Danish conglomerate A.P. Moller-Maersk is readying a war chest for proceeds from a $1 billion-plus share placement and crossing its fingers the container shipping market may recover in the fourth quarter.
The oil and shipping group is placing up to 250,000 B shares from treasury stock, equivalent to 5.7 percent of its share capital, to gain financial flexibility for investments, it said on Wednesday.
At Tuesday's closing price the placement was worth 9.2 billion Danish crowns ($1.8 billion). But the shares dropped 8.9 percent to 33,600 crowns by 1049 GMT (6:49 a.m. EDT), lagging a 3.5 percent drop in the Copenhagen bluechip index.
Chief Executive Nils Smedegaard Andersen said the firm was eyeing options in a number of sectors.
What we want to invest in will be good opportunities in oil, either by buying into production partnerships or buying a field, he told Reuters.
It could also be new container terminals, (or) development of existing terminals, and it can be within shipping ... (if something) very attractive comes up.
Supply vessels were another possibility, he said.
Maersk owns the world's biggest container shipping company, Maersk Line, produces oil and gas in the North Sea, operates a fleet of drilling rigs and supply vessels, and runs port terminals.
In separate comments, Maersk Line's Asia-Pacific CEO Jesper Praestensgaard told Reuters in an interview in Singapore the shipping cycle has bottomed out and an upturn for the container industry could be around the corner..
We do see a recovery in shipping, but it is from an incredibly low level ... If we are lucky, then we could see growth on a year-on-year basis in the fourth quarter, he said.
Group CEO Andersen declined to comment on whether Maersk was interested in buying troubled German shipper Hapag-Lloyd from TUI AG.
I have no comment on that. We look at what comes to the market, he said.
The most likely thing is that we would buy operations, if there are some available at a good price, rather than buying a whole company, Andersen said.
The global financial markets may continue to be affected by the economic crisis, limiting access to bank loans which have been the company's main source of capital, Maersk said.
The share sale is through an accelerated book-building open to existing and new institutional investors. The number of shares to be placed and the price will be decided at the close of the book-building.
The joint bookrunners for the sale are Nordea, SEB, Bank of America Merrill Lynch and Calyon, while Danske Bank is Maersk's main financial adviser, Andersen said.
Proceeds from the treasury sale will ... reduce the company's loan requirements and at the same time increase the company's attractiveness as a potential future bond issuer, Andersen said.
Andersen said that in the future, bonds could play a major role in the company's financing.
Last month, when presenting dismal half-year results, Andersen had said the company had no trouble getting bank financing for its projects, but that it was considering a wider range of sources of funding.
A.P. Moller-Maersk had a first-half net loss of 3.02 billion crowns, below analysts' average estimate of a 2.91 billion loss, and said second-half results would be equally poor.
(Reporting by John Acher; Editing by John Stonestreet)
($1 = 5.182 Danish crowns)