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Market Casualty
On Wednesday, Oceanaut Inc., a SPAC sponsored by Excel Maritime Carriers Ltd, announced that, in light of current market conditions, it had cancelled its shareholder meeting at which the shareholders were to vote on the previously announced acquisition. Back in August, Oceanaut had agreed to acquire three Panamax and one Supramax vessel for $352 million. The company is in the process of discussing whether the terms of each of the MOAs, dated August 20th and amended September 5th will be extended or restructured. The September 5th amendment extended the deadline for shareholder approval from September 30th to October 31st and the MOAs’ canceling dates from December 1st to December 31st.
We suspect that the difficulties in the financial markets when combined with a declining bulk market will make this a tough sell. Of course, it may be possible that Excel will take over the contracts.
Heidmar Continues Expansion
Heidmar Inc. announced today that Mercator Lines Limited of India, China Shipping Development and Conti Reederei of Germany will be joining the Sigma Tankers pool and that Emirates Trading Agency of Dubai, an existing member of both Sigma and the Heidmar managed Dorado Tankers pool, will be entering two more vessels into Sigma Tankers.
Alternative Financier Provides Equity
Completing its first investment, since it was established in 2007, Maritim Equity I invested EUR 11.25 million to purchase 75% of the equity in the M/S John Wulff, a 92,500 DWT mini-Cape. The ship company owner John-Peter Wulf owns the other 25% personally. The vessel is being constructed by the Chinese Yangfan Group and is scheduled for delivery in August 2010. Upon delivery, the vessel will enter into a five-year charter with Mitsui O.S.K. Lines at $32,000 per day.
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A True Believer Consolidates and Does Right by His Shareholders
On Monday, George Economou announced a major strategic expansion by DryShips Inc. (“DryShips”) in both its bulk and offshore businesses. First, the company acquired the equity interests, from entities controlled by Cardiff Marine Inc., in nine Capesize bulkcarriers, including five newbuildings for $690 million payable in the form of 19.4 million newly issued shares ($35.50 per share) of Dryships common stock increasing the number of shares to 63 million. In addition, the company will assume $216.3 million of existing debt and $262 in remaining shipyard installments. The latter will be funded by debt facilities in place except for $16 million that will be funded by cash flow. The implied aggregate value of the purchase is estimated at approximately $1.2 billion or approximately $130 million per vessel.
Make Me Whole!
Banks in the United States have long operated under a set of rules called Know Your Customer. The current liquidity crisis has turned the table requiring borrowers worldwide to know their lenders. The law of supply and demand has raised the cost of funding prohibitively and as banks try to raise funds daily to meet their obligations they are faced with the unknown.
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Ninja Takes on Credit Markets
On Tuesday, d’Amico International Shipping S.A. (“DIS”) announced that its operating subsidiary d’Amico Tankers Limited (Ireland) (“DAT”) had concluded a term loan facility of up to ten billion Yen (~$95 million). The facility was arranged by the Mizuho Corporate Bank Ltd., which is the market leader of the “Ninja Loan” market, and has been syndicated to a pool of Japanese primary banks and leading financial institutions. The proceeds of the loan will be used to acquire Japanese product tankers for which DAT has purchase options (4.5 vessels) and/or the acquisition of other product tankers (12.3 on order).
Liquidity Event
In these difficult times, it is a pleasure to report on a positive “liquidity event.” Last week, Northern Shipping Fund I LLC opened its doors to business having completed a first closing of $112 million in equity. The company expects to complete a second closing within a few months.
With lending from all but a few banks virtually frozen, the sponsors’ timing could not have been more propitious. Being liquid in these times as well as having an ability to underwrite transactions will allow the fund to have the pick of the deals out there and, as can be seen from the above article, a new entrant, with capital and no exposure, may hold all the cards.
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Capital Has a Price
Last week, we covered Justine Fisher’s presentation, which had an interesting slide on financing. In it, she described the current period as one of capital delayed rather than denied. She also highlighted the creativity of financiers and finally that capital eventually finds its way to profitable markets. We believe we found an example that confirms her theses as well as highlights the fact that alternative financing will play a major role in unraveling the current credit crisis. We note up front that it does have a price.
BRICs Ready for Wall of Offshore Work?
By Worldyards
We have heard extensive talk about the blame that can be laid at the door of BRICs (Brazil, Russia, India & China) for their contribution to surging oil demand. In this comment we examine the question of whether BRICs can be part of the solution in getting oil out of the ground. As trackers of shipbuilding and offshore facilities, we have covered in depth the acceleration in shipbuilding and offshore fabrication by BRICs.
As a point of reference, we note the International Energy Agency (IEA) Medium-Term Oil Market Report in early July, which sees “new project start-ups during 2008-2010, allied to weaker economic growth, providing potential spare capacity rise in excess of 4 MB/D.”
Public Equity: A Temporary Rush with Long-Term Prospects
Deutsche and JP Morgan Bring FSL to Market In Singapore
In choosing our first annual Asia public equity deal of the year, there was no question we were going back to 2007. Our public equity deal table shows a long list of planned and hoped for IPOs but not a single successful execution in Asia since the start of the year. That said, it helped that 2007 gave us a particularly good candidate – also the winner of our 2007 Eastern IPO of the Year award, in the Deutsche Bank and JP Morgan led First Ship Lease Trust (FSLT).
The Official Guide To Marine Finance Providers
Shipping Index
