Singapore Shipping Corp

[Boon]

From page 96 of AR2015:

"Intra-group financial guarantees
The principal risk to which the Company is exposed is the credit risk in connection with the guarantee contract it has issued on behalf of subsidiaries in respect of bank borrowings. The bank borrowings amounting to US$107,602,000 (2014: US$19,211,000) will mature within 3 to 15 years."

"The bank borrowings will mature within 3 to 15 years" => more or less in line with my earlier "guesstimate" on tenure of loan for Taurus Leader of 14.5 years.

(USD)

Here are some guess works..........

With the drawdown of the two new loans in 4Q2015 , of 16.5 m + 77 m = 93.5 m, amount of yearly loan repayment (principal only) has increased from 4.520 m to 12.188 m per year.

Yearly principal repayment of existing old loan = 4.520 million (would be fully repaid in 2018)

Yearly principal repayment of the new 16.5 million loan (7 years) = 16.5 / 7 = 2.357 million. (would be fully repaid in 2022)

=> Yearly principal repayment of the new 77 million loan = 12.188 – 4.52 – 2.357 = 5.311 million

=> Term = 77 / 5.311 = 14.5 years (would be fully repaid in 2030)

Over the next 3 years:

Principal repayment of loan = 12.188 m
+
Interest costs = 2m ~ 3 m
+
Dividend payment = 5 m (assuming DPS= SGD 1.5 cent )
+
Equity for new acquisition = 10 m

=> Total OCF required = 30 m per year – which seems like an tall order........

I guess the incremental OCF from Taurus Leader must at least be around 8 m - enough to service the loan (principal repayment + interest payment) - otherwise, I would not consider it to be a good deal........

Over the next 3 years - if OCF could hit 20 m per year, FCF (available for dividend payment + investing) would only be = 20 - 15 = 5m.

FCF (available for dividend payment + investing) would more likely to hit 10 m only after 3 years, when the old loan is fully repaid in 2018 - unless the charter rate for Centaurus and especially Taurus Leader are exceptionally good….....who knows....…have to wait and see…….

At US$50 to 80M per ship, this can amount to > US$300M in funding needed.

With bank generous financing of 90%, this means US$30M needed over 3 years.

The cashflow of US$12.30M is on the low side, hopefully can reach US$15M+ FY2016.

Maybe only the Jap banks dare to lend so much :-)


Vessel Capacity
Boheme =7,200 cars
Sirius Leader = 5,190 cars
Cougar Ace = 5,540 cars (30% = 1662 cars)
Capricornus Leader = 5,415 cars
Centaurus Leader = 5,427 cars
Taurus Leader = 7,000
Total capacity = 31,894 cars

To roughly double the fleet capacity => SSC needs to buy 4 to 5 more vessels with about 7,000 cars capacity.

If all future deals could be structured in exactly the same way as Taurus Leader - with only USD 3 million of equity needed for each vessel – then total equity needed is only about USD 12 to 15 million………ha-ha!

(vested)

Our debt to equity will be over 400% !

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