Links
Offshore Immune?
E.R. Offshore GmbH & Cie. KG, the offshore unit of Hamburg-based E.R. Schiffahrt, held the naming ceremony for two further UT 755 LN PSVs constructed at Aker Shipyard in Norway. According to Willem Dekker, the Managing Director, the fleet will continue to grow in the next few months. The company has four more PSVs on order, including two each of the UT 755 and UT 776 types, and eight AHTs for delivery by 2010.
Economou Out
Top Ships today announced the expiration of the exclusivity agreement between the company and an affiliate of George Economou. Mr. Economou’s affiliated entity had reduced its offer to acquire the outstanding shares of the company to $3 per share in cash, down from the original $6. After consideration of numerous factors, including the recent volatility in global markets and decline in the company’s share price, the company’s board has determined that this offer is not in the best interest of shareholders.
ICP Capital Structures Pemex Transaction
Last week, ICP Capital announced it had structured and arranged a $121 million financing package for Blue Marine Shipping of Mexico to acquire two 40,000 DWT product tankers to be leased to Pemex Refinacion for ten years with a purchase option at lease end.
Stena Finds Paradise
Stena Bulk announced today the acquisition of a 35% equity stake in the privately held Greek shipping company Paradise Tankers Holding Corp. The acquisition, which has total share capital valued at an estimated $250 million, provides Stena Bulk with full commercial control of three newly built Panamax tankers and two dry cargo bulk carriers which are on long-term charters.
The tankers are modern epoxy-coated Panamax tankers of 73,500 DWT all of which will be withdrawn from the Star Tankers Pool and will immediately enter the Stena Sonangol Panamax Pool. The pool is a direct spin-off from the successful collaboration with Angola’s national oil company Sonangol involving a fifteen tanker Suezmax pool which Stena and Sonangol have been operating for five years.
Songa’s Misguided Misadventure
In a presentation on Monday, Songa Offshore sought to explain its unexpected private placement of shares the previous week, at a discount of approximately 34% to the prior day’s close. The share placement alleviated a short-term liquidity shortfall as well as a breach of covenants.
The main culprit was its historic financial strategy. Over the last few years, Songa intentionally kept cash at tight levels of around $30 to $70 million, which level was increased as rigs were added. In addition, the company entered into TRS agreements during the 12-month period until January 2008. Both worked as planned until worlds collided. In a matter of five weeks, the company’s TRSs went from $16.7 million in the money to $26.8 million out of the money a swing of $43.5 million. In addition, during the week of September 15th, Songa expected to rollover $50 million in commercial paper and was able only to roll only $22 million leaving a $28 million shortfall.
Further New York Insights
In addition to being Conference Chairman of the New York Conference, Hamish Norton of Jefferies was also given the challenging assignment of commenting on the capital markets. Certainly, there are no surprises as the “subprime lending crisis is reverberating across all markets.” Current equity market conditions are at best uninspired with all major indices well down, with most of the damage done in the last eight weeks. YTD domestic equity fund flows are largely negative but less net negative recently. Not surprisingly, to the extent any equity deals were done they were largely done in the financial sector reflecting their need to recapitalize.
Global Insight in Name and Subject Matter
Last week, Global Insight held its Global Trade and Transportation Seminar at the Harvard Club in New York City with presentations by key principals on a myriad of topics, which reflect their specialties. Starting at the 10,000 foot level with a presentation on the world trade outlook, the subsequent presentations focused at the more micro level on freight flows and how they might be impacted by high oil prices, exchange rates and reverse globalization. Given our particular charge, we focused particularly on the presentations dealing with international as opposed to domestic movements. The latter should not however be ignored as they are critical to the overall logistics chain.
Short Sea Transportation
The October 9, 2008, Federal Register carries the first set of implementing rules for the Energy and Security Act of 2007 (2007 Act) short sea transportation (SST) program. The interim rules published will enable the Maritime Administration (MarAd) to initiate its America’s Marine Highway (AMH) Program by the solicitation of recommendations for SST routes, and of applications from parties interested in participating in SST projects. It provides rules that will be available in 30 days to govern these and other immediate matters, while allowing 120 days for interested party review and comment on these rules, and to offer suggestions for improvements, prior to the publication of final rules. See, Fed. Reg. volume 73, number 197, pages 59530-59537.
K-Sea Cancels Plans for GP IPO
Last week, K-Sea Transportation Partners (‘K-Sea”) announced the withdrawal of its registration statement for the proposed initial public offering of K-Sea GP Holdings LP due to the current state of the financial markets. The registration statement had been filed on March 5th. As Tim Casey, president and CEO of K-Sea noted, “The possible general partner IPO would have no impact on our results of operations or financial condition, and its withdrawal also has no impact on us.
Mr. Economou Continues Discussions with a Cautionary Note
As discussions continue with an affiliate of Mr. Economou, Top Ships announced last week that it had extended its exclusivity agreement for two weeks through October 22. However, the earlier price indication of $6 has gone by the wayside. The potential acquirer has informed the company that the purchase price will be subject to further negotiations and will reflect prevailing market conditions. At today’s levels, we expect shareholders and management may be less inclined to move forward.
The Official Guide To Marine Finance Providers
Shipping Index
