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The Week in Review – 03/01/2007
The global ship finance market continues to bustle along this week, in defiance of any negative investor sentiment caused by concern over China. Among a variety of interesting earnings releases and reported deals, were notable growth programs among public companies. French company Bourbon Offshore, for example, is ordering 46 next generation vessels for a total value of EUR 560 million, or approximately $760 million. NY-listed TBS International has announced a newbuilding program with China Communications Construction Company Ltd. and Nantong Yahua Shipbuilding Co., Ltd. for six multi-purpose and tweendeck vessels worth $212.5 million, which RBS has indicated it will likely finance subject to the appropriate negotiations and agreements. And Eagle Bulk Shipping, also listed in NY, has announced a program to acquire three 2002-2003 built Japanese supramax vessels and to construct a further two supramax vessels for $205.1 million. To help finance this expansion the company has sold the oldest and smallest vessel in its fleet for $12.525 million and has just closed a $102 million follow-on offering led by UBS – coming on the heels of a January Bear Stearns-led secondary (i.e. selling shareholder) offering of around $125 million. Continue Reading
Convertibles: The Equity Linked Award
“Hell, I don’t know what you’re talking about, but at that rate sign me up!”
The use of convertibles is generally not commonplace despite the low coupon rate. The likely explanation is the high cost in terms of equity dilution. This year we reinstituted this award reflecting increased activity in this category by a widely diverse group of borrowers including Hornbeck Offshore, FreeSeas and China Shipping Development. Continue Reading
Market Commentary – 02/22/2007
Offshore Norway
In the recent issue of Nordic Credits, a publication of Nordea Markets, Mr. Morten Heiner Pederson describes some interesting developments in the offshore market, particularly in Norway.
At first, he notes what appears to be the development of a two-tier market. The share prices of the US offshore drillers, particularly those with Gulf of Mexico exposure have been hard hit, declining on average by more than 10%. The negative impetus comes from the dramatic decline in crude prices and a “loosening” supply/demand balance. In particular, the prospect of sub-$50 crude oil raises concerns about independent E&P companies’ willingness to increase capital budgets. Making matters worse is the fact that the driller’s are experiencing increasing cost inflation.
Although mainly investment grade, the spreads on the US drillers debt remains elevated largely affected by LBO rumors, although they too are influenced by shareholder-friendly initiatives such as buybacks which sometimes increase leverage. Continue Reading
Research – 02/22/2007
Research Bites
Our inbox was flooded with research over the past two weeks and we have just begun to dig out. The reports were about evenly split between energy, specifically drilling, and shipping.
Drilling
On January 25, Ingolff Gillesdal of Nordea Markets initiated coverage on Seadrill with a buy rating and a target price of $19.80 within a year versus the then current price of $16.24. The target price is based upon a combination of DCF and NAV valuations. Interestingly, he added a market premium to current NAV reflecting its modern fleet, deepwater focus and strong operational experience. Seadrill’s strategy is to grow not only organically but also as an industry consolidator. Continue Reading
People & Places – 02/22/2007
Deal Me In
At a party at L’Orangerie on February 8th, Poten & Partners celebrated the establishment of Poten Capital Services LLC (“PCS”) as a broker-dealer. The event marked the shipbroker’s formal entry into the securities business. With this registration, the role of PCS has moved from beyond a pure consulting/advisory to being able to directly participate in and manage securities transactions. Continue Reading
Debt – 02/22/2007
Odfjell ASA Refinances
We learned today that Odfjell successfully launched a new NOK 600 million floating rate bond with a 3-year tenor. The first tranche of the loan will be NOK 300 million with closing to be on March 19th. The bonds will be listed on the Oslo Stock Exchange. Continue Reading
Equity – 02/22/2007
First Ship Lease Trust Gets Ready For Shipping Trust Listing In Singapore
It has been more than 9 months since Singapore’s first shipping trust, Pacific Shipping Trust (PST), made its debut on the Singapore Stock Exchange and we are delighted to see another shipping trust aspirant joining PST soon. First Ship Lease Trust (FSLT), having just filed its preliminary IPO prospectus with authority earlier this week, is offering 220,000,000 million shares at a yet to be confirmed price with First Ship Lease (FSL) as the sponsor. The assumed offer price of USD 0.96 per share is used in the prospectus.
FSL is a Singapore-based non-tax driven leasing service provider exclusively for the international maritime industry and upon completion of this offering PSLT will acquire 13 Special Purpose Companies (SPCs) from FSL. Each SPC will own one vessel subject to a long-term bareboat charter. In the initial portfolio, the SPCs will own four containerships, four product tankers, three chemical tankers and two dry bulk carriers. Penta Investment Advisers, Ltd, DWS Investment GmbH and AIG Global Investment Corporation (Singapore) Ltd are the cornerstone investors and have entered into a subscription agreement with the Trustee-Manager to subscribe for an aggregate of 120,000,000 Units at the Offering Price. Continue Reading
On the Spot – Hamburg – 02/22/2007
Marine Money’s sixth annual German Ship Finance forum in Hamburg was off to a rolling start on Wednesday. That evening began with a bustling cocktail party hosted by law firm Ehlermann Rindfleisch Gadow at their new offices at Ballindamm 26. Over 120 attended the speakers’ dinner hosted later that evening by Howe Robinson & Co. Hamburg at the exclusive Anglo-German Club.
Then nine the next morning the serious business of speeches began with an introduction by Ingmar Loges, Managing Director of conference partner HypoVereinsbank. Mr. Loges related a conversation held with his daughter that morning describing his reasons for attending: to meet business friends, listen to speeches, and maybe get some new creative ideas.
Marine Money’s Mike McCleery then welcomed the record crowd of 435 registered delegates, after which Conference Chairman Christian von Olderhausen of HCI Capital began the day, stressing the impressive innovation on both the equity and debt sides of ship finance in Hamburg and around the world that would be demonstrated throughout the day. Continue Reading
Awards – 02/22/2007
Marine Money Acknowledges Best Deals of 2006 Awards Recognize Creativity, Client Service, and Business Growth
Marine Money International’s February issue contains Awards selected by the magazine’s editorial staff given to companies and individuals for special achievement during the 2006 calendar year. The annual issue reviews hundreds of transactions completed in the international ship finance arena and singles out the Best in several important financial areas. Our heartiest congratulations to all involved. The issue should be arriving to you any day.
The winners for 2006 appear on the front cover.
The special issue also takes a detailed look at ship finance transactions on a week by week basis, providing a unique snapshot of a year during which hundreds of deals were closed including several in the billions of dollar range. Continue Reading
The Official Guide To Marine Finance Providers
Shipping Index
