PETALING JAYA: MISC Bhd marks its foray into the global ethane market with its purchase of six very-large ethane carriers (VLECs) for US$726mil (RM3.09bil), which will be chartered to Zhejiang Satellite Petrochemical Co Ltd (STL) for 15 years.
The charters for the vessels are expected to commence in the fourth quarter of this year.
MISC said in a filing with Bursa Malaysia that it had inked memorandums of agreement (MoAs) with six indirect and wholly-owned subsidiaries of STL for the purchase of six newbuild 98,000 cubic meters vessels.
Concurrently, MISC, through its vessel-owning entity Portovenere and Lerici (Singapore) Pte Ltd (PLS), has entered into time charter parties with STL for the time charter of the six vessels for operations in international waters.
Samsung Heavy Industries Co Ltd and Hyundai Heavy Industries Co Ltd, which are both shipyards in South Korea, are constructing three vessels each.
MISC president and group CEO Yee Yang Chien said the acquisition of the six VLECs marked a milestone in MISC’s offerings for large-scale ethane transport.
“Adding to the strength and expansion of our existing fleets as well as diversifying our portfolios, we are now the proud owner of six VLECs – which are the largest vessels of its kind, aside from the existing seven VLECs in the world.
“As one of the only three owners of such vessels in the world, this new addition to our fleet would strengthen MISC’s competitive advantage in this segment.
“I would like to thank Zhejiang Satellite for the invaluable trust given to us, ” he said in a statement.
Noting the current market challenges, Yee said MISC has been making notable strides in diversifying its portfolio, through the development of new solutions and enlarging the group’s presence with the addition of new markets.
“The long-term charter parties are instrumental to the built-up of our sustainable income stream; a clear reflection of long-term drivers that sets our growth strategies and valuable investments.
“The fact that these milestones are achieved at a time like this shows MISC’s resilience and consistency in its virtuous growth, ” he added.
The MoAs and time charter parties are not expected to have any material impact on MISC’s earnings per share, gearing and net assets per share for the financial year ending Dec 31,2020.
Meanwhile, STL chairman and president Yang Weidong said the venture between MISC and STL would see both parties building a global logistics supply chain for chemicals.
“This supply chain is going to safeguard the world-leading ethylene cracker that is being built by STL. Together, the two companies will help accelerate the development of the global chemical industry, ” he said.
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