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Articles from 2016 In May

HMM one step closer to survival as bondholders approve restructuring

HMM one step closer to survival as bondholders approve restructuring

HMM’s bondholders reportedly unanimously agreed to a proposal on some KRW630bn ($529m) debt to swap more than half of it for equity in the shipping line, at bondholder meetings on Tuesday. The remainder will be paid back over three years after a two-year moratorium.

Local reports indicated that bondholders saw the restructuring plan as preferable to receivership.

HMM is also in last-ditch negotiations with shipowners to cut charter rates on containerships and bulkers, with talks said to have produced significant progress on Monday, following a previous impass.

A sign of the times - Tanjung Offshore to venture into education business

A sign of the times - Tanjung Offshore to venture into education business

The company signed a Memorandum of Understanding (MoU) with Hills Education Group (HEG) to venture into education and training, local reports said.

The joint venture combines Tanjung Offshore’s business expertise and HEG’s vast education experience to form a dynamic and strategic partnership.

“This joint venture marks a very exciting time for Tanjung Offshore,” group ceo Rahmandin Md Shamsudin was quoted as saying in a press release.

“We are making good, on our promise to diversify and this education initiative will lead Tanjung Offshore to new, profitable areas to expand our portfolio that will see better returns to shareholders and employees.”

Tanjung Offshore has previously said it plans to diversify while remaining focused on oil and gas, The group is also gearing up to enter the property construction, development and maintenance arena whilst exploring opportunities in education, aerospace and transport.

Shipbuilding and oil and gas services companies diversifying into non-core sectors have generally had a poor track record in generating good returns from the diversification.

Live From Posidonia 2016

Azipod notches up 25 years in service

Azipod notches up 25 years in service

The company is marking 25 years in service for its Azipod propulsion units, which will soon rack up 12m hours of operating time with a remarkable availability of 99.8%.

The company points out that this electrical propulsion system – where the electric motor with propeller is mounted inside a streamlined azimuthing pod beneath the ship – can drive and steer the ship at the same time, reducing fuel consumption by 20%.

With applications across a wide range of vessels from icebreakers to the world’s largest cruiseship, the entire installed Azipod fleet has saved over 700,00 tons of fuel (and the resulting emissions) to date, roughly equivalent to the annual fuel consumption of 700,000 cars, it said.

Additionally, ABB notes that the number of vessels with electric propulsion is growing at a pace of 12% per year, according to Clarksons Research, some three times faster than the world’s fleet.

“Much has changed in the shipping sector since we introduced the first Azipod,” comments Juha Koskela, md of ABB’s Marine and Ports business, “but the desire for efficiency, maneuverability and reliability remains the same. The fact that Azipod propulsion remains the dominant force in podded electric propulsion shows our commitment to meet our customer’s needs.”

Frontline reports $78.9m Q1 profit, upbeat on tanker market outlook

Frontline reports $78.9m Q1 profit, upbeat on tanker market outlook

It was the first full quarter’s results since Frontline merged back with Frontline 2012. Robert Hvide Macloed, ceo of Frontline Management commented: “We are very pleased to report yet another strong quarter with net income attributable to the company of $78.9m or $0.50 per share.

“Our performance, particularly in the VLCC segment was strong, despite some market weakness in February and March.” Average time charter equivalents (TCE) for VLCCs, both spot and time charter, were $65,400 per day in Q1 2016 compared to $57,500 per day in Q4 2015. The spot TCE average per day for VLCCs in Q1 2016 was $70,200 compared to $62,700 in Q4 2015.

Guidance for average spot TCE rates per day in Q2 was a lower at $52,000 per day and Frontline said it had 83% coverage. Looking at Q2 2016 the company commented: “As we are now well into the second quarter earnings have softened, but we expect forward tanker demand to be strong.”

Macleod added: “We are also encouraged that our newbuilding programme is proceeding according to schedule.”

The company has taken delivery of five LR2 product tankers so far this year, with six more to come in 2016 and 17 newbuildings in 2017.

Frontline has secured an additional $275m in debt financing from Fredriksen’s Hemen Holding to partially cover its newbuilding programme and potential acquisitions.

“Based on cash on hand, committed and assumed debt financing we are confident that the current newbuilding program will be fully funded, as well as leaving flexibility for further growth,” said Inger Klemp cfo of Frontline Management.

