MISC aims to acquire six more LNG tankers

By J.S. Dhaliwall

KUALA LUMPUR: Malaysia International Shipping Corp Bhd (MISC) aims at strengthening its fleet size by acquiring up to six liquefied natural gas (LNG) tankers.

"We have placed firm orders for two LNG tankers, the first of which will be delivered in 2002, with an option available for the purchase of the additional four to be delivered on a staggered basis," MISC chairman Tan Sri Hassan Marican said after the company's AGM in Kuala Lumpur yesterday.

The acquisitions will give MISC the opportunity to expand its lucrative LNG transport business. It has 13 LNG tankers now.

According to an industry source, MISC would have to fork out about RM4.5bil if it decided to buy all six LNG tankers, based on an average of US$200mil per tanker.

Hassan said although MISC's gearing level would rise after the acquisitions, the additional debt obligations would be matched by revenue streams generated by long-term charter of the new tankers.

"The company's gearing ratio of 1.17 times at the end of 1998 is quite low as far as the shipping industry is concerned," Hassan said.

MISC also plans to divest some of its non-shipping-related businesses from August.

"The non-shipping businesses to be divested will include some under MISC Enterprises Sdn Bhd and others as well . . . We will now concentrate on our shipping and shipping-related activities," he said.

Hassan pointed out that the main challenges facing MISC this year were the continued sluggish performance of its non-LNG businesses and depressed freight rates.

The company will also strive to be more pro-active in its dealings with customers and to retain as much business as possible despite the regional economic downturn.

"Internally, we have to continue to put in the structures to become more cost-effective and extract more synergies from bringing together the LNG businesses of MISC and Petroliam Nasional Bhd," he explained.

MISC, he said, was expected to maintain its financial performance for the 15 months to March 31, 2000, barring any external shocks.

On a separate matter, Hassan, who is also Petroliam Nasional Bhd president and chief executive, said that independent valuation was still being done on Hicom Holdings' 27.2% stake in Perusahaan Otomobil Nasional Bhd (Proton), which Petronas has proposed to acquire.

"The independent valuer (Britain-based investment and research firm Dresdner Kleinwort Benson) has yet to get back to us . . . Its valuation of the Proton stake is now also related to Proton buying over the other national car assets and these valuations will be established concurrently," he explained.

The DRB-Hicom group has proposed to sell its controlling stakes in Edaran Otomobil Nasional Bhd (EON) and Usahasama Proton-DRB Sdn Bhd, together with ancillary component-making companies, to Proton, which in turn will be sold to Petronas.

Hassan denied that the long delay in negotiations was due to haggling between Petronas and DRB-Hicom over price of the Proton stake.

"Both parties have been objective in discussions so far . . . it is up to the valuer to complete its job and come back to us," he said.