Reports » Singapore

Singapore stock market and companies daily report (Otto Marine, Ascendas REIT, Hyflux) (March 11, 2013)

Contributed by Shares Investment

Otto Marine Secures US$27.8m In New Build Orders For Shipbuilding
Otto Marine, leading offshore marine company, announced that it has secured new shipbuilding orders for building two offshore vessels for a total value of US$27.8 million. The new shipbuilding contracts are for constructing two identical units of 5,150 brakehorsepower (bhp) anchor handling tug supply vessels (AHTS), which will be approximately 62 meters in length and will be constructed to meet ABS class requirements. The vessels are expected to be delivered in the second half of 2014. Notably, the contracts are awarded by a renowned Indonesian operator that owns and operates a fleet of offshore and other vessels.
Significance: Otto Marine notes that the new orders are the first that the company has won in two years, thereby rejuvenating its shipbuilding segment and expect the shipbuilding orders to have a positive impact on its financial performance for FY13.

Ascendas REIT Raises $406.4m From Private Placement
Ascendas Real Estate Investment Trust (Ascendas REIT) closed the order book for its private place in one day and raised gross proceeds of $406.4 million. Ascendas REIT was initially looking at a placement of 140 million new units at an issue price of between $2.50 and $2.55, to be offered to institutional and other investors. However, it increased the number of new units to be issued to 160 million due to the positive market demand. The issue price of $2.54 was also on the higher range. It represents a discount of 3.5 percent to the volume-weighted average price of $2.6328 for the full day of trading on 7 March. Of the net proceeds of about $400.6 million, $270 million will go towards partly funding the potential acquisition of an integrated mixed use property at Kallang Avenue and $126 million will be channelled towards the potential acquisition of a property located within Singapore Science Park II with the remaining set aside for general working capital purposes.
Significance: The placement will help Ascendas REIT facilitate its acquisition of two top-tier assets, which would enhance the quality of its portfolio and improve distributable income to unitholders, while helping strengthen its balance sheet and capital structure.

Hyflux To Commence Tuaspring Desalination Plant in 2H13 Although In-House Power Plant Not Ready
Hyflux, which is starting up its $1.05 billion Tuaspring desalination plant in 2H13, will have to power the facility during this period with electricity purchased from Singapore’s main power grid as its in-house power plant will not be ready by then. According to Business Times, industry sources have attributed this to construction-related issues, including the late award of the contract for the 411-megawatt (MW) power plant. Also, it experienced delays in connecting the power plant to the main grid as it intends to export some 300 MW of its excess capacity to the main grid apart from powering Tuaspring’s 70 million gallons (265 million litres) per day desalination plant. Hyflux’s spokeswoman explained that while it had committed to PUB to deliver the Tuaspring desalination plant in 2013, “the timeline for the project incorporated a gap between the completion of the desalination and power plants as Hyflux required a longer period to finalise the power subcontract”.
Significance: There are concerns among lenders that while the desalination portion of Tuaspring is covered by its 25-year purchase agreement with PUB, the electricity portion does not have similar customer guarantees. Nonetheless, Hyflux has started on obtaining long-term non-recourse financing for both the desalination and power plants. As Tuaspring is viewed as a prestigious project, there is very good interest from many banks to participate.