Looking ahead Frontline was upbeat in particular noted increased demand from India and China. “Notably, in April, China imported 7.96m bpd of crude oil, and Chinese crude oil imports rose 11.8% over the first four months of 2016 compared to the same period in 2015. Incremental demand is being generated by Chinese teapot refineries, a trend that is expected to continue in the coming months, according to IEA forecasts.

“In addition, increasing near-term OPEC supply and declining US production supports tanker demand by increasing voyage lengths, which has the effect of reducing available supply.”

The main risk Frontline sees to the tanker market is cuts in oil production but it sees a cut in production by OPEC as unlikely.

Jinhui in restructuring talks amid losses and tight liquidity

Jinhui in restructuring talks amid losses and tight liquidity

“In order to preserve the group’s liquidity and financial resources to weather the unprecedented storm in dry bulk shipping market, the group has decided to manage liquidity risk ahead and initiated restructuring arrangement discussions with its lenders,” Jinhui stated.

“Such discussions are currently ongoing and at an advanced stage. The group expects to finalise the potential restructuring exercise before the end of second quarter of 2016,” it said.

Jinhui pointed out that as at 31 March 2016, it had been able to service its debt obligations, including principal and interest payments. But it warned that its liquidity would become tighter if the prevailing “extreme shipping market conditions” continue and do not improve.

The Hong Kong-listed company posted a net loss of $18.48m in the first quarter, as against the profit of $4.69m in the same period of last year.

First quarter revenue plunged by 55.2% year-on-year to $9.96m due primarily to the large exposure to spot market as freight rates kept declining to unexpectedly low levels during the quarter.

Jinhui said the average daily time charter equivalent rates earned by the group’s fleet dropped 57% to $2,934 for the first quarter of 2016 compared to $6,749 for the previous corresponding quarter.

Jinhui also entered into an agreement to dispose of a 2000-built supramax for $2.9m in late-March, booking a loss on disposal of approximately $4.5m and the loss would be accounted for in the second quarter results.

“The disposal will enable the group to enhance its working capital position and to strengthen its liquidity, and optimise the fleet size through this ongoing management of asset portfolio,” Jinhui said.

The company further commented: “Despite there was a small uptick in freight rates in late February and March 2016, the overall recovery in dry bulk shipping market require a strong demand and supply rebalance through slowing fleet growth, layups and scrapping of tonnages.”

Tasik Subsea DSV newbuild launched in China

Tasik Subsea DSV newbuild launched in China

The DSV Southern Star was launched at Fujian Mawei Shipyard in China on Monday.

The Southern Star is a 112 m, DP3, Saturation/Air Dive and ROV support vessel and will go into service early next year on a five-year bareboat charter.

Its ROV hangar can house two deep-water, construction class vehicles and the vessel's propulsion system is supplied by VOITH and Rolls Royce.

Speaking at the launch ceremony, John Giddens md of Tasik Subsea said: “At the outset we decided to build a technically advanced, cost effective vessel whilst working closely with the charterer from the start.

“Those decisions have been vindicated by the economic challenges that face our industry today as a result of low oil prices and the general slowdown in the marine industry.”

Fujian Mawei Shipyard Chairman Zhang Zhitong said it was new type of vessel for the yard and was an exciting development for the yard’s future.

Tasik Subsea was established in 2014 by Hallin Marine founder Giddens along with Mike Meade from M3 Marine.

Provisions lower Bumi Armada Q1 profit to $6m

Provisions lower Bumi Armada Q1 profit to $6m

Excluding the charge for stacking the multi-purpose platform support vessel, the group would have reported net profit of MYR41.3, Bumi Armada said in a stock market release. 

The decline in revenue was mainly due to lower contributions from the Armada Claire FPSO, in respect of which the Company has filed a legal action seeking damages for unlawful termination and lower utilisation of vessels in the OMS business, the group said.

In terms of segments, the floating production storage and offloading (FPSO) and floating gas solutions (FGS) businesses saw revenue decline by 26% year-on-year, while the offshore marine services (OMS) segment saw revenue fall by 24%.

The group’s total order book as at end-March 2016 however remains healthy, standing at MYR36.4bn, consisting MYR24.2bn in firm contracts and MYR12.2bn of optional extensions.

Bumi Armada ceo and ed Leon Harland said: “The underlying earnings of the group remain strong, with net cash flow generation from operations of MYR544.4m in Q1 2016, and EBITDA margin improving to 58.4% in Q1 2016, from 50.2% in Q1 2015.

