It is understood that Borr Drilling has raised its latest offer for KOM’s jack-up rigs, but it is unclear whether this matches the asking price from the yard group.

The rig-builder is said to be after an average unit price of US$150 million to US$160 million for a KFELS B Class jack-up.

Industry sources suggest the indicative price range would have capped impairments and writeoffs within an acceptable threshold to the yard group and its parent.

KOM and Borr Drilling are believed to have been in talks for the sale and resale of six jack-ups, including one that the yard group has been building without any contract in hand. The other five jack-ups that were under consideration were originally constructed for Grupo R, Clearwater Capital, Falcon Energy Group’s (FEG) unit, FTS Derricks and Fecon, according to sources.

Brokers indicated that the jack-up rig commissioned by private equity player Clearwater Capital has been offered for resale for some time now. KOM has deferred the delivery of the other jack-up rigs placed by FTS Derricks, Grupo R and Fecon at the request of these clients.

Talks between Borr Drilling and KOM first started last year for these jack-ups although a deal could not be reached mainly because the two parties could not agree on the pricing. Ian Craven of Icarus Consulting said: “It is believed that KOM would not match the discounts offered by PPL (Sembcorp Marine).”

Borr Drilling went on to sign a US$1.3 billion deal with SembMarine for nine jack-ups. Six of these rigs were originally contracted by Oro Negro, Perisai Petroleum and Marco Polo Marine. The average unit price for the nine rigs works out to less than US$145 million.

Upfront deposits

The rig-building contracts KOM had signed for these jack-up rigs called for customers to pay up at least 20 per cent of the contracted values as upfront deposits.

Shipping data firm Vesselsvalue (VV) noted on Jan 9 that Fecon’s KFELS B Class jack-ups, previously contracted to KOM at above US$200 million apiece, are now valued at just above US$170 million each. VV’s valuation took into consideration drastically lower offshore drilling demand and a supply glut stemming from over-investments in rig-building before the market crashed in 2014.

KOM has maintained so far that it has been adequately compensated for deferment of rig deliveries. The yard group could well grant its clients further deferment for the deliveries of these jack-ups – now said to number above a dozen – if it could not get good enough offers in the resale market.

However, as part of a large conglomerate, KOM also has one further option on the table for the jack-up rigs on its order book: it can choose to extend financing to clients in favour of delivering rigs earlier than later.

A Keppel spokesman, citing the black-out period before the release of its fourth quarter financial results, declined comment. Keppel Corp is due to announce its full-year financial results on Jan 25.

It is understood that Keppel Capital has already hooked up with structured finance provider Clifford Capital to potentially extend a sale-and-lease-back arrangement for at least one jack-up contracted by Grupo R.

In a sale and leaseback arrangement, the asset owner, “sells” or offloads the asset from its balance sheet to the financier. The owner then charters back from the financier at agreed rates over a fixed term. The rates typically include a rate of return to the financier. The financier may nominate an asset holding vehicle for the said asset.

The sale-and-leaseback financing for the Grupo R rig is said to have been termed out over a charter exceeding 10 years.

Project financing for the Grupo R jack-up may signal Keppel Capital’s first forays into the O&M industry.xxxxxxxxxBut this is not entirely new to Clifford Capital. In 2015, the Temasek-backed structured finance entity acted as the mandated lead arranger for a US$100 million dual-currency senior term facility for Seafox 5, a service and accommodation liftboat constructed at Keppel Fels shipyard in Singapore. Seafox 5 was owned by a 75:25 joint venture between KOM and Seafox International. Clifford Capital declined comment when approached by BT.

Ang Dingli, APAC lead at global information company IHS Markit, considered leasing out the undelivered rigs as an alternative way for the yard to generate cash rather than sell at a discount.

“Realistically, the yard must weigh the pros and cons of doing so from a cashflow and business perspective; that is, the rates it can fetch from leasing then selling the rig later compared to selling the rig now. Cutting losses and moving on may not be a bad thing in some cases,” he said.

Cambodia generated about US$300 million in revenue by exporting nearly 189,000 tonnes of rubber last year, according to Pol Sopha, general director of the rubber department at the Ministry of Agriculture.

The revenue boost was also helped by a 24 per cent increase in the average price per tonne, which was up to $1,586 last year, compared to $1,283 in 2016.

But while small-scale rubber farmers were able to sell their crops for a profit, the industry as a whole was crippled by massive smuggling operations that shipped much of the country’s rubber into Vietnam tax-free, according to Sopha.

