Chinese link drives up Interbulk

SHARES in Interbulk, the East Kilbride-based logistics company in which engineering tycoon Jim McColl holds a stake, more than doubled yesterday after a Chinese peer bought a 35 per cent stake.

Sinotrans acquired 165 million shares in the company at 11p each, a 185 per cent premium to Thursday's closing price.

Interbulk finance director Scott Cunningham, right, told The Scotsman that 17.4 million of the 18.2m raised through the share placing would be used to pay down the firm's expensive "mezzanine " debt with Bank of Scotland, which carries an interest rate of Libor plus 12 per cent.

Cunningham said the deal would reduce interest payments by about 2.8m a year, which would filter straight through to pre-tax profits.

He added that the move would also give Interbulk - in which a McColl holds a 5.5 per cent stake - access to China's domestic chemicals market, the fastest-growing in the world.

Although the Scottish firm has already been carrying out business in China - and has worked with Sinotrans for a number of years - the deal will allow it to expand its operations in the Asian country.

Meanwhile Sinotrans will be able to access Interbulk's transport network and expertise in moving wet and dry chemicals.

Cunningham said the debt related to the period around 2006, when the company was launched and acquired liquid and solid chemical transportation companies, using a combination of debt and equity raised on Aim.