"The FPSO and FGS businesses continue to focus on the delivery of the three FPSOs (Armada Kraken, Armada Olombendo and Karapan Armada Sterling III) and the FSU (Armada LNG Mediteranna), which all leave the shipyard in the second half of 2016. Delivery of these projects will trigger a significant improvement in earnings and cash flow generation for the group over full year 2017," he added.

Harland noted that while the offshore supply vessel (OSV) business "remains challenging", the group's strong position in the Caspian Sea with its subsea construction operations should help to stabilise overall earnings in the OMS business, where the firm order book stands at MYR2.8bn as at end March 2016.  

Palfinger adds lifeboat and life saving capability with Harding acquisition

Palfinger adds lifeboat and life saving capability with Harding acquisition

Palfinger signed an agreement on Monday to acquire 100% of Herkules Harding Holding from Norwegian private equity fund Herkules. The acquisition price was not revealed, and the deal is expected to close in the next few weeks after expected regulatory approvals.

“In our product portfolio we were missing the lifeboats and were looking for improvements in our service network. In our business, the need for professional services and trainings will be a key success factor in the future,” commented Karl Oberreiter, md of Palfinger.

Styrk Bekkenes, ceo of Harding said: “Our combined range of products and services will be unique in today’s marine industry. We will stand stronger together and see huge advantages for both the equipment and service side of our business.”

The acquisition of Harding will almost double Palfinger’s marine business to over EUR300m a year and 20% of its overall revenues. Harding will 800 employees to Palfinger Marine bringing its total staff to 1,800.

The deal is also seen as reducing Palfinger Marine’s dependence on the oil price.

“Experiencing a certain dependency from the oil price drop, we are actively working on our strategy and taking other segment more into our focus. We profit from a strong offshore wind market, where we are one of the market leaders in nacelle, platform and substation cranes,” said Oberreiter.

Singapore Shipping Corp improves full year results

Singapore Shipping Corp improves full year results

Net profit for the year rose by 7.8% to $9.59m from $8.9m in the previous financial year.

The annual revenue also increased by 29.4% year-on-year to $44.92m due mainly to stronger performance from the shipowning segment following the delivery of three vessels.

The results were partly offset by weaker contribution from the agency and logistics segment, owing to lesser business activities and margin pressures.

Singapore-listed SSC said three vessels are due for drydocking in financial year 2017 and the group expects earnings from the shipowing segment to remain stable.

“Barring unforeseen circumstances, the group expects its overal performance in financial year 2017 to be profitable,” it said.

SSC has a fleet of six car carriers ranging from 5,190-7,200 cars capacity, according to its website.

Hipsters replacing harbour-rats along Brooklyn shoreline

Hipsters replacing harbour-rats along Brooklyn shoreline

Due to Greenpoint’s geography- abutting the very trendy Williamsburgh neighborhood, and a short tube ride under the East River from Manhattan, it has become a mecca for the young and trendy segments of New York. Around New York, Greenpoint, has attracted hipsters and other species of cool people, replacing the harbour-rats of days gone by. Importantly, New Yorkers have been rediscovering the city’s long-forgotten waterfront, and have been returning to it.

The taps were turned on, in late May (a week ago), just in time for the Memorial Day Holiday- the unofficial start of the summer season. It had opened briefly in late 2015, unfortunately too late in the season to gain much headway.

The 2016 menu includes comfort food- burgers, taco’s and sandwiches and the nautically named tugboat fries, which all can be washed down with a selection of lagers and ales. The venue itself is actually an old scow from New York Harbour, now in the hands of three partners with backgrounds in the towage and hotel management businesses.

The Brooklyn Barge should not be viewed as merely a new restaurant, instead, it should be seen as a sign of a modern sensibility about neighborhoods with an inclusive view of the waterfront and its relationship to its residents. So, the Brooklyn Barge does more than serve food and drink. It’s also a meeting place for educational and environmental events. It offers access to kayaking, sailing and fishing, much like similar spots along the Hudson River in Manhattan. Its three partners hope to attract families.

Out of towners should note that Greenpoint is actually 120 miles from another highly recommended destination- Greenport, which is out at the eastern tip of Long Island’s “North Fork” - noted for wineries - where a Maritime Festival will take place in late September 2016.

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