Danish shipping and energy group AP Moller-Mærsk hopes to raise nearly $1.8bn through a share offering.
A.P. Moller-Maersk A/S said Wednesday it will sell treasury shares worth 9.2 billion Danish kroner ($1.76 billion) to strengthen its balance sheet and provide financial flexibility after the global economic slowdown eroded container freight volumes.
The world's biggest container-shipping company will sell 250,340 B-shares -- which closed Tuesday at 36,900 kroner -- representing 5.7% of Maersk's total share capital.
"Through the sale of our treasury shares, we will strengthen our financial flexibility and increase our readiness to take advantage of possible, attractive investment opportunities, which may arise as a consequence of the economic crisis," Chief Executive Nils Andersen said.
The sale will also increase Maersk's free float, which should improve liquidity in its B shares, the company said.
Sydbank analyst Jacob Pedersen said the timing of the placement was better now than before the first-half report, but said it "doesn't make a lot of change" to Maersk's more than 100 billion kroner net interest-bearing debt.
"It does not change anything fundamental in its capital structure or in the financial well-being of the company. Of course it could just take a bit off the top of their debt, and make it cheaper if they want to issue bonds," he added.
Maersk, which also has an oil and gas production unit, has been hard hit by plunging container freight volumes. It swung to a loss of 3.67 billion kroner in the second quarter of 2009 as global demand slowed, sending world trade flows sharply lower, from a profit of 11.59 billion kroner in the same period a year earlier.
At the time, the company said that the economic crisis might limit access to bank loans, its traditional source of capital. "Almost all our current committed investments are funded, but the world economy and the loan markets are unusual," Mr. Andersen said. "Proceeds from the treasury sale in itself will reduce the company's loan requirements and at the same time increase its attractiveness as a potential future bond issuer," he said.
Maersk's Vice President Jan Kjaervik said that the reason for the share sale was two-fold. In addition to strengthening the balance sheet, "today's crisis will give us opportunities to invest in assets or companies," he said. "As we see it today, assets are most attractive. There's nothing concrete; this is a general measure to increase our flexibility," Mr. Kjaervik added.
Mr. Kjaervik said the company would consider "oil and gas and (container) terminal assets," and that there might be opportunities in other business units as well.
Sydbank's Mr. Pedersen said the receipts from the placement don't give Maersk a lot of room for a large acquisition. "I see some possibilities in the tanker segment, also investment opportunities in terminals," he said.
The placing will be carried out through an accelerated book-building process, and settlement will take place through VP Securities on the third business day after the announcement of the price of the placing shares, Maersk said.
The company's shares were recently down 7.6% at 34,100 kroner, below its previous 12-month high of 58,100 kroner before the slowdown filtered through to container markets.