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[DUBAI] National Shipping Company of Saudi Arabia (Bahri) is in talks with banks to raise around 2.8 billion riyals (US$747 million) from a long-term loan to be used towards vessel financing, two sources aware of the matter said on Wednesday.
Bahri became the sole provider of very large crude carrier (VLCC) oil shipping services to Saudi Aramco after it purchased the marine unit of the oil giant in a deal first announced in 2012 and completed last year.
The shipper has sent invitations for financing to a group of local and international banks, the sources said on condition of anonymity as the information is private.
The funds raised will be used to buy VLCCs from South Korean ship builder Hyundai Heavy Industries, one of the sources said.
Hyundai agreed in two separate contracts in May and July to build a total of 10 tankers and deliver them to Bahri in 2017 and 2018, each of which will have a capacity of 300,000 deadweight tonnage and would replace ships in its existing fleet.
Bahri could not immediately be reached for comments.
Bahri is seeking a loan with a lifespan of up to 12 years, with an amortising structure, the sources said. Under an amortising deal, the borrower repays parts of the loan throughout the duration, as opposed to a bullet schedule which only requires interest payments to be serviced.
The company on Tuesday reported a significant jump in third-quarter net profit, helped by higher revenues following its merger with Vela Marine International, higher profits at affiliate Petredec and lower bunker costs.