Osprey buys out London shipping firm

Osprey buys out London shipping firm

SINGAPORE (AFP): Singapore's listed tanker operator Osprey Maritime Ltd. announced yesterday it would buy London-based shipping firm Gotaas-Larsen Shipping Corp. for US$750 million in a bid to cash in on Asia's soaring gas demand.

With the acquisition, Osprey Maritime will own a fleet of 30 vessels and manage another six liquefied natural gas (LNG) carriers, making it one of Asia's largest energy transport groups, officials said.

Osprey Maritime's announcement that it will acquire a 100 percent equity interest in Gotaas-Larsen ended two weeks of speculation on the deal which led to the suspension of trading in the Singapore company's shares at the weekend.

"This acquisition is a springboard to realizing the company's goal of becoming a leading international energy transportation group," Osprey Maritime chairman Timothy Cottew told a news conference.

"It is in line with our strategy to maximize shareholder value by tapping on the immense growth prospects in Asia's oil and gas industries," he said.

The takeover comes hot on the heels of Singapore-listed Neptune Orient Lines Ltd.'s purchase of US-based APL Ltd. last month for $825 million amid uphill battles by shipping firms to survive falling freight rates, tougher regulations and fierce competition.

"This is not a reaction to Neptune. We have been studying the energy market for quite some time and the acquisition will add both to our fleet of LNG and crude carriers and broadening the company's management expertise," Cottew said.

Osprey Maritime currently owns and operates a modern fleet of 22 vessels used to transport liquid cargo.

Before the deal, Osprey Maritime was a 50:50 partner with Gotaas-Larsen in a venture that owned a LNG carrier. Industry sources said they had also planned to build a LNG carrier for Taiwan's state-owned Chinese Petroleum Corp. before Tuesday's announcement.

Analysts said the acquisition would enable Osprey Maritime to gain a foothold in the lucrative LNG sector, especially ownership of LNG carriers, of which there are only about 100 in the world.

An LNG carrier costs about $225 million.

"It's a very nimble and strategic deal which will allow them to gain a foothold, especially in the Indonesian LNG sector," Richard Stokes, a marine analyst with W.I.Carr in Singapore, told AFP.

Osprey Maritime has close links with Pertamina, the state- owned oil corporation of Indonesia, the world's largest LNG exporter. Pertamina is keen to develop Indonesia's substantial natural gas reserves.

"The timing of the deal is opportune, especially when there is a lot of focus on VLCCs (very large crude carriers)," Stokes said. VLCC freight rates, he added, were beginning to recover and the Singapore company wanted to ride on this growth.

Apart from being major LNG exporters, Asian economies' demand for the gas was also expected to increase -- to more than 90 million tons a year by 2005 from about 59 million tons in 1996, analysts said.

Cottew said the acquisition of Gotaas-Larsen would be financed through syndicated loan facilities and the issue of new equity.

Company officials said Osprey Maritime was arranging for syndicated loan facilities totaling $944 million primarily to finance part of the acquisition cost and to refinance the bulk of its existing bank borrowings.

Gotaas-Larsen, currently owned by a British family, was set up by two Norwegian businessmen and used to be listed publicly before delisting sometime in the late 1980's.

Osprey Maritime shares was last traded at 2.16 Singapore dollars (US$1.54) on Friday.