Neptune Orient Lines considers sale or spin-off of logistics unit

Neptune Orient Lines, a Singapore-based container shipping and logistics company, is looking to sell or spin off its profitable subsidiary APL Logistics (APLL), in a surprise move that seems to indicate an attempt to generate capital to repay its debt.

State-controlled NOL said in a statement to the Singapore exchange yesterday that it was considering "a potential sale or initial public offering and listing its logistics business as a separate, stand-alone unit".

"These considerations are preliminary and exploratory in nature. There is no assurance that any definitive transaction for the sale or an IPO of NOL's logistics business will be concluded," said the firm, which also owns APL, the world's 10th-largest container shipping line by fleet size, according to Alphaliner.

The move would quench the company's thirst for cash and help it trim some debts as NOL, like many of its rivals, has reported losses due to a protracted downturn in the container shipping market.

NOL is 67 per cent owned by Temasek Holdings, the Singapore government's sovereign wealth fund.

"The plan did come as a surprise, a positive one. Over the past two years, NOL has expressed its intention to invest more into APL Logistics," said Rahul Kapoor, equity research director at maritime consultancy Drewry.

"The sale will leave NOL with volatile earnings in container shipping, but will also meet the company's capital needs and help reduce its leverage ratio."