- KDB and NH is partially financing Teekay’s new tanker acquisitions which will boost the prospects of the Crude Oil Tanker Operator.
- The investment is part of KDB’s new plan for shipowners named Ocean Value-up Fund Program
- Powered by this, Teekay has further ordered for 4 new tankers.
Three new Teekay tankers are being partially financed by South Korea’s state-run lender KDB Bank and NH Investment & Securities Co. Ltd. Together they have underwritten a $15 million subordinated debt each which will finance the $330 million purchase by Teekay who is leading operator of crude oil and LNG tankers, says a report published in the KoreanInvestors website.
The Investment
In addition to the $30 million subordinated tranche, Teekay borrowed $260 million in senior direct loans from KDB, Export-Import Bank of Korea and other global banks to buy the shuttle tankers from South Korea’s Samsung Heavy Industries Co. Ltd., according to sources with knowledge of the matter on July 2.
For its part, Teekay stumped up $40 million for the three newbuilds it ordered in 2015. They were delivered between 2017 and early 2018.
KDB’s Plan for Shipowners
The vessel financing by South Korean financial institutions was part of KDB Bank’s Ocean Value-up Fund Program of about 1.2 trillion won ($1.1 billion). It was launched in 2015 in a bid to support the country’s shipbuilders struggling with reduced orders due to the slowing global shipping industry.
- Under the terms of the subordinated debt, KDB and NH Investment will receive only interest payments for the first five years before receiving the principal.
- Its average yield is expected to be above 5% per annum, according to the sources.
- In comparison, the senior loans will be paid back in equal annual installments over a 12-year period.
NO RESALE
Both KDB Bank and NH Investment cancelled a plan to sell down the subordinated note through KTB Asset Management Co. Ltd.
KTB Asset had planned to launch a dollar-denominated private investment fund with a five-year term for the resale. But it cancelled the plan, without giving a reason.
“The vessels are in long-term shipping contracts with leading companies, so they are expected to generate stable cashflows,” a KTB Asset source told the Korean investors.
Risk Factors
Regarding the risk factor of a customer loss and difficulty in getting back the principal, the KTB source noted that recent oil price increases have boosted profitability of offshore oil drilling and Teekay would be able to attract new customers with the high value-added shuttle tankers.
Vessel Financing Expert
KTB Asset recently hired a vessel financing expert and has been aggressively marketing for ship financing in Germany, Britain and Singapore.
South Korea is home to the world’s top shipbuilders – Hyundai Heavy Industries Co. Ltd. and Daewoo Shipbuilding & Marine Engineering Co. Ltd. as well as Samsung Heavy.
Further Teekay Deals
Additionally, Teekay ordered four new shuttle tankers to Samsung Heavy in 2017 to expand its transportation services in the North Sea, according to its announcement in November 2017.
A shuttle tanker, a type of tanker ship, transports oil from offshore oil fields to onshore refineries. They are used in the high seas’ oil exploration areas such as the North Sea and Canada’s offshore oil fields.
Global oil companies such as Exxon Mobil Corp. and Chevron Corp. are among Teekay’s major customers.
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Korean Investors
