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Wed 4 Mar 2015 02:22 PM

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Saudi shipper Bahri plans $1bn sukuk to repay debt

National Shipping Company of Saudi Arabia to sell 10-year sukuk which will also fund general business purposes

Saudi shipper Bahri plans $1bn sukuk to repay debt
(Photo for illustrative purposes only)

National Shipping Company of Saudi Arabia (Bahri) plans to sell ten-year sukuk worth 3.9 billion riyals ($1.04 billion) by the end of March to repay debt and for general business purposes, a company executive said on Wednesday.

Bahri became the sole provider of very large crude carrier (VLCC) crude oil shipping services to Saudi Aramco after it purchased the marine unit of the oil giant in a deal first announced in 2012 but which was completed last year.

The purchase of Vela made Bahri the world's fourth-largest owner of VLCCs and was backed by shares in itself and a 3.18 billion riyal bridge loan, which it said last June would be replaced by long-term, sharia-compliant financing within 12 months.

The financing looks set to be its debut sukuk issue, with the firm choosing HSBC Saudi Arabia, JP Morgan and Samba Capital, the investment banking arm of Samba Financial Group, to arrange the transaction, Mohammad Alotaibi, vice chief executive officer for finance, told reporters on the sidelines of a marine conference in Dubai.

Bahri hopes to get a better interest rate on the sukuk than it has been paying for the bridge loan, which was agreed in February 2013 with the three banks and signed in June 2014, Alotaibi said, declining to provide more details.

He added that the company was open to more acquisitions in the future.

"We are reviewing our strategy. We are inclined more to acquiring ships (than other companies)," he said, adding that the dry bulk market had very low prices currently, which offered potential opportunities for buyers.

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