A Deal of the Year Nominee Already

Today, A.P. Moller – Maersk (“Maersk”) announced that it has reached an agreement to sell its 13.7% interest in Sigma Enterprises, which, in turn, owns an interest in Yantian International Container Terminal and the related shareholder loans to a subsidiary of COSCO Pacific Limited for a total consideration of $520 million. Yantian is a joint venture that has been successfully managed by Hutchison. As Maersk was not the operator and because it held only a minority interest, the company was not reticent to sell it, as part of its active portfolio management, when it received a fair offer. Maersk will not be exiting China as it currently maintains operations and holds terminal interests in the ports of Dalian, Guangzhou, Qingdao, Shanghai, Tianjin and Xiamen. When concluded, Maersk expects to book an accounting gain of $300 million to $400 million.

Solidifying the Balance Sheet

Last week, Nordic Tankers A/S (“Nordic”) announced a 2:1 rights issue of up to 25,176,592 new shares of DKK 10 nominal value at an offering price of DKK 10 per share. The offer has been underwritten to provide minimum proceeds to the company of DKK 167.7 million. If the offering is fully subscribed, Nordic will receive net proceeds of approximately DKK 228.3 million. The new shares will rank parri passu with the existing shares.

In light of the difficult market conditions, the goal of the offering is to strengthen Nordic’s cash reserves, as agreed with its bankers, Nordea and Danish Ship Finance, while improving the company’s equity ratio to 23.1% on the basis of the offer being fully subscribed.  The long-term objective is to attain a minimum 30% equity ratio.
Continue Reading

You’re Never Too Old to Try Something New

Looking to diversify its funding sources, J. Lauritzen A/S (“JL”), a Danish shipowner founded in 1884, offered bonds in the Norwegian market for the first time. The offering of NOK 700 million of senior unsecured notes was well received being fully sold in 1 1/2 hours, somewhat aided by a presubscription consortium. According to the company, the issue was placed with a broad range of investors. Not surprisingly, the purchasers, from a geographic perspective, were mainly from Norway and Denmark, reflecting the fact that the issuer is a private company and not well known outside the Nordic countries. As expected, the issue was largely bought by institutions although there was retail interest too.
Continue Reading

WOMAR and Nordic Envision Small Chemical Tanker Consolidation

A press release jointly issued by Nordic Tankers, a Danish shipping company listed on NASDAQ OMX Copenhagen and WOMAR, a privately held company with its head office in Singapore operating 3 commercial pool’s, stated, “Commencing 1 June 2010 it is the intention that, Nordic Tankers and WOMAR will start marketing each others’ coated chemical tankers in the range of 10,000 to 17,000 deadweight tonnes (dwt) in their individual areas of primary marketing strength. The Letter of Intent is subject to execution of a final agreement.”
Continue Reading

Aker Bonds

Norway continues to be the go to source for capital, particularly high yield bonds, for small energy companies. Highly leveraged already, the companies use the bonds, mostly short-term, to provide an equity bridge and a source of cash to meet an immediate cash need.

Last week, Aker Drilling ASA successfully completed a NOK 1.5 billion three year unsecured bond issue, which was guaranteed by its parent, Aker ASA. The bonds pay interest on a floating rate of NIBOR + 400 bps. Proceeds will be used to refinance NOK 800 million of an existing convertible bond maturing in October 2010 and for general corporate purposes. Details of the transaction are shown in the Guts of the Deal below.
Continue Reading

A Tanker Saga

On Wednesday, Arne Blystad went to market to raise equity for a new pure play large tanker IPO, Saga Tankers ASA, which will acquire three VLCCs from companies controlled by Blystad with the fourth on subjects. The company is looking to raise $80 million or $120 million in a private placement, however it intends to list the shares on the Oslo Axess in mid-June. For investors, the main attraction will be the full dividend payout model.

