Saturday, November 22, 2008
Otto Marine goes ahead with Singapore IPO
Marcus Hand - Friday 21 November 2008
SINGAPORE offshore vessel builder and owner Otto Marine is going ahead with a S$120m ($78.3m) initial public offering to better position itself in the “challenging macro environment”.
Otto Marine will launch the public offering of 235m shares on the Singapore Exchange tomorrow at a price of S$0.51 per share.
The IPO comes at a time of extreme turmoil on financial and stock markets, and a number of other planned public offerings on SGX have been withdrawn in recent weeks.
The company, which is primarily involved in the construction offshore vessels and more recently also moved into owning and chartering, provisionally registered the offering with the Monetary Authority of Singapore in early September.
“With the additional funds raised from this IPO, we will be able to further strengthen our financial and business position as well as brace ourselves for the challenging macro environment,” said Otto Marine executive chairman Yaw Chee Siew.
“This IPO will also help to better position the group for long-term growth when suitable expansion opportunities arise.”
The company will raise net proceeds of S$97.7m from the 206m new shares that are being issued as part of the offering. Well over half the offering has already been taken up by three cornerstone investors, Bangkok Bank, Maju Holdings and Standard Chartered Private Equity, which have agreed to subscribe to 146m shares.
Otto Marine said it planned to use S$43.4m of the funds for strategic investments, S$27.2m for expansion of its own fleet, S$23.1m for investment in its shipyard in Batam, Indonesia and S$4m for working capital.
The company said it is also looking at the viability of building a second shipyard in China. However, Chinese authorities said recently that they would be indefinitely suspending the issue of licences for new shipyards given the plunge in global newbuilding orders brought on by the credit crunch.
As of August 8 this year its shipbuilding orderbook stood at S$937m, including 18 anchor handler tug supply vessels.
“In the next two to three years, we will focus on ensuring smooth delivery of the vessels on our orderbook to our customers. The sale proceeds from these vessels will certainly contribute to our cash inflows and further strengthen our financial position, thus equipping us with additional funds to expand and grow when suitable opportunities come along,” Mr Yaw said.
Otto Marine also said a public listing would improve its recognition with customers and business partners. The IPO closes at 1200 hrs on November 26, with trading starting on November 28.
As adapted from LloydsList
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