“Now the price satisfies the family rubber farmers, but it doesn’t give a profit to the rubber industry,” he said yesterday. “We are trying to crack down on rubber smugglers…but they use the small gates at the border, which is difficult to control.”

Men Sopheak, vice president of rubber plantation operator Sopheak Nika Investment Group, blamed the smugglers for some recent closures and lack of profits for the bigger Cambodian rubber exporters.

“Most of the local exporters have been forced to shut down, since they could not compete with the rubber brokers who smuggle to the border without paying tax,” he said yesterday.

But those brokers were a boon for smaller rubber operations, often times paying farmers near the border a high price for their crops, according to Thy Sambo, president of the Tbong Khmum Family Rubber Association, which has 92 small-scale rubber farmers as members.

“From what we sold last year, we can say that it is fair enough for us if the price stays the same this year,” he said, adding that being close to the Vietnamese border meant higher prices from the rubber brokers.

“We are not worried about our living.”

More cooperation documents are expected to be signed during next month’s 40th meeting of the Laos-Vietnam and Vietnam-Laos cooperation committees, a source from the Laos-Vietnam Cooperation Committee said.

The documents include deals on electricity trade, with Laos seeking to export power to Vietnam.

“Laos is encouraging the signing of these documents,” the source said. The Laos-Vietnam Cooperation Committee would meet in Vientiane in preparation for the 40th intergovernmental committee meeting, according to the source.

Meanwhile, Vietnamese Prime Minister Nguyen Xuan Phuc told the relevant ministries and sectors of Vietnam to make thorough preparations for the upcoming intergovernmental committee meeting, Vietnamese media reported.

PM Phuc made the request at a meeting with the Vietnam-Laos Cooperation Committee and relevant ministries and sectors in Hanoi, Nhan Dan reported.

He stressed that in 2018 the two sides will bolster their cooperation in all fields, with priority given to electricity and the Vung Ang port – a cooperation project in Vietnam’s central Ha Tinh province which will enable land-locked Laos to access sea trade routes.

The two sides are continuing to seek funding for key projects, such as the 725-km Hanoi- Vientiane highway and a railway connecting Vung Ang, Tan Ap, Mu Gia (Vietnam) and Thakhaek, Vientiane (Laos), according to the Voice of Vietnam (VoV).

In addition, a number of joint projects on transport infrastructure and connectivity have been undertaken between the two countries and within the region.

The two countries have just concluded the Laos-Vietnam friendship and solidarity year 2017, in which a number of activities were organised to mark the 55th anniversary of diplomatic relations and the 40th anniversary of the signing of the Laos-Vietnam Treaty on Amity and Cooperation.

Vietnam is now the third largest foreign investor in Laos with 276 projects worth around US$5 billion in total.

Accumulative disbursement has been estimated at US$1.6 billion so far, accounting for 32.5percentof total Vietnamese investment, according to VoV.

Vietnam-Laos trade in the first 11 months of 2017 surpassed US$808 million, up roughly 10 percent from 2016.

Last year, Vietnam granted 1,246 scholarships to Lao students, 246 more than the number pledged by the two governments.

About 95 per cent of the solar cells and panels sold in the United States are made abroad, with most coming from Malaysia, China and the Philippines, according to SPV Market Research.

The solar industry is anxiously awaiting the decision, which will have wide-reaching implications for the sector. Domestic panel producers opposed to cheap imports would benefit from a tariff. But installers that have relied on the lower-cost hardware for their recent breakneck growth would suffer.

In an interview with Reuters, Trump declined to say how he would land on the case – which was triggered last year by a domestic manufacturer’s trade grievance – but complained about the effect of imports on US panel makers.

“You know, they dump ‘em – government-subsidised, lots of things happening – they dump the panels, then everybody goes out of business,” he said.

Asked when the decision would be announced, he said: “Pretty soon. Honestly, pretty soon.”

According to a process governed by the International Trade Commission, Trump has until January 26 to make his decision.

Bankrupt domestic panel producer Suniva triggered Trump’s consideration of tariffs last year when it filed a trade case arguing it could not compete with cheap imports. About 95 per cent of the solar cells and panels sold in the United States are made abroad, with most coming from Malaysia, China and the Philippines, according to SPV Market Research.

Suniva was later joined in the case by the US arm of German manufacturer SolarWorld AG.

In October, Trump received a range of options from members of the US International Trade Commission to protect domestic producers, but he has broad leeway to come up with his own alternative or do nothing at all.

Suniva is seeking strong measures.

