Aboitiz buyer eyes more cargo vessels

MANILA, Philippines - Negros Navigation Co (Nenaco), a major stakeholder in the holding company acquiring the country's leading shipping firm, is planning to acquire more vessels to expand its cargo business. Nenaco Chairman and Chief Executive Sulficio Tagud Jr said the company is looking for two to three cargo ships which will be acquired over the next six months. He said a cargo vessel costs between $5 million and $10 million, depending on its quality at the time of purchase. Just last month, Nenaco shelled out $6.2 million for an 18-year old German cargo ship with a capacity for 250 containers. "There is undercapacity in cargo. We will expand there," Tagud told reporters on Wednesday, a day after the Aboitiz family announced it is selling its transport business to Nenaco and its Dutch and Kuwaiti partners. The undercapacity stems from the grounding of the vessels of Sulpicio Lines after one of its passenger ships sank in June, killing more than 800 people on board. Tagud said half of Nenaco's revenues come from its cargo enterprise, while the rest is from its passenger business. The holding company, KGLI-NM, started its 60-day due diligence exercise for the acquisition of Aboitiz Transport Systems Corp (ATS) on Wednesday. The transaction is expected to be completed by January 2009. If the acquisition pushes through, Tagud said KLGI-NM will be have the biggest cargo capacity among shipping lines in the country. "ATS accounts for 35 percent of the cargo volume in the country. Negros Navigation holds 10 percent. If you combine the carrying capacity of Aboitiz and Negros, it will be the biggest," Tagud said. - GMANews.TV