Berlian Laju Tankers has made a news splash with its recent US$ 685 mio senior debt restructuring by a 6-bank consortium plus a US$ 90 mio sale leaseback deal for four chemical tankers including one new building with Standard & Chartered (S&C). S&C also participated in the consortium deal that refinanced US$ 593 mio debt to repay 10 outstanding loans. Another too big to fail company with substantial borrower leverage.
In addition to its 65 chemical tankers, BLT also operates a fleet of 14 gas tankers and 14 oil tankers. It has an oil tanker subsidiary Buana Listy Tarna owning three tankers and an FSPO. BLT is hoping to get benefit of new Indonesian cabotage rules in the FSPO sector. The company is expected to have negative free cash flow this year but a surplus next year.
There is talk about selling off a 40% interest in Buana as well as two Suezmax crude tankers as early as spring this year.
In the market place, it is said that BLT is almost as good as sovereign risk with a prominent Indonesian family as controlling shareholders. The banks seem eager to lend to them more money despite the high leverage. On the other hand, the company seems delighted to pay the increased financial cost from the high leverage, betting on a market turnaround bonanza.
Management continues to have an extremely bullish view on the chemical tanker sector. This year there has been some stabilization in rates and from 2012 the orderbook overhang will be substantially reduced, so perhaps there lies ahead a silver lining for the sector.
BLT is the most leveraged play in the chemical tanker market so they will profit the most in an upturn, but they will face potential problems should there be further unexpected downturn. The senior lenders seem to be betting on the rosy scenario.
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