Neptune Orient Lines (NOL) today announced it had reached a conditional agreement to sell its crude oil transportation company American Eagle Tankers (AET) to Malaysia International Shipping Corporation Berhad (MISC).
NOL Chairman Cheng Wai Keung said, ‘This is a strategic move that will allow us to focus on our core container transportation and logistics businesses, APL and APL Logistics, while at the same time strengthening our balance sheet and unlocking value for shareholders.’
Under the terms of the agreement, MISC will pay $445 million in cash at closing for the acquisition of the lightering specialist company, which today operates 29 Aframax tankers and two Very Large Crude Carriers (VLCCs), principally in the Gulf of Mexico/Atlantic basin. MISC will also fund a $75 million cash dividend from AET to NOL.
The purchase price is also subject to adjustment on a dollar-to-dollar basis for the profits earned from February 8, 2003 to the closing date. MISC has also agreed to increase the equity price should AET achieve certain performance milestones over the next two years.
The decision to divest is said to have followed a six-month review of the group’s investment in AET. Mr Cheng said, ‘We have been through a robust and comprehensive assessment process, and we are confident that the sale of AET at this time, if approved, will provide an opportunity to realise a sizable gain on the group’s investment in AET.
‘It would also significantly strengthen the group’s balance sheet and enable resources to be focused on driving sustained profitability from our core capabilities in global container transportation and logistics,’ he said.
As a result of the strategic divestment, the NOL group is expected to reduce its debt burden.
The agreement is subject to shareholder approval, which will be sought at an Extraordinary General Meeting to be held on the same day as the Annual General Meeting, 28 May.