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All (not so) Quiet on the Western Front – 02/22/2007
Lacking any intelligence from our staff on the ground (we concede that they must be busy), we have been relying up till now on third parties (thanks Brad) for reports on our 6th Annual German Ship Finance Forum in Hamburg. We hear it has been a great success with over 400 owners and financiers attending the conference itself no less the many ancillary fun events. This event keeps growing and has become the number two Marine Money Conference, second only to Marine Money Week. We all know about Avis and Hertz; so we challenge Germany to continue to grow in 2008.
For the success of this conference, we are grateful to our conference partner, HypoVereinsbank and the many other sponsors too numerous to mention. We also offer kudos to Mike McCleery, our new conference organizer, who took on the challenge with great success. And finally we thank Mr. Christian von Olderhausen who took on the thankless role of conference chairman. Happily, Nora Huvane was on site and filed the following article at the conclusion of the conference. As our Chairman constantly says, “Get me color.” So here it is. Continue Reading
People & Places – 02/15/2007
Dubai Just Grows and Grows
On Wednesday 14th February, Valentine’s Day no less, almost 160 speakers and delegates attended the 3rd Annual Marine Money Gulf Ship Finance conference. Festivities had started the night before when over 100 revellers had attended a beautiful cocktail party in the grounds of the Grand Hyatt hotel in Dubai, co-hosted with our anchor sponsor Tufton Oceanic.
On the day of the conference itself all the major players from Dubai and the region were represented as well as local and international financiers. In terms of figures over 60 representatives of shipping groups were there, over 20 foreign banks and financial institutions and many of the local banks involved in shipping finance. Continue Reading
Jones Act Update – 02/15/2007
AKASA Delivers
On February 9th, Aker American Shipyards delivered the Overseas Houston, the first of sixteen MT46 Veteran Class Product tankers, to Aker American Shipping, who in turn have chartered the vessel to a subsidiary of OSG America. The vessel will soon be delivered under long-term charter to Shell Oil Company in the US Gulf.
Three more vessels of this series are currently under construction in the shipyard with the second to be delivered this summer. Continue Reading
Mergers & Acquisitions – 02/15/2007
DP World Deal Hits Minor Snag
Imagine buying a ship with a charter attached. The charterer has to sign off on the transaction. The situation in New York where the Port of NY/NJ is asking for a cool $84 million in order to approve the lease transfer is not much different. The demand is reported by the Wall Street Journal to have “cast the overall transaction into jeopardy.” Expect the issue to be resolved.
US concession rights other than New York/New Jersey being sold to AIG are said to have received local approvals. These include contracts to run terminals in Baltimore, Miami, New Orleans, Philadelphia and Tampa, as well as stevedoring operations elsewhere. Continue Reading
Equity – 02/15/2007
Panayotides Looks to Excel with New SPAC
This week saw the registration of another shipping-focused SPAC, or blank check company, in the form of Gabriel Panayotides-sponsored Oceanaut. The timing is quite reasonable, coming only weeks after Petros Pappas’ SPAC Star Maritime announced plans to acquire eight dry bulk carriers from TMT Marine for $345 million. Star Maritime’s own offering itself came just months after Angeliki Frangou’s SPAC International Shipping Enterprises closed its acquisition of Navios. At present, the market appears to be in equilibrium with the presence of precisely one shopping shipping SPAC at a time.
A more interesting development of this deal, however, is its ties to Panayotides’ other US-listed public company Excel Maritime. Under the leadership of President & CEO Christopher Georgakis, Excel has, well, excelled, over the past few years, winning what amounts to a “promotion” from the AMEX to the NYSE while taking a share price that in 2003 traded below $1.00 up to $17.33 at press time. Continue Reading
Bonds – 02/15/2007
Shipping capital market activity remains robust and varied this week, with Russia’s Prisco accessing the international capital markets for the first time while Gabriel Panayotides files for a SPAC with an unusually close alliance to another public company. Oaktree sells down its stake in Genco while we pause to consider more closely what its intended Kleimar acquisition will do for Navios. OSG’s Jones Act projects continue to progress, though the Dubai Ports World deal has been caught by yet another snag in the US – even as Dubai itself continues to prove an ever more fertile ground for shipping transactions.
The Russians Are Coming – Nordea Takes Prisco on a Trip to the Capital Markets
The third largest oil transportation company in Russia, Primorsk Shipping Company (“Prisco”), long financed through the international bank syndicates, made its introduction in the capital markets this week. Through the intervention of Nordea Bank, Primorsk International Shipping Ltd. (“PISL”), a company with the same shareholders as Prisco, issued a senior unsecured NOK/USD bond of NOK 450 million (circa $73 million), out of a total availability NOK 1,000 million, in the Norwegian bond market. Continue Reading
Market Commentary – 02/08/2007
New York Politicos Urge Competitive Stimulation of Fin Markets
McKinsey, a respected consultancy, has issued a report commissioned by New York City Mayor Michael Bloomberg (of Bloomberg fortune) which expresses concern that New York is in danger of losing its status as the World Financial Center within 10 years without a major shift in regulations and policy.
Mayor Bloomberg, Senator Charles Schumer and Governor Eliot Spitzer all echoed the concern, warning that NY financial markets stifled by stringent regulations and high litigation risks are in danger of losing businesses and high-skilled workers to overseas competitors relegating NY to regional market status. The report also noted that many of the causes of concern are also due to improved markets abroad and sophisticated technology that has virtually eliminated barriers to the flow of capital. It also notes though that a good number of the causes are self-imposed, with Sarbanes Oxley at the head of the list. Continue Reading
The Week in Review – 02/08/2007
Printing Money
Viewing the league tables and the numbers of Norwegian bond offerings, we were concerned about how hard working our banker friends in Norway were. We did not dare calculate how many millions they had to lend each day to come up with these numbers. Surely there couldn’t be enough Norwegian bankers to do all this. But then a deal like Mr. Fredriksen’s Sea Production Ltd. comes to market and the truth comes out. The managers of the bond offering, Pareto Securities and Nordea Bank Norge, sold the deal in less than an hour and the deal was oversubscribed approximately 14 times leaving an allocation of approximately 7% per investor. Clearly, as we mentioned last week it isn’t a tough sell when Mr. Fredriksen is involved. Still, we have to acknowledge that there was some work to be done but they sure make it look effortless. We all admire a well-oiled machine.
We briefly mentioned the deal last week and we can now fill in some details. Sea Production Ltd. is a new company established by Mr. Fredriksen to develop an FPSO business. Like the successful MLP strategy, Mr. Fredriksen sees an opportunity, warehouses it internally and then establishes a company to exploit it thereby shifting the risk while retaining upside. With the $130 million bond in place, a bank loan of up to $105 million as well as the $180 million in committed equity, Sea Production is now in a position to acquire the Front Puffin, to be delivered from the yard in July, the Crystal Ocean, currently under contract, 2 D/S Aframax vessels and Sea Production Management for $336 million. Continue Reading
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