Links
Golden Ocean Sale-Leaseback
Golden Ocean Group (“GOGL”) this week reported the sale of one of its Kamsarmax newbuildings scheduled to be delivered in the 3rd quarter 2009 and currently under construction at the Jinhaiwan Shipyard in China. Upon delivery to the buyers, the vessel will commence a 10 year bareboat charter with GOGL at a rate of $21,975 per day. The transaction provides for annual purchase options beginning in year 4. the purchase price after 10 years is $40 million. At delivery, the seller will net $21 million cash. The IRR is approximately 10% for the full term.
Change – Faster Than a Speeding Bullet, But For the Better?
The concept of change continues to gain currency in both politics and financial markets. In times of crisis, surely speed is of the essence. Crisis management by definition precludes well thought out solutions. For example, this was evident when the government changed its position about buying only mortgages and decided instead to cover the full gamut of toxic financial products or restricting short selling on a wholesale basis rather than focusing on what many perceive as the real issue, naked short selling. It becomes more of showing that something is being done, than finding the real long-term solution-like putting band-aids on a million cuts.
Continue Reading
Report from Houston
We received the following report on the situation in Houston after hurricane Ike from Darrell Wilson of MTI on Tuesday. While we sit at our desks writing proposals, modeling transactions and reading documents, we often lose sight of the realities of shipping.
The Meaning of the Wall Street Debacle in Dollars and Cents
After reading the papers and listening to news reports, which purport to describe what the happenings on Wall Street mean, we realized that we were truly clueless. Huge numbers are bandied about that purport to describe the impact of the collapse of these financial institutions. But to the little guy, they are “…full of sound and fury, signifying nothing.” Thus, when we came upon the following news release, we truly began to understand the real impact.
Continue Reading
Not to Be Missed
Despite the difficult environment, a veritable who’s who of the shipping community descended on the Jefferies 5th Annual Shipping, Logistics & Offshore Services Conference on Tuesday and Wednesday.
We must confess that walking in at the uncivilized hour of 8 AM to a sparse crowd and seeing Jefferies Magic Eight Balls gave us pause. Was Hamish making a market statement or was he merely giving investors a new forecasting tool? Our conclusion was probably both.
“Green Financing” – Resolution Shipping
Last week, Fortis Merchant Bank announced that it had successfully arranged and structured a EUR 250 million club deal for Resolution Shipping Ltd. A subsidiary of Vroon Group BV, Resolution, a Cyprus company, operates a windmill installation vessel, which is currently on time charter to Centrica installing wind turbines in the North Sea. The facility finances the existing vessel as well as two newbuildings, which are currently under construction and includes pre- and post delivery finance.
Norwegian Bonds Return
We spoke too soon last week in intimating the demise of the Norwegian bond market. With the assistance of Fearnley Fonds ASA, I.M. Skaugen this week issued NOK 200 million of 3 year unsecured fixed rate notes with a coupon of 10.5% with the repayment obligation swapped to U.S. dollars. The proceeds will be used to finance the re-purchase an existing issue which matures in
Ship Finance Doubles Down
After entering into its first sale-leaseback with Seadrill for a drillship in May, Ship Finance announced on Tuesday that it had agreed to acquire two newbuilding ultra-deepwater semi-submersible drilling rigs from subsidiaries of Seadrill Limited in combination with 15-year bareboat charters back. The cost of the two rigs is approximately $1,700 million and will be financed with a $1,400 million bank facility (LTV of 82%). The $300 million net investment by Ship Finance will be sourced from existing liquidity, the refinancing of existing assets with low gearing and a substantial profit sharing payment due from Frontline.
“Just Say No”
If December 7, 1941 is “a date which will live in infamy,” the weekend of September 13th and 14th will be recalled as the date the United States Government threw up its hands, having just bought Fannie Mae and Freddie Mac, and finally said no to Wall Street leaving the financial institutions to fend for themselves. Lehman filed for bankruptcy Monday. Merrill sold itself to Bank of America, with a push from the government some surmise and AIG continued its scramble for capital after declining an offer from a hedge fund. The strength and resiliency of our economic system will now be tested, something the government sought up to now to avoid by acting as the lender of last resort since the collapse of Bear Stearns. For many, this was the correct response after all the masters of the universe brought this upon themselves. But more importantly how much more could the government afford and, in fact, is the government even qualified to run these businesses.
Sub Prime Potential
In Korea today the subprime crisis is all about the shipping industry. The historic close relationship between shipowners, yards and Korea’s largely government sponsored banks is raw in a way all sides wish it were not.
Owners looking for funds are finding banks constrained by liquidity and a rising cost of capital, while small and medium size yards suffer under a thin refund guarantee market and concerns that banks will not fund the next round of deliveries. Banks, on their part, bemoan their inability to step up for owners and worry that an influx of foreign banks such as SocGen, Garanti, DVB, and DnB will alter the future landscape by developing relationships with owners today. The reality, though, is that it is much more likely banks like KDB will create new solutions, providing both themselves the returns they seek and their clients the funding that they need. Meanwhile for the moment orders must be financed and Korea’s growing community of owners is looking for funds.
Continue Reading
The Official Guide To Marine Finance Providers
Shipping Index