Constructed at Daewoo Shipbuilding, two of the VLCCs were built in 2000 with the third in 1995. The two younger vessels were valued at $69 million each, even though one is spot and the other is on time charter through Q3 2012. The 1995 built vessel is valued at $49 million and is employed in the spot market as well. The en bloc price is $187 million, excluding the option vessel, which is financed with the proceeds of the offering, the existing bank debt and an in-kind payment from the seller. The sources and uses of funds, as well as the pro forma percentage ownership is shown in the chart above for both the three and four vessel deals.
Continue Reading

It’s Spring and the Convertible Takes Another Spin

On Tuesday, DryShips announced that it would re-open the indenture of its original convertible bond offering done November 25, 2009, and offer an additional $150 million aggregate principal amount of the 5% Convertible Senior Notes due 2014 (“Convertible Notes”). As a consequence of the strict six-month window, this is a highly unusual occurrence, which we understand has only happened twice in the last five years.

By the time it was priced, this deal, like the previous one, was upsized from $150 million to $220 million, an increase of almost 47%. The notes are being offered as additional notes under an indenture, as supplemented by a supplemental indenture, under which the company issued the original $460 million of the Convertible Notes. In addition, the underwriter will be granted an option to purchase up to an additional amount of $20 million of the notes to cover over-allotments. The notes offered currently and the previously issued notes will be treated as a single series of debt securities under the indenture. The terms of the new notes, other than the issue date and public offering price will be identical to the previously issued notes. Upon completion of the offering the total outstanding amount of the Convertible Notes will be $680 million, assuming the overallotment option is not exercised. After the announcement the shares traded down 4.6%, closing yesterday at $6.19.
Continue Reading

A Book Review

While it will never be a best seller, Navios Maritime Acquisition Corporation’s (“NMAC”) proxy statement makes a cogent argument for shareholder approval of the pending transaction for the acquisition of 11 newbuilding product tankers (four LR1s and seven MR2s) and two chemical tankers with an option to acquire two further LR1 product tankers. The acquisition cost is $457.7 million of which $334.3 million will be financed with debt. Included in the $344.3 million in debt facilities is a $52 million loan facility, which is in advance stages of negotiation, but, unlike the rest, not yet committed. The balance of the purchase price will be funded from the $250.8 million of proceeds of the initial public offering of 25.3 million units, including 3.3 million units issued upon the exercise of the over-allotment option. Invested in Treasuries, the cash position of the trust account stood at $251.5 as of year-end. The actual cash availability is uncertain however as unit holders can vote against the acquisition and exercise their conversion rights.
Continue Reading

Precious Shipping

It may not be fresh news anymore, but we thought it would be interesting to take a closer took at Precious Shipping’s USD 250 million featured among Dealogic’s Top 15 Shipping Loans in 1Q2010. In January, Thailand’s dry bulk shipping company Precious Shipping secured a new USD 250 million secured term loan facility with a syndicate of lenders comprising Bank of Tokyo Mitsubishi UFJ (“BTMU”), Bank of Ayudhya, Kasikornbank, Export-Import Bank of Thailand and Thanachart Bank, making this possibly the second largest shipping loan in Asia in 1Q2010. This transaction was led by BTMU’s team in Singapore, which demonstrates the bank’s strategy in using Singapore as a platform to widen its geographical reach.

Precious Shipping will be making use of the loan facility to finance up to 60% of the dry bulk ships (details in the accompanying table). The company has recently concluded its plan to sell its oldest 25 ships and is in the process of rejuvenating its fleet by acquiring younger and bigger vessels. In addition to the two second-hand ship purchases, Precious Shipping has contracted 18 brand new ships at ABG Shipyard in India and signed long term charter contracts for three cement carriers. Continue Reading

KIC joins hands with Nathalin

Malaysian private oil terminal operator KIC Group is reportedly setting up a shipping trust with its lead partner, Nathalin Group of Thailand – the largest private shipping company in the country. The shipping trust, that targets to be operational by the end of this year, will be roping in Thailand’s top energy firm PTT for the acquisition of 22 vessels at around USD 200 million within the next three years. KIC plans to deploy the vessels to support its oil terminal operations in Malaysia at the Port of Tanjung Pelepas in Johor, Westports in Port Klang and the Asia Petroleum Hub that is currently under construction.