UNI-ASIA Finance Corporation, a structured-finance arranger and alternative-asset investor, revealed plans yesterday to swoop in on ships being sold on the cheap.
UNI-ASIA Finance Corporation, a structured-finance arranger and alternative-asset investor, revealed plans yesterday to swoop in on ships being sold on the cheap. To this end, the ship-investment fund manager will be setting up a new 'opportunity-driven fund' which will capitalise on the hard times that have plagued the shipping industry of late.
'There have been more cases of vessel orders being placed with shipyards, with the shipowner falling into financial trouble and being unable to pay the instalments. Uni-Asia plans to buy such vessels at a discounted price,' said Michio Tanamoto, managing director of Uni-Asia Finance's subsidiary - Uni-Asia Capital (Singapore).
The Baltic Dry Index, a barometer of the shipping industry's health, plummeted to a record low of 663 points last December.
While it has displayed a decidedly volatile disposition this year, Mr Tanamoto is certain that the market's bottom is near.
This new development in the firm's distressed-assets venture follows Uni-Asia Finance's announcement yesterday that it will not have to take delivery of three handy bulk vessels ordered in 2007 and 2008 from a shipbuilder, Kanasashi Heavy Industries Co Ltd.
The contracts had been cancelled following Kanasashi's financial difficulties. In April, Kanasashi had sought court protection of its assets from its creditors.
This will free up 12.6 billion yen (S$194 million) that Uni-Asia Finance had originally set aside for the payment of the three vessels. It will go towards acquiring other small handy bulk vessels at a discount, through the new fund.
The timing of such a cancellation is a fortuitous one for Uni-Asia Finance. Last year, each small handy bulk vessel had been contracted for 4.2 billion yen, or roughly US$40 million.
By Q1 this year, the value of a brand-new small handy bulk vessel had fallen to just US$31.2 million, according to a dry bulk forecaster report issued by Drewry Shipping Consultants.
Uni-Asia Finance also expects the funding of its ship investments to be fuelled by the net proceeds of a proposed private share placement announced last month. It anticipates raising at least $20.7 million in net proceeds.