Dubai's Gulf Navigation 'resilient' despite coronavirus, plans new Sukuk

Company also posts huge savings from oil price declines

  
Image used for illustrative purpose. Skyscrapers along Sheikh Zayed Road, Dubai, UAE.

Image used for illustrative purpose. Skyscrapers along Sheikh Zayed Road, Dubai, UAE.

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Dubai’s Gulf Navigation Holding (GNH) said on Wednesday its business has benefited from low oil prices and thus remained resilient despite the disruptions caused by the coronavirus pandemic.

The emirate’s only listed crude shipper, which operates a fleet of chemical tankers and livestock transport vessels, also unveiled plans to raise 124 million UAE dirhams Sukuk to boost company liquidity.

“Contrary to most businesses, GNH is proving adaptive and resilient to the disruptions witnessed by other industries,” the company said in its statement to the Dubai bourse.

The coronavirus pandemic has crippled most businesses worldwide and sent millions of people jobless as governments imposed lockdowns and quarantine measures to curb infections. Among the hardest hit are airlines, which have grounded almost all their fleet as travelers retreated to their homes.

However, for Gulf Navigation, the situation is different, citing that it has “witnessed higher demand” during the outbreak.

“Seaborne cargo movements are essential to the global supply chain and vital to the continued availability of essential goods to consumers around the world,” the company said.

GNH’s six out of seven chemical tankers still have fixed long-term contracts with remaining contract periods ranging from one year to four years. In some contracts, where the company is required to supply fuel to the vessels, cost savings from oil prices have been substantial.

“Bunker costs have declined by 40 percent to 60 percent, leading to higher profitability on such voyages,” the company said.

“Since the COVID-19 outbreak, GNH’s remaining vessels witnessed higher demand than in previous periods and GNH is actively working to bring the vessels to charter as soon as possible to benefit from the favorable business environment,” it added.

As for the Sukuk issuance, the company said it is currently in talks with potential investors. The proceeds will be used to “strengthen” the liquidity of the company at this time.

Oil prices have been hitting multiyear lows since the world’s biggest oil producers, Saudi Arabia and Russia, failed to reach an agreement on oil supply limits and global demand slowed down due to the pandemic. In late March, crude dropped below $20 for the first time in nearly two decades.

(Writing by Cleofe Maceda; editing by Seban Scaria)

Cleofe.Maceda@refinitiv.com

#SUKUK #DUBAI #GULFNAVIGATION

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