Pareto World Wide Offshore AS - Pareto Project Finance

This Quarter’s Investment Review:Bukit Timah DISBukit Timah owns three 10,800 BHP AHTS, which were built in China in 2009/10. Since delivery, thevessels have been on bareboat charters to Swiber Offshore Marine, which is a Singapore listed oilservice company. The charters have 10 years duration, with purchase options from 2015.The project was started as a sale-lease-back projectbased on a newbuild project initiated by Swiber. Thevessels were delivered during 2009 and 2010 fromFujian shipyard in China and went straight on charterto Swiber upon delivery.Swiber Offshore is a Singapore listed oil servicecompany specializing in offshore construction, subseaservices, offshore support services and offshoredevelopment services. The company has a fleet of 55offshore vessels, a majority of which is leased. Thecompany was founded in 1996 and has grownsignificantly since then. In 2011, the company hadrevenues of USD 654m (+40%) with a pretax profit ofUSD 69m (+50%). The Q1’12 results followed up onthis with a 29% y-o-y revenue growth. The orderbacklog for Swiber is currently USD 1.2bn, indicatingcontinued growth. The current market cap of Swiber isSGD 367m (USD 290m).The ships were purchased for USD 120m, which wasfinanced by USD 84m of bank debt, USD 12m of loansfrom Swiber and a sellers credit of USD 6m. Paid inequity was USD 29m. The charters have 10 yearduration and Swiber has purchase options per vesselfrom 2015 and onwards.Bukit Timah is a good example of a solid bareboatproject against a good counterpart, where an attractiveleverage provides good IRR for equity holders. So farthe project has yielded an IRR for PWWO of roughly16% (in NOK), in line with the estimated return for theproject.The value of the vessels is holding up well and they areconsidered attractive units. Current market dayrateshave recovered well and support the valuation of theproject.Project start: June 2008Segment: AHTSContract: Bareboat charter to 2020Charterer: Swiber Offshore MarinePaid in equity: NOK 19.2mPaid out equity: NOK 9.7mLast valuation: NOK 20.5m