from its agreement with Oceanic Shipping Pte Ltd or some other vessel operators.
Early this year, MMM entered into an agreement with Oceanic Shipping to operate four new 9,000 deadweight tonne (dwt) double-hulled tankers under a bare boat charter with a conditional option to purchase.
The vessels are valued at about RM280mil.
The first tanker is expected to be delivered between December and February while the remaining tankers would be delivered by November 2009.
Oceanic Shipping is a subsidiary of Titan Petrochemicals Group Ltd, a company listed on the Hong Kong Stock Exchange.
Ramesh said the positive outcome of the agreement would only be seen in the next financial year.
“MMM derives revenue from chartering the vessels but the lease payment (bareboat charter payment) goes to the vendor, which remains the legal owner until we exercise the option to purchase the vessel,” he said.
Ramesh said: “Until we renewed our fleet to a newer and sizeable size, the existing old vessels are not economically cashflow positive.
He said the group had dry docked for both Kingston and Dayton vessels this year.
This explains the significant increase in the overheads relating to the process. The vessels will be able to attract better charter rates or disposal value.
So far this year, MMM had sold a tanker, the Ashton, for US$11mil.
For third quarter ended May 31 (Q3), MMM suffered a net loss of about RM4mil on the back of RM18.3mil in revenue.
MMM’s cash and bank balances stood at RM52.3mil in Q3.
Last month, the company announced the change of its financial year end from August 31 2008 to March 31, 2009.
Malaysian Rating Corp Bhd (MARC) has also recently affirmed its A- rating on MMM’s RM120mil Al Bai’ Bithaman Ajil Serial Bonds (BaIDS) following the company’s plans to undertake an early redemption of the remaining RM24mil outstanding BaIDS within this quarter with proceeds from the contracted sale of a vessel.
Ramesh said the management would always find ways to maximise the company’s cash reserves.
“We have not embarked on significant cash consuming activity or acquisitions that are not synergistic with our business.
“While earnings of 3% in fixed deposit may seem lame, given the anticipated tough times, we believe that cash conserving strategies will bode well for the company.
“The focus is to expand our fleet size gradually and within our means,” he said.
Executive deputy chairman Datuk Ramesh Rajaratnam said the hybrid vessels could be traded for higher returns.
“Both Dayton and Kingston are hybrid vessels where two of their tankers are double hulled and the remaining two tanks are single hulled,” he told StarBiz.
He said MMM planned to utilise the sale proceeds to acquire tankers possibly from its agreement with Oceanic Shipping Pte Ltd or some other vessel operators.
Early this year, MMM entered into an agreement with Oceanic Shipping to operate four new 9,000 deadweight tonne (dwt) double-hulled tankers under a bare boat charter with a conditional option to purchase.
The vessels are valued at about RM280mil.
The first tanker is expected to be delivered between December and February while the remaining tankers would be delivered by November 2009.
Oceanic Shipping is a subsidiary of Titan Petrochemicals Group Ltd, a company listed on the Hong Kong Stock Exchange.
Ramesh said the positive outcome of the agreement would only be seen in the next financial year.
“MMM derives revenue from chartering the vessels but the lease payment (bareboat charter payment) goes to the vendor, which remains the legal owner until we exercise the option to purchase the vessel,” he said.
Ramesh said: “Until we renewed our fleet to a newer and sizeable size, the existing old vessels are not economically cashflow positive.
He said the group had dry docked for both Kingston and Dayton vessels this year.
This explains the significant increase in the overheads relating to the process. The vessels will be able to attract better charter rates or disposal value.
So far this year, MMM had sold a tanker, the Ashton, for US$11mil.
For third quarter ended May 31 (Q3), MMM suffered a net loss of about RM4mil on the back of RM18.3mil in revenue.
MMM’s cash and bank balances stood at RM52.3mil in Q3.
Last month, the company announced the change of its financial year end from August 31 2008 to March 31, 2009.
Malaysian Rating Corp Bhd (MARC) has also recently affirmed its A- rating on MMM’s RM120mil Al Bai’ Bithaman Ajil Serial Bonds (BaIDS) following the company’s plans to undertake an early redemption of the remaining RM24mil outstanding BaIDS within this quarter with proceeds from the contracted sale of a vessel.
Ramesh said the management would always find ways to maximise the company’s cash reserves.
“We have not embarked on significant cash consuming activity or acquisitions that are not synergistic with our business.
“While earnings of 3% in fixed deposit may seem lame, given the anticipated tough times, we believe that cash conserving strategies will bode well for the company.
“The focus is to expand our fleet size gradually and within our means,” he said.