SGD New Issue Review : Pacific Radiance 4Y 4.5%


Issuer: Pacific Radiance Ltd.
Status: Direct, unconditional, unsubordinated and  unsecured Notes
Rating: Unrated
Format:  Reg S, S274 & 275 of Singapore SFA
Tenure: 4 Years
Issue Size: TBD
Initial Price Guidance: 4.5% area
Redemption at Option of Noteholders upon Cessation of Trading of Shares:  At par, in accordance with the Programme
Redemption for Taxation Reasons: Yes, in accordance with the Programme
Payment: Semi-annual, actual/365 (fixed)
Details: SGD250K/Multicurrency Debt Issuance Programme/Singapore Law/CDP
Listing:  SGX-ST

– Comps:
Ezion 4.6 18: 101.50, 4.19%
Dyna Mac 4.25 2017: 101.20, 3.81%

Credit Highlights:

–       Listed on SGX with a market capitalization of SGD1,081M as at 21 August 2014, Pacific Radiance Ltd (“PRL”) is a fast expanding owner and operator of a young and diverse fleet of more than 130 offshore vessels in Asia and beyond

–       Diverse and modern fleet: PRL operates a diverse fleet which can be deployed across the oilfield lifecycles. Its fleet has an average young age of about four years, which offers a competitive advantage in greater reliability, higher deployment rate and lower maintenance cost

–       Access to High Growth & Cabotage-Protected Areas: PRL enters into cabotage-protected markets, such as Indonesia and Malaysia which are among the largest offshore O&G markets in Asia, forming joint ventures with trusted local partners

–       Strong Global Customer Base: Blue chip clientele consisting of leading IOCs and NOCs such as BG Group, TOTAL, Shell, Pertamina and Petrobas. In addition, the group also serves large international oil and gas contractors such as Saipem, McDermott and Subsea 7

–       Expertise in Ship Building Management: Strong in-house shipbuilding expertise has enabled PRL to manage and supervise vessel construction of its newbuild orders in third party shipyards. This has helped to lower overall newbuild costs

–       Strong financial performance: 4-year revenue CAGR at 41.3% and 4-year net profit CAGR at 56.6%. Prudent capital structure with Debt/Asset and Debt/Equity ratios at 0.36x and 0.66x respectively as at 30 June 2014

Owned by the co-founder of Jaya Holdings which was majority sold at the peak to Affinity Equity Partners in 2006, sold at a loss to Deutsche AM consortium back in 2011 and who then re-sold to Mermaid Maritime earlier this year at a almost 100% profit. What a run !

They are back with Pacific Radiance and looking to replicate the Jaya story ?

We cannot make any assumptions about their management or accounts because the company just listed itself in November last year and its share price is up 66.67% since (from $ 0.9 to $ 1.5) which is expected for a 65.37% majority owned by 1 man company.

So I would say it is too early to comment about their prudent debt housekeeping because 1. they just listed in Nov 2013 which means they would do everything right until then and, 2. their MTN borrowing programme is not the 300 or 500 million kiddy ones but it is up to 1 billion in a convenant-light version.

Less than a year into listing, I would expect their numbers to look good. Financial leverage 2.3 times, Debt/Assets 39.3%.

So here we have it, a 4 year paper in the 4% category of Dyna Mac and Tiong seng and Koh Brothers and all our favourite local names. I daresay they would have done their homework and decided that there is enough demand although I would not expect more than 100 mio for them today.