More Rights Issues in the Works?

It is the time of the year when most companies in Singapore will be holding their Annual General Meetings. This year, more companies are expected to put forward “blank cheque” resolutions to raise money by selling more shares, encouraged by the revisions in Singapore Exchange (“SGX”) listing rules.

In February 2009, SGX increased the limit to allow a listed issuer to seek a general mandate from shareholders for issuance of new shares on a pro-rata basis up to 100% of its issued share capital, vis-à-vis the 50% limit previously. The stock exchange believes that concerns over dilution of minority shareholders’ interests are mitigated in a pro-rata renounceable rights issue as all shareholders have equal opportunities to participate and can dispose their entitlements through trading of nil-paid rights if they do not wish to subscribe for their rights shares. Continue Reading

Budding Optimism

First Ship Lease (“FSL”) Trust and Pacific Shipping Trust (“PST”) have both released their first quarter results this year and reported stable numbers. FSL Trust saw its lease revenue marginally decline by 1.6% to USD 24.4 million compared with 1Q FY09 due to the lower lease payments received from two vessels leased to Geden Lines. These leases are pegged to USD 3 month LIBOR which has declined between 1Q FY09 and 1QFY10. In a similar fashion, PST’s first quarter revenue in 1Q FY10 remained unchanged at USD 15.2 million, delivering a predictable and healthy performance.

Mr Philip Clausius, Chief Executive Officer of FSL Trust Management, says the trust is encouraged by the positive signs of a demand recovery in the shipping industry, although the oversupply of new ships continues to be an overshadow over the mid-term. FSL Trust pointed out that as at March 2010, the aggregate charter free value of its 23 vessels stood at USD 623 million, which is 5.5% higher than the charter free value of USD 590.5 million obtained from independent appraisers in October 2009. This points towards a recovery in asset values and industry credit profile. Continue Reading

A Growing Chinese Ship Financier

Asian banks tend to have a domestic or regional focus with a relatively limited role in global ship finance, but it is always our belief that the crises of global disequilibrium have provided them with the opportunity to gain prominence over the medium and long term. Last year, for the very first time, ICBC reported their shipping loan portfolio figures to Marine Money and we view this as the result of the increasing confidence the bank is eluding in its ship financing business.

This year, we are delighted that ICBC has once again provided us with their shipping loan portfolio figures at the end of 2009, and despite the challenging market conditions, ICBC managed to grow its book by 115% from USD 2.2 billion in 2008 to USD 4.74 billion last year. In terms of assets, bulk carriers form the majority 59.4% in the portfolio while container vessels and tankers took up 19.2% and 16.3% respectively. 2009 was a difficult year but ICBC remained supportive to both its foreign and domestic shipping clients with good track records and sustainable business models. Continue Reading

Otto Marine Establishes MTN

Last Tuesday, Singapore listed Otto Marine established a SGD 500 million (USD 364.6 million) multicurrency term note (“MTN”) programme with arranger Standard Chartered Bank. This gives the shipbuilder the flexibility to issue notes from time to time in series or tranches in any currency as may be agreed between the arranger and the issuer. Each series of notes may also be issued in various amounts and tenors, and may bear fixed, floating or variable rates of interest. The notes will be unconditional, unsecured and unsubordinated and shall at all times rank pari passu with all other present and future unsecured obligations of the company.

To the issuers and investors, the main advantage that MTN has over bonds would be the flexibility of its structure and documentation. In other words, the issuer can potentially pay investors a lower yield by customising the notes in accordance with the features they demand. The issuer can likewise match the terms of the offering with its liabilities and ensure a smoother operating cash flow. The flexibility of MTNs also allows the issuer to take advantage of temporary market opportunities, since a new MTN with specific characteristics can be issued quickly. Continue Reading

China’s Largest Shipbuilder Eyes Singapore

It has been more than two years since Yangzijiang Shipbuilding and JES International made their way to the Singapore Exchange and the city state is now buzzing with excitement over New Century Shipbuilding (“NCS”)’s imminent IPO. NCS is the largest privately owned shipbuilder in China and is ranked among the fifth largest shipbuilding groups in China. Market hearsays suggest that the shipbuilder is looking at raising up to USD 2.4 billion, making this possibly the largest Chinese IPO in Singapore. We will be providing more coverage in the next edition of Marine Money Asia when more details are available.

Obama Order Addressing Somali Conflict Lacks Clarity

By Sarah Noonan, Contributing Editor

President Obama’s issued an Executive Order this week in light of recent acts of violence in Somalia. The order “blocks all property and interests in property of any person listed in the Annex to the Executive Order and any other person determined by the Secretary of the Treasury to have engaged in acts that directly or indirectly threaten the peace, security, or stability of Somalia.”

After careful reading of the order, we cannot conclude whether or not the statement took a clear stance on the payment of ransom to Somali pirates, who, as we have reported, have attacked many vessels throughout the past year. Therefore, we defer the opinion of maritime lawyer Dennis Bryant, who offered this interpretation of the Order on his blog, http://bryantsmaritimeblog.blogspot.com:
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The Doctor Is In!

For us, the news of a companies’ placing new orders for ships was largely background noise. Covering the financial markets is a full-time job, in and of itself, although we do like to take a peek at broker reports when we have a chance. But in the main we get our market news largely distilled from the analysts, all of whom are keen students of the market. And so the news of new orders barely impinged upon our thoughts as we were more focused on the existing orderbook, and the forever unknowns, slippage and cancellations.

That was the case until we had a look at a short précis on the dry bulk market authored by Gregory Lewis of Credit Suisse in which he discussed the current dry bulk orderbook and made the following observations:
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Silence Is Golden

It’s Wednesday, as we write this, and for the first time we can remember in months it’s been a quiet week in terms of transactions. We took the opportunity of a free moment to meet with Mark Friedman and Hugh Baker of Evercore Partners. Our agenda was twofold: we wanted to understand how Evercore is positioning itself in the competitive landscape of investment banking and to engage in a post-mortem of the recent shipping equity offerings to better understand why some have succeeded while others struggled.

Evercore is different. It is obvious when you walk into their offices, which are quieter than a library should be. There is no trading floor. This is about advisory work in the old style, built on relationships and trust. Like all bankers, they are client-centric, but with a difference. Lacking distribution, they are less driven by the constant need to feed securities through a distribution network. Instead, they are focused on long-term relationships and providing the highest quality advice with respect to their clients’ strategic needs.
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TEN Tops the Charts – 17 years of profits!

Nick Tsakos and Michael Jolliffe deserve to have some fun. They have earned it for themselves and their shareholders for their consistent performance during the past 17 years since TEN, in a slightly different stage of development, first listed on the Oslo Bors.

You will excuse us if a bit of editorial pride fills these lines because their launch back then coincided with Marine Money’s early belief that good management would build real value for shareholders and themselves in concert with the capital markets and the public ones specifically.

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Announce Deals; Get Check; and List on the NYSE

Only John Fredriksen can announce a deal a deal on Tuesday and have financing in place the same day. It has been a very busy week for the management of Seadrill who while in the midst of these transactions travelled to NY to open the New York Stock Exchange in honor of the listing of the shares here. The common theme here is growth capital.

It all began on Monday, when Seadrill acquired an additional 1.3 million shares in Scorpion Offshore at a price of NOK 36 per share. With this purchase, Seadrill now controlled ~36 million shares or 40.1% of the outstanding issued shares, triggering an obligation to make a mandatory cash offer for the remaining shares or reduce its holdings below that threshold within 4 weeks.
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