Maersk Issues Eurobonds for War Chest

A.P. Moller-Maersk launched on Friday an issue of euro bonds to refinance its bank debt and provide a fund for potential acquisitions.

The Danish group did not disclose the size, coupon or maturity of the unrated eurobonds, but said it would provide further details when the issue closes. The sale is progressing “well” and book-building will be completed this afternoon, Maersk's head of finance Jan Kjaervik said in an interview with Bloomberg.

The group, which owns Maersk Line, the world's biggest container carrier, had said in its second-quarter report in August that it would explore opportunities in the corporate bond market to diversify its sources of funding.

"The issuance of bonds will be A.P. Moller-Maersk A/S' first in the international capital markets," it said in a statement.

"The issuance is expected to be a benchmark transaction in terms of volume," Maersk said.

Proceeds will be used for general purposes and repayment of funds drawn on revolving bank facilities, it said.

Danske Bank A/S, HSBC Bank Plc, ING Bank N.V., J.P. Morgan Securities Ltd. and Nordea Bank AB are placing the bonds, seven weeks after Maersk sold new shares to raise $1.7 billion, the biggest such auction in its 105-year history.

Maersk Chief Executive Officer Nils Smedegaard Andersen has said he wants as much independence from banks as possible while he still seeks to buy rival companies and make investments for the oil and terminals businesses.

Andersen has said that he would probably not pursue acquisitions in the troubled container shipping sector where Maersk Line is the top carrier with an estimated 15 percent world market share. But Andersen has also said the company would not rule out acquisitions in container shipping if attractive operations become available at a good price.

"Corporate bonds are increasingly being used as an additional funding source for large European corporates, and in the light of that development it is only natural that we look at the funding opportunities in the European capital markets," Kjaervik said in the statement.

Contact Peter T. Leach at pleach@joc.com.