NOL in talks to raise US$5-7b: sources

SINGAPORE - Singapore's Neptune Orient Lines (NOL), the world's eighth-biggest container shipping firm, is in talks with banks to take up a US$5-7 billion syndicated loan, sources familiar with the situation said.

Talks for a loan come as German tourism group TUI chief executive Michael Frenzel tours Asia to market his company's container shipping business Hapag-Lloyd, which the German group has put up for sale and NOL is considered a likely bidder.

Hapag-Lloyd is valued by analysts at around US$7 billion, including debt.

A spokesman for NOL declined to comment. The shipping firm is in talks with Singapore's three local banks DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank as well as with some foreign banks for the loan, a source close to the situation said.

A second banker said that 'NOL is exploring this'.

'Yes, there have been informal talks,' he said. 'The sum is northwards of US$5 billion. The range is US$5-7 billion.'

The banks expect to receive a formal proposal for the loan this week, he said.

Shares in NOL dropped as much as 3 per cent to a nine-week low at $3.19 on Monday, with over three million shares changing hands.

A source said earlier this month that TUI's Mr Frenzel is set to meet NOL in Singapore during his tour in Asia. NOL, which is about two-thirds owned by Singapore's state investor Temasek , has already been in talks on Hapag-Lloyd and is seen as one of the top bidders.

A source said last week that TUI, which is hiving off Hapag-Lloyd to focus on tourism, is forecasting Hapag-Lloyd's sales to rise 19.8 per cent this year to US$9.7 billion and reach US$11.7 billion by 2010.

Mr Frenzel is prepared to meet Orient Overseas (OOCL), the world's ninth-biggest shipper, in Hong Kong, the source said.

In Tokyo he will meet Japanese market leader Nippon Yusen KK (NYK), the world's tenth-biggest container shipper.

Shipping experts think the group of potential bidders from Asia could include China Shipping Container Lines (CSCL), Cosco STX Pan Ocean and Hyundai Merchant Marine .

In Europe, world market leader Maersk , Switzerland's MSC and France's CMA CGM are considered possible suitors. -- REUTERS