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MOL considers acquisition of bulk shipping line

Tokyo: Mitsui O.S.K. Lines Ltd., the world's largest merchant fleet operator, may bid for an overseas bulk- shipping line as plunging demand and the global recession send company valuations tumbling, writes Bloomberg.

"We're willing to spend several tens of billions of yen on an acquisition," Kenichi Yonetani, a senior managing executive officer at the company, told the newswire in an interview in Tokyo yesterday. He declined to elaborate further on possible targets.

Japan's most profitable shipping line expects to be able to borrow funds as it has avoided the worst of a collapse in commodity-shipping rates by locking in fees through long-term contracts. The rates meltdown, caused by rising capacity and slower Chinese demand for iron ore, has pushed at least four dry-bulk shipping lines into bankruptcy.

"This year is a chance for people who can buy," Yonetani said. "We don't see a problem in getting financing from banks to pay for our investment."

The shipping line's interest-bearing debt will increase 27% to 890 billion yen in the year ending March 31 as the company buys new vessels. The following year, it may increase another 12% to 1 trillion yen, he said. The company will pare capital spending in the fiscal year starting April 2011, he added.

MOL predicts a profit of 40 billion yen this fiscal year, a drop of 69 percent compared with last year. It plans to boost its fleet of bulk carriers, tankers and car carriers by 6.5% to 740 ships by the end of this fiscal year. Its overall fleet will increase to 900 ships from 861.  [26/05/09]

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