Harbor Star investing $10M for Indonesia transport deal

MANILA, Philippines – Listed tugboat operator Harbor Star Shipping Services Inc. plans to invest $10 million in Indonesia as it looks to seal a deal with a power plant operator there soon.

In an interview after the company’s annual stockholders’ meeting yesterday, Harbor Star chairman Geronimo Bella Jr. said they are eyeing their maiden venture in Indonesia soon through a coal transport agreement for a power generating facility.

Bella said Harbor Star is currently in talks with the main service provider of an Indonesian state-owned power facility for a potential 15-year contract to deliver coal.

Once the deal is finalized, he said Harbor Star is likely to spend $10 million to buy 10 tug and barge tandem which will have a carrying capacity of about 8,000 tons each.

Harbor Star chief finance officer Leah Vasquez, in a separate interview, said the company is eyeing to conduct a follow-on offering or project financing to fund the Indonesia investment.

“China Trust Banking Corp. is our main bank here. They have a branch in Jakarta and they will support us in the deal. But follow-on offering is also on the table because the deal is huge for us depending on the volume (of coal) that we will take,” Vasquez said.

Harbor Star is currently exploring new opportunities in other countries across Southeast Asia given that its operations in the country have been affected by the ongoing port congestion.

“The effects of the 2014 port congestion will still be felt as shipping lines calling the Philippines have reduced their scheduled voyages, Nevertheless, we see our harbor assist business to expand as we look to enter other markets such as General Santos and Cebu. We are also upbeat in finally penetrating overseas markets specifically Indonesia and Vietnam,” Bella said.

Bella said the company already marked its international debut in Malaysia recently but noted business there is still “a bit slow” as Harbor Star is a new player in the country.

Harbor Star has operations in 13 base ports all over the Philippines, providing services to approximately 5,214 ship calls as of end-2014.

The company derives revenues from mostly from services such as harbor assistance, lighterage, towing, salvage, and ship and crew management.