“A robust tariff will allow Suniva to restart its factories and rehire employees,” Suniva spokesman Mark Paustenbach said.

Only about 14 per cent of the solar industry’s 260,000 jobs are in manufacturing. The trade case has fueled anxiety among installers that make up most of the rest of the industry and rely on low-priced imports.

The installation sector’s trade group, the Solar Energy Industries Association, has campaigned against tariffs, saying they would drive up the price of solar and cripple demand, eliminating tens of thousands of jobs and ultimately hurting the manufacturers that sought them in the first place.

“I’m staying optimistic that the business aspect of this will come through in the end,” said George Hershman, president of Swinerton Renewable Energy, a privately held firm that constructs large-scale solar projects.

Hershman said Swinerton employed 2,000 full-time employees and up to 8,000 temporary workers, but added several of its projects had been placed on hold pending Trump’s decision.

“If you add 50 per cent to the cost of the job, it may not be economic,” Hershman said.

Solaria Corp, a US company that produces panels in both California and South Korea, also opposes tariffs, according to Chief Executive Suvi Sharma. The company said a recent $23 million financing round took months longer than it should have partly because of investor jitters about the case.

“The best thing would be to have this whole thing go away,” Sharma said.

“The sale purchase agreement is expected to be signed during the visit. It is what is being discussed in the ministry,” he said as reported by Antara, adding that the export volume reached between 1 and 1.5 million tonnes per annum.

In the implementation, state-owned energy firm Pertamina will cooperate with its counterpart in Bangladesh (Petrobangla) and its counterpart in Pakistan (Pakistan LNG Limited).

The contract agreement is to be designed in 10-year terms each.

The LNG export plan to the two countries is a follow-up of a memorandum of understanding between Pertamina and the two companies.

The West Java provincial government in Indonesia will sign an agreement with state-owned airport operator PT Angkasa Pura II (AP II) on the operation of Kertajati International Airport, which is scheduled to open in July.

“Hopefully we can sign a memorandum of understanding (MoU) on Febuary 10,” West Java Governor Ahmad Heryawan said on Thursday in Jakarta.

Under the agreement, AP II will manage the airport’s operation.

Kertajati airport is currently being developed by PT Bandara Internasional Jawa Barat (BIJB), which is owned by the West Java government.

Separately, Heryawan said the West Java administration would maintain 51 per cent ownership in BIJB, while the other 49 per cent would be sold. The turnover from the shares sale would be used to develop the airport in Majalengka regency. “We want to keep majority shares in the BIJB,” he said. – The Jakarta Post

VN car market slump continues

Vietnaam spent more than US$2.15 billion importing 94,000 cars last year, marking a year-on-year decrease of 16.8 per cent in volume and 9.6 per cent in value, according to the General Statistics Office.

The domestic automobile market witnessed many uncertainties last year. Notably, in the first half of the year, after the tax rate of complete built-up units (CBUs) import from Asean countries dropped to 30 per cent, the auto import turnover remained constantly high. However, in the second half of the year, the import turnover fell to low levels in both quantity and value.

The uncertainty of CBUs auto import turnover in 2017 clearly reflects the evolution of the market.

The decline in turnover shows a paradox. The car import market in 2017 benefited from the import tax of Southeast Asian-origin vehicles down by 10 per cent (to 30 per cent) and car import tax from countries enjoying the status of the Most Favoured Nation decreased by five per cent.

With such a decrease, the auto import turnover should have accelerated; however, the figures remarkably reduced.

Meanwhile, the tax rate of CBUs imported from ASEAN countries has officially reduced to zero per cent from January 1. But the market is yet to recover. – Viet Nam News

Banks asked to expand credit to small businesses

Indonesia’s President Joko “Jokowi” Widodo has called on banks to diversify their loan disbursement to micro, small and medium enterprises (MSMEs) to help them expand their businesses.

“I see the debtors [of banks] are the same people over the years. I want more people to have access to banks,” he said at a Financial Services Authority (OJK) gathering event in Jakarta on Thursday.

According to an OJK report, in 2017, the loan disbursement only grew 8.35 per cent year-on-year to 4.78 quadrillion rupiah (US$358.5 billion) while the third-party fund grew 9.35 per cent yoy to 5.29 quadrillion rupiah.

Jokowi said by providing MSMEs with more access to banks, they were expected to be able to upgrade themselves to become bigger business players. “We have to put forth extra effort to help them from micro to medium businesses, etc,”Jokowi said.

Jokowi stressed that several government programs had paved the way for low-income families to have access to banks. – The Jakarta Post