June 2 (Bloomberg) -- Neptune Orient Lines Ltd., Southeast Asia’s largest container carrier, plans to raise S$1.44 billion ($1 billion) selling new shares to repay debt. The stock surged to the highest in more than seven months.

Investors will be able to buy three new shares for every four held at S$1.30 apiece, a 15 percent discount from the May 29 closing price, the company said in a statement to the Singapore stock exchange. Temasek Holdings Pte, the company’s largest shareholder, will sub-underwrite the entire issue.

Neptune Orient’s shares have gained 50 percent this year, providing Chief Executive Officer Ron Widdows with the ability to raise funds in the company’s biggest share sale since its initial public offering in 1981. The global recession pushed the company to its biggest loss in at least seven years as rivals A.P. Moeller-Maersk A/S and Evergreen Marine Corp. also posted losses.

“Market sentiment is coming back,” said Gideon Lo, an analyst at DBS Vickers Hong Kong Ltd. “Investors think shipping stocks performance is usually ahead of economic cycle.”

The shares jumped 9.8 percent to S$1.68 at the close of trading in Singapore today, after halting trade yesterday. Temasek, a Singapore investment company, owns 67 percent of Neptune, according to data compiled by Bloomberg.

Pacific Basin, Hanjin

“The rights issue will strengthen the group’s balance sheet, provide additional general working capital and enhance its financial flexibility,” the company said in the statement.

Half of the proceeds from the rights issue will be used for repayment of debts and the balance will be used for investments, general corporate and working capital purposes or for further repayment of debts, the statement said.

“Asset prices are depressed today and will probably remain so for some time,” Widdows told reporters today. “It’s certainly an area that we would look at as opportunities develop.”

Neptune has S$1.2 billion in syndicated bank loans and bonds outstanding, according to Bloomberg data. Bank loans of S$576 million mature in 2013 and another S$432 million in 2014.

A share sale will follow similar moves by Pacific Basin Shipping Ltd., Hong Kong’s largest operator of commodity vessels, Hanjin Shipping Co., South Korea’s biggest container line, and Golden Ocean Group Ltd.

“Global Recovery”

Neptune Orient appointed DBS Bank Ltd. as the lead manager for the issue and the bank has underwritten the offering fully, the statement said. The timing for the offering will be detailed released once approvals are obtained, it said.

“Investors who were earlier holding back are now buying into the stock,” said Andrew Lee, an analyst at Nomura International in Hong Kong. “It’s part of a global recovery story, because if there’s a global recovery, then container shipping will benefit. Investors are optimistic overall.”

Neptune Orient posted a loss of $244.6 million in the first quarter after revenue slid 36 percent to $1.5 billion. The company last month predicted it may post a “significant” full- year loss due to “adverse business operating conditions.”

Widdows, who took the helm last July, voluntarily agreed to take a 20 percent cut in basic pay from March, while non- executive directors have accepted a 20 percent reduction in fees. The company in April said it’s more than doubling its cost-savings target for the year to as much as $550 million.

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net

Last Updated: June 2, 2009 05:33 EDT