Soechi Lines Plans to Acquire Tanker & Issue Global Bonds
Indonesia-based shipping company Soechi Lines set aside between USD $30 million and USD $50 million to acquire a tanker in 2018. Paula Marlina, Corporate Secretary at Soechi Lines, said the exact type of tanker depends on incoming customer orders. Traditionally, the shipping company acquires a certain type of tanker when it receives plenty of demand for certain tanker services.
The fleet of Soechi Lines currently numbers 39 tankers. This fleet has a utilization ratio of 80 percent. The shipping company targets to raise this ratio to 85 - 90 percent in 2018. Marlina added that due to ship repair and docking, the company cannot use all of its tankers at the same time.
As the majority of the company's shipping services involves transport of crude oil and natural gas, Soechi Lines' corporate earnings are heavily affected by the dynamics in the oil and gas sector. Its long-term partnership with Indonesian state-owned energy company Pertamina contributed 62 percent to the shipping company's revenue in the first nine months of 2017.
But despite strengthening commodity prices and the targeted higher utilization ratio, Soechi Lines set a conservative revenue growth target for 2018.
Meanwhile, through subsidiary Soechi Capital Pte Ltd, Soechi Lines plans to issue USD $200 million in global bonds that will mature in 2023 and have a coupon rate of 8,375 percent (a year). Proceeds will be used to settle debt obligations. Per September 2017, Soechi Lines has outstanding debt of USD $184 million.
Moody's Investors Service recently affirmed the B1 corporate rating for Soechi Lines, with a stable prospect. The ratings agency expects stable revenue growth for Soechi Lines supported by time charters and Indonesia's cabotage rules (requiring domestic sea transportation to be carried out by an Indonesian shipping company using an Indonesian-flagged vessel and an Indonesian crew).
However, Soechi Lines' rating remains constrained by the relatively small global scale of the company's operations, and the high price involved when acquiring vessels. Also the dependence of the company on two very large crude carriers - which account for 38 percent of the company's total capacity - causes concern about the cash flow.
On Monday (29/01) shares of Soechi Lines, listed on the Indonesia Stock Exchange, surged 2.08 percent to IDR 294 a piece. So far this year, the company's shares have surged 24.58 percent.
Stock Quote Soechi Lines - SOCI: