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For Lease Finance: First Ship Lease
Diversified Portfolio Serves Clients and Unit Holders
Honorable Mention: Citi for Wan Hai Group
By Jim Lawrence
Vessel leasing provides enormous flexibility to any business. It can provide capital for growth, asset flexibility, balance sheet options and returns, of course, for lessors.
For a shipowner or a ship operator, there are a variety of options to turn to when considering a lease. In the current market, understanding the options and to whom to turn for advice and support is extremely important. In an environment of tight liquidity, increasing operating costs and fierce competition within the chartering and operating business, securing the proper finance structure, asset flexibility and partner in that effort matters greatly.
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M&A of the Year: The PT Berlian Laju Tanker TbK (BLT) Acquisition of Chembulk Tankers LLC
To: Berlian Laju Tankers and DnBNOR
Co-Starring: Bob Burke, AMA Capital Partners, Varde, ACP Fund II, Doug McShane and Christina Tan of MTMM, Nordea, Watson Farley & Williams, Seward & Kissell, Merrill Lynch, Lehman Brothers, Paul, Weiss, Rifkin, Clifford Chance, the Bank Syndication participants and the management of Chembulk.
In the best deals everyone wins. In the Berlian Laju acquisition of Chembulk, which completed a growing transaction that spanned a year, and the globe and involved some of the industry’s best institutions and people, success and value are found at every stop. It is difficult to imagine a better series of transactions, each of which delivered value, each of which were well executed and each of which fulfilled the objectives of the participants.
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Mirror Mirror On the Wall, Who’s the Most Creative of Them All? – Bank Debt Award
By George Weltman
Surely, these are difficult times in the capital and credit markets. The credit crisis has squeezed liquidity, which is clearly borne out in the dearth of activity in the capital markets. In the bank market, the situation is not so clearly evident but activity has certainly slowed, with banks reiterating that the right clients with the right assets will have ready access to funding. Of course, pricing and conditions of the loans have reverted to the more normal terms of the recent past, including higher spreads, lower advances, amortization and covenants. But despite the increased cost and tightening, bank debt remains the cheapest capital available. And as evidenced by the multitude of nominees, deals are getting done. The syndication market is working even with the imposition of market flex. In short, it is no longer the age of being young and single, far better to be old and stable.
Editor’s Choice: Fortis and Standard Chartered for Brunei Gas Carriers
By Rodricks Wong
How quickly the tide has turned. Just a year ago, shipowners were still basking in cheap money with relatively little difficulty in securing funds for their fleet expansion plans. Today, times have certainly gotten tougher as the torrent of bad news from Wall Street continues to ignite fears that more financial institutions will fall victim to the subprime crisis. Bankers are now advising their clients to secure financing while they still can amid a general consensus that things are most probably going to get worse before they get better.
Liquidity is no doubt drying up but there are still pockets of alternative financing sources available to the shipowners and Islamic banking is one option. Although people tend to perceive Islamic financing as a complicated way of raising money, our Editor’s Choice Award winners demonstrated that with clever structuring, Islamic concepts can deliver flexible financing solutions across various vessel types effectively for the shipowners.
Asian Awards 2008 Achievement – Marine Money Awards for the Best in Asian Ship Finance
Current financial market conditions place a premium on thought, creativity, liquidity, execution and commitment. Locate an institution with those skills and resources and hook your star to theirs as the best partnerships between principal and financier deliver value to both.
When Marine Money solicited transactions for consideration as examples of the best Asian produced deals of the past year, the response was enormous. Institutions throughout the vast region submitted transactions that covered the spectrum of marine finance from club deals to multi million dollar IPO’s, to billion dollar debt financings to efficiently executed lease transactions. There were seconds from advisors and acknowledgements by competitors of the fine work of others.
It is always satisfying to read and weigh the merits of each submission. The truth is each one is a model case study full of insights and value. They are exploded versions of our weekly and monthly Deal Pages, with motivations, challenges to execution and values all presented in ways that demonstrate the best of partnering between financial institution and shipowner.
