Nam Cheong Sells 3 More Vessels

Nam Cheong Limited announced that it has sold three vessels worth approximately US$41.0 million (approximately S$52.1 million).

These three contract wins are on the back of five vessel sales to PT Pelayaran Nasional Bina Buana Raya tbk (“BBR”), secured during the same month, bringing the total orders in September 2014 to eight which are collectively worth approximately US$126.0 million (approximately S$160.1 million).

Mr Leong Seng Keat, Nam Cheong’s Chief Executive Officer said: “The regional and global OSV industry continues to see good demand for shallow water OSVs, despite some softening of oil prices. As evidenced by the securing of these orders which has helped buoy our order book to a healthy level of approximately RM1.9 billion, we continue to be a beneficiary of the robust growth in the shallow water segment.”

One 5,150 bhp Anchor Handling Towing Supply Vessel (“AHTS”) was sold to a Norway-based repeat customer, Vega Offshore Group, which is in-line with the customer’s fleet expansion plan.

In addition, orders for two 6,500 bhp AHTS vessels were also secured from repeat customers of which one is based in Asia and the other, from Vroon B.V. which is based in the Netherlands.

Vega Offshore Group is an OSV owner, operator and commercial manager providing high quality offshore support services to the global market. The Asian customer is an emerging player with a strong reputation in the ship agency services and service broking business while Vroon B.V. is an international shipping company with experience that has spanned more than a century.

Mr Leong said: “These three orders, of which two are from European customers, represent the results of our sustained pursuit of being at the forefront of the OSV industry as a global player, beyond the shores of Malaysia. It is a clear testament to the quality, reliability and track record of the delivery of our vessels which has garnered strong confidence from all three repeat customers.”

BBR is an indirect subsidiary of Marco Polo Marine Limited. The Group had entered into a binding Heads Of Agreement (“HOA”) with MPML in September 2014 in relation to a proposed investment of approximately US$30.7 million (approximately S$39.0 million) in BBR, of which Nam Cheong may hold up to approximately 30% of BBR’s enlarged share capital. As part of the HOA and the proposed investment, BBR had entered into memorandums of agreement with the Group to purchase five vessels from Nam Cheong.

Mr Leong concluded: “We are delighted that our efforts in building Nam Cheong into a robust enterprise have continued to transcend geographical boundaries. Looking ahead, we are confident that our core focus on our shipbuilding and chartering businesses will light the path forward while our investments and strategic collaborations with MPML recently will reap rewards for Nam Cheong in years to come. In addition, we will continue to direct our efforts within the shallow water segment of the OSV industry which is more resilient to oil price fluctuations and has largely helped to drive our contract wins.”

The eight vessels, including the five vessels sold to BBR, are all of American Bureau of Shipping (ABS) class and are being constructed as part of Nam Cheong’s built-to-stock series in the Group’s subcontracted yards in China. These vessels arescheduled for delivery in 2014 and 2015 and are expected to contribute positively to the Group’s earnings for the financial year ending 31 December 2014 and 31 December 2015.