Ezra in sale and lease back deal for nine vesselsNews // July 25, 2006
Ezra Holdings in Singapore has announced details of a major sale and leaseback deal for nine vessels.
The deal allows Ezra to expand and diversify its fleet without straining balance sheet; capture a larger slice of strong charter rate uptrend; and explore and acquire new businesses, improving earnings and increasing shareholder value.
In this latest deal, its wholly-owned Lewek Shipping Pte Ltd has signed the US$181.3 million sale and leaseback agreement with Navigation Finance Corporation (NFC) on seven deep water anchor handlers and two anchor handling tugs.
Navigation Finance Corporation is a global maritime private equity investment company and a joint venture between DVB Bank and US-based Northern Navigation International.
Said Ezra’s Managing Director Lionel Lee: “The latest sale and leaseback, like the first one, will enable us to expand and diversify our fleet at a faster pace to not only match the sharp upturn in charter rates for offshore support vessels we operate, but also to capture a larger slice of the buoyant market. They allow us to maintain full commercial and operational control over the vessels while deploying capital towards other businesses which will improve earnings and increase shareholders’ value."
“Our strategy to actively manage our balance sheet and capex needs via such deals is in line with our goal to keep gearing at a reasonable level, improve cashflow, and become an integrated solutions provider in the offshore oil and gas industry. This has been well-timed so that Ezra can benefit from the high charter
The implementation of this asset-light strategy and Ezra’s improving cashflow from operations help lower group net gearing to 0.2x in 1HFY06 from 1.1x in FY05.
The vessels comprise two 90m 18,000bhp AHTS vessels, four 71m 12,000bhp AHTS vessels, a 66m 8,000bhp AHTS vessel and two 48m 8,000bhp AHT vessels.
There are no profits attributable to these vessels as they are under construction.
Each vessel will be sold and leased back on a bareboat charter basis from NFC on delivery.
The US$181.3 million consideration was arrived at on a willing buyer-willing seller basis, considering factors such as vessels’ specifications and capabilities when completed, prevailing and anticipated market conditions for such vessels.
The deal is subject to shareholders’ approval at an extraordinary general meeting.
Since 23 March 2005, when it embarked on a sale and leaseback strategy with four vessels in a deal worth US$78.1 million arranged by NFC with Mount Faber KS of Norway, the nine vessels bring total vessels under such agreements to 13.
By 2007, EZRA intends to have 30 vessels under management, including those under such agreements.