Oman Shipping raises $277m financing for MR tanker fleet

For financial deal Societe Generale acted as sole arranger and sole underwriter

Oman Shipping Company, part of the government’s transport and logistics holding company Oman Global Logistics Group (OGL), has successfully raised $227 million to finance its purchase of 10 new medium range tankers, which are chartered to Shell Tankers Singapore for seven years.

Societe Generale acted as sole arranger and sole underwriter for the landmark transaction, which involved a combination of export credit agency (ECA) and commercial financing. Seven of the 10 vessels were covered by Korea’s export credit agency, K-Sure.

“We are very pleased with the successful close of this landmark transaction particularly in the current environment, a testimony to our current strategy and its robustness. Beyond the importance for OSC, this deal perfectly meets our company’s objectives in terms of diversification of funding sources,” said Tarik al Junaidi, chief executive officer, Oman Shipping Company.

The funding covered the purchase of ten 50,000 dwt medium-range tankers, built by Hyundai Heavy Industries of South Korea. Societe Generale underwrote the whole transaction on the basis of an innovative structure: for seven of the vessels, a 12year ECA facility combined with a Tied Commercial Loan. The remaining three vessels were financed under a seven-year mortgage loan.

Societe Generale, Crédit Agricole Corporate & Investment Bank, the Korea Development Bank and ABN Amro acted as mandated lead arrangers.

“At the start we set a number of objectives that had to be fulfilled, including finding one single bank able to assist us in raising financing for the acquisition of 10 vessels, raising long-term financing to move towards the asset lifespan, obtaining competitive pricing, diversifying our banking pool and increasing the OSC Group’s visibility within the international banking market. Societe Generale’s commitment to meet all our requirements through an innovative model raised the profile of OSC and attracted liquidity to successfully close this transaction,” said Venugopal Venkatesh, chief financial officer of Oman Shipping Company.

“We are delighted to be involved in this landmark financing which comes at a time when various Omani sovereign entities are in the market to raise long term funding. By using ECA financing for the majority of this project, Oman Shipping Company is leveraging the capacity of international banks to join future deals. The Sultanate of Oman, like most GCC nations, has significant requirements when it comes to financing assets and infrastructure. As such, Oman Shipping Company is likely to serve as a reference for others in the Middle Eastern market,” said Richad Soundardjee, chief executive officer Middle East at Societe Generale.