NOL eyes $5-$7 billion loan, likely for Hapag-Lloyd: sources

By Koh Gui Qing and Saeed Azhar

SINGAPORE (Reuters) - Singapore's Neptune Orient Lines, the world's eighth-biggest container shipping firm, is looking to raise $5-$7 billion in loans, banking sources said on Monday, the clearest sign yet it will bid for Germany's Hapag-Lloyd.

The merger of the two companies could potentially create the world's number three container shipping group, behind Danish shipping group A.P. Moller-Maersk (MAERSKb.CO: Quote, Profile, Research, Stock Buzz) and privately-owned Mediterranean Shipping Co.

The talks come as German tourism group TUI (TUIGn.DE: Quote, Profile, Research, Stock Buzz) Chief Executive Michael Frenzel tours Asia to market his company's container shipping business, Hapag-Lloyd, which analysts value at around $7 billion, including debt.

NOL (NEPS.SI: Quote, Profile, Research, Stock Buzz) has a market value of $3.5 billion and several analysts have said any merger will require the financial support of its major shareholder, Singapore sovereign wealth fund Temasek Holdings TEM.UL.

"This certainly looks like a merger in the works," said a fund manager at a European investment firm, who asked not to be named because he cannot publicly talk about individual stocks.

Analysts in Germany said the possible financing highlights NOL's seriousness in pursuing the bid.

"NOL is a potential bidder for Hapag-Lloyd," said Jochen Rothenbacher, an analyst at German brokerage Equinet. "It should be seen positive for TUI that NOL is in talks to take up $5-$7billion."

A spokesman for NOL declined to comment, but in April NOL Chief Executive Thomas Held, who is a German national, said NOL was looking at a merger with Hapag-Lloyd as an option for growth.