Muscat-based Oman Shipping Company has raised US $227 million to finance its purchase of 10 new medium range tankers, which are chartered to Shell Tankers Singapore for seven years.
Societe Generale acted as sole arranger and underwriter for the transaction, which involved a combination of export credit agency (ECA) and commercial financing. Seven of the 10 vessels were covered by Korea’s export credit agency, K-Sure. “We are very pleased with the successful close of this landmark transaction particularly in the current environment, and it is testimony to our current strategy and its robustness. Beyond the importance for OSC, this deal perfectly meets our company’s objectives in terms of diversification of funding sources,” said Tarik Al-Junaidi, chief executive officer, Oman Shipping Company.
The funding covers the purchase of 10, 50,000 dwt medium-range tankers, built by Hyundai Heavy Industries of South Korea. Societe Generale underwrote the whole transaction on the basis of an innovative structure. For seven of the vessels, a 12-year ECA facility was combined with a Tied Commercial Loan; the remaining three vessels were financed under a seven-year mortgage loan.
OSC says it set a number of objectives that had to be fulfilled. It aimed to find a single bank able to assist the company in raising financing for the acquisition of these new vessels, while also raising long-term financing, obtaining competitive pricing, diversifying its banking pool and increasing OSC’s visibility within the international banking market. “Societe Generale’s commitment to meet all our requirements through an innovative model raised the profile of OSC and attracted liquidity to successfully close this transaction,” added Venugopal Venkatesh, chief financial officer of Oman Shipping Company.
The deal is important also for Societe General, at a time when various Omani sovereign entities are in the market to raise long term funding. According to Richad Soundardjee, group chief executive, Middle East, “By using ECA financing for the majority of this project, OSC is leveraging the capacity of international banks to join future deals. As such, the company is likely to serve as a reference for others in the Middle Eastern market.”