Malaysia International Shipping Corporation Berhad (MISC) will acquire Neptune Orient Lines (NPTOF)
’s American Eagle Tankers (AET).
The acquisition will provide MISC with an additional fleet of 29 Aframax tankers (22 owned and 7 chartered-in) and 2 Very Large Crude Carriers (VLCC). This will effectively increase MISC’s fleet to 37 Aframax tankers and 3 VLCCs (MISC presently has 8 Aframax tankers and 1 VLCC). In addition, AET has contracted for 3 Aframax and 3 VLCC new-builds and plans to charter-in 1 Aframax newbuild, while MISC has contracted for 4 additional Aframax and 1 VLCC newbuilds. Including newbuilds and charter-ins, the combined fleet totals 53 crude oil carriers.With the acquisition, MISC will be the second largest combined Aframax fleet in the world. MISC will also have the youngest Aframax fleet with an average age of 7.5 years as compared to the world’s average of 11.4 years. With AET operating the largest Aframax fleet in the Atlantic basin, MISC will be transformed to become one of the leading tanker operators globally. The strategic acquisition will enable MISC to expand its petroleum tanker market beyond the Arabian Gulf-Far East region cutting across to the West of Suez, giving MISC access to the US market. AET will
also be a strong platform for MISC to grow its operations in the North Sea, African and Mediterranean markets besides enabling it to broaden its customer base with the world’s oil super majors and support the growing business of its parent company, PETRONAS. The 7 VLCCs will further allow the Corporation to offer total logistic solutions for lightering operations in the US Gulf and support the development of similar opportunities in the Far East on the back of AET’s recent BITOR contract.
In the transaction, MISC will pay NOL a purchase price of $ 445 million for the shares of AET. The price is subject to adjustment on a dollar-to-dollar basis for the profits earned from February 8, 2003 to the closing date. It would be further adjusted by a mutually beneficial two-year earn-out mechanism agreed by MISC and NOL. AET has declared US$75 million dividend to NOL for the full year 2002 results and MISC will make full settlement for the dividend payable as of closing date. The completion of the transaction, which is expected in July is subject to approval of MISC’s and NOL’s shareholders, various regulatory approvals and other customary closing conditions.