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HONG
KONG—Neptune Orient Lines Ltd., Southeast Asia’s largest
shipping line, hired 11 banks to arrange a $6-billion
loan for its bid to buy TUI AG’s Hapag-Lloyd AG unit,
according to five people involved in the deal.
Bank of
Tokyo-Mitsubishi UFJ Ltd., Citigroup Inc., HSBC Holdings
Plc., Intesa Sanpaolo SpA, JPMorgan Chase & Co., Mizuho
Financial Group Inc., Natixis, Oversea-Chinese Banking
Corp., Société Générale, Sumitomo Mitsui Financial Group
Inc. and United Overseas Bank Ltd. will arrange the
loan, said the people, who declined to be identified as
the information isn’t public.
Neptune
Orient, competing for Hapag-Lloyd with a German group,
said earlier this month it will integrate its APL Ltd.
unit with the container shipping line if TUI accepts its
final bid. The combination would create the world’s
third-largest sea-cargo box carrier, behind A.P.
Moeller-Maersk A/S and Mediterranean Shipping Co.,
according to Bloomberg calculations.
“Neptune
Orient makes a logical candidate to merge with Hapag-Lloyd,
but making an acquisition this size when the industry is
facing deteriorating outlook increases Neptune Orient’s
risk, it leaves no room for integration error,” Hong
Kong-based Jon Windham, analyst at Macquarie Securities
Ltd., said in a telephone interview.
Trade
between Asia and Europe has declined this year after
growing 17 percent in 2007 due to effect of the US
subprime crisis on consumer spending and as shipyards
began delivering more new vessels, according to Philip
Damas, research director at Drewry Shipping Consultants
Ltd. in London.
The
industry may have over- capacity this year as demand on
the Asia-Europe route slows to 7 percent while it will
be little changed in the trans-Pacific sector, Damas
said.
Hapag
Lloyd is more focused on transatlantic routes while
Neptune Orient on the transpacific trades, Macquarie’s
Windham wrote in a research report on July 21. A merged
company “would have a more balanced revenue profile, but
would still have significant exposure to the US,” he
wrote.
Singapore-based Neptune Orient plans to pay 1.5
percentage points above the London interbank offered
rate as interest and fee for the two-year loan,
including interest margin of 125 basis points over Libor
and a fee of 50 basis points, said the people. A basis
point is 0.01 percentage point. Paul Barrett, a
spokesman for Neptune Orient, declined to comment.
TUI,
Europe’s biggest tourism company, is selling Hapag-Lloyd
after bowing to investor pressure earlier this year.
Investors from Hamburg, the German port city where Hapag-Lloyd
is based, including private investment bank M.M. Warburg
& Co. and billionaire Klaus-Michael Kuehne, will also
continue pursuing the purchase of Hapag-Lloyd, Sebastian
Panknin, a spokesman for the city’s Finance Ministry,
said on August 8.
The
Hamburg group has repeatedly said it wants Hapag-Lloyd
to remain German-controlled to keep it independent and
locally based.
Hapag-Lloyd,
valued by some analysts at €5.4 billion ($8 billion),
would help Neptune Orient bolster its transatlantic
presence. Neptune Orient submitted a nonbinding offer
for the German company on July 21.
Norwegian billionaire John Fredriksen, who holds more
than 15 percent of TUI, said a sale of the business
should be halted given the current economic climate, and
that Hapag-Lloyd should be split off into a separate
company instead.
Russian
billionaire Alexei Mordashov has raised his stake in TUI
to 15.03 percent and said he supports TUI’s decision to
sell the container shipping unit.
Hanover,
Germany-based TUI’s shares have fallen 26 percent this
year, giving the company a market value of €3.56
billion.
Neptune
Orient stock has fallen 34 percent this year.
The
company said earlier this month it will pare expansion
plans after second-quarter profit fell 19 percent to
$75.8 million, hurt by rising fuel cost. (Bloomberg) |
