Singapore's NOL in Talks to Raise $5-7 billion : Sources

Singapore's Neptune Orient Lines, the world's eighth-biggest container shipping firm, is in talks with banks to take up a $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 $7 billion, including debt.

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

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

"Yes, there have been informal talks," he said. "The sum is northwards of $5 billion. The range is $5-7 billion." The banks expect to receive a formal proposal for the loan this week, he said.

A source told Reuters earlier this month that TUI's 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 told Reuters last week that TUI, which is hiving off Hapag-Lloyd to focus on tourism, is forecasting Hapag-Lloyd's sales to rise 19.8 percent this year to $9.7 billion and reach $11.7 billion by 2010.

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

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

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

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