The Third Movement
By Robert Kunkel, AMTECH
Publisher’s Note:
We ask our readers to indulge us as we step outside our pure shipping box to begin to explore more of the logistics chain. We are firm believers that none of the parts of the chain can be viewed in isolation. Trucks and rail, for example, bring goods to the ports; they just don’t magically appear. In order to truly understand shipping, the whole of the supply chain as well as infrastructure need to be understood. We asked Bob Kunkel who has been heavily involved in coastal shipping to begin the process of connecting the dots for us in the following article.
Proponents of Short Sea Shipping continue to praise the “glory days” of coastal transportation in every new research report. Periods when sailing packets were the diamonds of U.S. ship construction and the majority of domestic freight was carried aboard a swift, efficient and economical coastal sailing fleet. Considering our current environmental developments, those coastal fleets were well ahead of their time. Taking advantage of natural energy sources, the ships were powered without emissions and fully capable of transporting nearly every type of cargo; manufactured goods, bulk commodities, granite, lumber and even ice. Coastal schedules were considered better than rail or road and investment created local jobs and supported U.S. manufacturing. Give any modern domestic shipping company those same advantages today and coastal shipping would be labeled a growth industry.
Opportunities in Crisis
By Rodricks Wong
As the credit crunch bites deeper and wider, the tightening of global money markets has pushed relative borrowing costs higher and the shipping sector in Asia has already started to feel the pinch. Many financiers have since scaled back their lending to shipping, a sector they perceive to be heading towards an imminent correction. But for others like Standard Chartered, the recent credit crisis presents significant opportunities to expand their shipping portfolio.
The Standard Chartered Group began life in 1969 through a merger of two banks: The Standard Bank of British South Africa founded in 1863 and the Chartered Bank of India, Australia and China, founded in 1853. With a rich history of over 150 years, the London-headquartered group has been extending its footprint in the world’s fastest growing markets and derives more than 90% of its operating income and profits from Asia, Africa and the Middle East. The bank recently announced in August that net profit attributed to shareholders grew 30% to USD 1.785 billion in the first half of 2008 from USD 1.443 billion in the second half of last year.
May You Live in Interesting Times
By George Weltman & Jim Lawrence
On Tuesday September 16, 2008, the US government blinked after the private sector failed to come up with the necessary funding for AIG given the lack of transparency and inability to get around the risk. By the weekend they’d thrown up their hands entirely. Following on the heels of Lehman Brothers’ bankruptcy, Merrill Lynch’s sale to Bank of America and the very real spectre last Thursday that the financial markets were tottering on the brink of disaster, the US government had only one choice left a complete bailout of the finance business in an effort to cleanse the balance sheets of institutions, which had frittered away some trillion dollars of value over the past decade.
CMA Views Ms. Fisher’s Metals
To a packed and highly receptive crowd of 143 guests, Justine Fisher, Goldman, Sachs’ High Yield Analyst for Metals, Mining and Transportation, delivered an update on bulk commodities and shipping on the occasion of CMA’s first fall luncheon.
The title of the presentation, “After the party… A post-Olympics update on bulk commodities and shipping” was a double entendre. Would there be an after party or a hangover? On the edge of our seats, she gently let us down for the moment by saying that no one can say, as there are insufficient data points. Disappointment was quickly mitigated as she quickly jumped into her presentation and provided extensive data coupled with her insightful analysis giving everyone more than enough to think about.
Largest FPSO Project Loan Ever
BTMU and Fortis, as Coordinators, announced this week the successful closing of a $585 million project loan to finance the conversion and subsequent operation offshore Brazil of the FPSO Espirito Santo. The FPSO is owned by SBM Offshore (51%) and MISC Berhad (49%) and upon delivery will enter into a 15 year charter to Shell Brazil.
Despite the challenging market conditions, a total of 11 banks (BNP Paribas, BTMU, CIC, DnB Nor, Fortis, ING, Mizuho, Rabobank, RBS, Sociiete Generale and SMBC) participated in the financing. The loan was significantly oversubscribed which all owed for final take downscaling for all syndicate members.
The Official Guide To Marine Finance Providers
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