Freshly Minted – May 6, 1999

BREAKING NEWS

SCHOELLER GROUP

After completing its roadshow, the Schoeller Group’s $114 million IPO, Columbia Container Shipping, has been “postponed” due to “market conditions”. Underwriters of the deal were Paine Webber, Lazard Freres and Prudential. See the next issue of Marine Money for the Deal in Depth.

TBS

TBS failed to make its semiannual coupon payment which was due early in the week. The bonds traded up on the announcement. The news came as a surprise to just about everybody we spoke with. While the company has a 30-day grace period by which to cure the coupon default, high yield veterans say this very rarely happens. TBS has appointed DLJ to examine the company’s restructuring options. As we reported in Freshly Minted 2 weeks ago, Chase tightened up on TBS’s credit facility requiring the company to put $1 of equity into the company for every $1 it took from the revolver.

One reason that the failure to pay the coupon may have been surprising was that in its 20-F, which was filed on March 31, 1999, the company painted a very positive picture of its prospects. Unlike Pacific & Atlantic which warned bondholders of the possibility of an upcoming default, TBS management proclaimed that it was in good shape for at least another year. We quote from the 20-F:

Based upon the current and anticipated level of operations, the Company believes that cash flow from operations, permitted borrowing under the Working Capital Facility (and any replacement thereof) and available cash will be adequate to meet the company’s anticipated requirements for working capital, budgeted capital expenditures and scheduled payments of principal and interest on its indebtedness through at least the next 12 months.

This is only an excerpt of Freshly Minted – May 6, 1999

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