NOL dives on report of rights issue plan

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http://forum.channelnewsasia.com/viewtopic.php?t=177272&postdays=0&postorder=asc&start=150

NOL dives on report of rights issue plan

March 10, 2009, 4.29 pm (Singapore time)

SINGAPORE - Shares of Neptune Orient Lines (NOL), the world's seventh-largest container shipper, fell as much as 12.7 per cent on Tuesday after a Dow Jones report that the company is considering a rights issue to raise more than US$250 million.

NOL did not respond to emails asking for a comment, or answer telephone calls.

Banking sources told Reuters NOL, like other companies in which Singapore state investor Temasek Holdings has a stake, is considering ways to bolster its capital, but no mandates have been given out.

By 0752 GMT, NOL was down 10.8 per cent at 91 Singapore cents, underperforming the benchmark Straits Times Index which gained 0.8 per cent. -- REUTERS

 

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NOL's shares down by some 8% to close at S$0.935

By May Wong & Yasmine Yahya, Channel NewsAsia & 938LIVE | Posted: 10 March 2009 1954 hrs


SINGAPORE: Shares of Neptune Orient Lines (NOL) fell by about 8 per cent in Tuesday's trade, closing at 93.5 Singapore cents.

This is after the release of a Dow Jones report that said the company is considering a rights issue to raise more than US$250 million.

The move would have made it the fifth government-linked company to turn to shareholders to raise funds.

In a statement to the Singapore Exchange, NOL – the world's 7th largest container shipper – said it does not comment on market rumours or speculation. But it said it would evaluate all available options to improve its performance and strategic position.

NOL added that it has not entered into any agreements that would require disclosure under listing rules.

The company has been suffering from falling freight rates and a dramatic slump in world trade because of the global economic turmoil.

Phillip Securities research analyst Alfred Low said a rights issue may be a good move for the firm right now as it has high borrowings.

"What happens is that NOL currently has total borrowings of S$1.2 billion and are projecting it to increase to S$1.3 billion in 2009. Net debt to equity ratio is likely to increase from 0.3 to 0.4. So by doing a rights issue, NOL can reduce the borrowings and improve its balance sheet," he said.

NOL said in its 2008 balance sheet that it had US$429 million in cash as of end of last year, compared with total liabilities of US$2.94 billion, of which US$467 million comprised short-term loans.

However, Mr Low noted that if NOL does announce a rights issue, the company's share price may weaken further because a rights issue introduces more shares into the market, diluting NOL's earnings per share.

Mr Low believed that NOL is likely to get support from its major shareholder Temasek Holdings if it chooses to raise funds.

NOL posted a fourth quarter net loss of US$149 million this year – its first loss in six years. That compares with a net profit of US$196 million a year earlier.

The company has also warned that it will be in the red for all of 2009.


- CNA/so