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Mind the G & A
Shareholders in Euroseas Ltd should be encouraged by the cost saving ways of their management team. Having left the NYSE, we jumped on the subway to head uptown to the Speakers’ Dinner. As we exited the subway at the 53rd Street station just in front of us were Messers. Pittas and Aslidis. No limos for these gentlemen
A Launch Party
When you want to buy oil, you can buy an oil future. When you want to buy an oil company, you can buy Exxon Mobil and if you want to buy a basket of oil companies you can buy an ETF. But what is an investor who wants exposure to the shipping market to do? Dahlman Rose & Co. may have the answer.
As part of the Marine Money Week extravaganza, Dahlman Rose launched its new Dry Bulk and Tanker Shipping Indexes, a concept they have been working on for some time. The venue was the beautiful Victorian Gardens in Central Park and it was an exciting conclusion to an event filled week.
Hail Britannia!
On Wednesday shares of Britannia Bulk were fully sold at $15, below the $17 to $19 expected range. Given the volatility of the recent week in the dry bulk markets, we believe this to be a huge success and congratulate the company and its bankers, Goldman Sachs, Banc of America, Dahlman Rose and Oppenheimer on a deal well done.
That Was The Week That Was
Marine Money’s flagship conference came to New York this week and if you were a kid you might refer to it as a three- ring circus. With the conference as the centerpiece, the week has become filled not only with the usual owner/banker meetings but formal presentations and the usual bevy of social events. The numbers are astounding with over 1,000 delegates registered this year, exceeding by far all previous years. In fact, as quickly as we printed a copy of the delegate list, we found it to be obsolete.
Staggering Growth in the Sizzling Desert
by Kevin Oates
To get an idea of what Dubai is like right now, consider the following statistics:
• UAE growth was measured at 7% in 2003, estimated at 3.6% in 2004 and forecast for 4.5% in 2005.
• Jebel Ali was the first Free Zone in the 1980s; there are now more than 30 such zones in the Middle East.
• Estimates put planned aggregate Middle East regional investment in the energy sector, to meet demand growth, at $150 billion.
• Estimated capital required for oil projects by 2006 is $41 billion, for gas projects $19 billion and for petrochemical projects $13 billion.
• The container throughput in Dubai has grown from 1.16 million boxes in 2001 to 2.61 million boxes in 2004.
If you have ever visited Dubai, then the skyline alone should be enough to give you an indication of the amount of investment going on. New buildings are being constructed continually, each one bigger and better than the previous. Whole islands and landmasses are being created from the sea, destined to be home to luxury residential, leisure and commercial communities.
With so much going on, it was not surprising that our First Annual Marine Money Ship Finance Conference, held in the magnificent Grand Hyatt hotel in Dubai on 2nd February, was a great success. Over 167 shipowners, shipping bankers and shipping service executives spent the day with us. All the major players from Dubai and the region were represented, as well as local and international financiers. In terms of figures, over 60 representatives of shipping groups were there, 12 local and regional banks or financial institutions and over 15 foreign lenders.
Keynote addresses were given by Mr Sultan Ahmed bin Sulayem, the Executive Chairman of the Ports Customs and Free Zone Corporation, and by Mr Yusr Sultan, Board Member of GEM and CEO of Terminals, Shipping and LPG, Emirates National Oil Company. The words that come to mind from both addresses are optimism, opportunity, pride, potential and quality. Dubai is going places, and not least because the government and major private players in shipping have plans for greater things to come. A UAE flag, to be recognised internationally as a state flag, is on the agenda. Such an achievement could only serve to pull even more local investment into shipping.
Local and regional shipping companies including Emarat Maritime LLC and Emirates Ship Investment Co. presented the initiatives they have taken to reap the potential rewards that stem from Dubai’s unique shipping environment. We were privileged to hear an enlightening presentation by IRISL (IR Iran Shipping Lines), a company with 87 vessels, more being built and expansion plans for another 40 vessels by 2007. IRISL cannot always get foreign finance because of the lack of an Iranian national credit rating by the international agencies. To get around this, IRISL has set up a company in Germany that will own vessels, fly acceptable flags and be able to attract the type of investment and banking interest its parent requires, a solid and creative example of forward thinking.
Dubai Maritime City gave us an update on their plans to create a unique shipping service environment on land currently being reclaimed from the sea. The area will house a shipyard and repair yard, commercial space for all types of shipping activities, a maritime academy, a marina and state of the art office space for shipping companies. It is planned to be ready by 2007!
National Bank of Fujairah and DVB Bank AG held an intriguing discussion about their different approaches to lending in the region. Both have a great deal to offer, and the point was emphasized that there is every opportunity for local and international banks to link up and complement each other’s strengths, thereby providing optimal service to the region’s shipowners.
Our final session, titled alternative finance, included a discussion by our anchor sponsor, Tufton Oceanic, about Islamic Finance, a new and huge potential source of finance to our industry. The session also featured a talk by CAT Finance, which baited the audience with discussions about building ships in the region and getting suitable finance.
Dubai makes things happen was a slogan used by one of our speakers. Well, we at Marine Money are convinced of this, and our second annual Marine Money Gulf Ship Finance Conference is already booked for 1st March 2006, at the Grand Hyatt Hotel. Hope to see you there!
Eitzen Maritime Services Grows Market Share with Seven Seas Acquisition
Eitzen Maritime Services (EMS) this week moved forward with its goal to become the leading global ship supply and ship management companies with the $115 million acquisition of leading Middle East ship supplier Seven Seas Shipchandlers. Seven Seas saw a turnover of $193 million in 2007 and EBITDA of $14.9 million, implying a 7.1x EV to trailing EBITDA sales price. The acquisition included no interest bearing debt as and a large, modern warehouse with a prime location in Dubai.
Reederei Claus-Peter Offen in $73 million Loan with Dresdner
Reederei Claus-Peter Offen raised $73 million in debt this week for the two year pre-delivery- and 15 year post-delivery-financing of two 52,000 dwt product tankers (to be delivered in 2010). Dresdner Kleinwort acted as bookrunner and MLA for the deal while Bayern LB acted as senior lead arranger.
Asset-Light Niche Player Times the Market
Following quickly on the heels on a multitude of successful follow-on offerings and the Safe Bulker IPO, Britannia Bulk Holdings, Inc. has decided to test the waters here in New York with its IPO. Led by Goldman Sachs and Banc of America Securities together with the support of Dahlman Rose and Oppenheimer, the company is selling 8,333,333 shares at a price range of $17 to $19 and is seeking a listing on the NYSE. The proceeds of this primary offering will be used to de-leverage the balance sheet giving the company access to additional capital resources to grow the company. Management will retain an approximate 70% interest in the company. The terms of the offering are summarized in the Guts of the Deal table contained herein.
STOLT OFFSHORE WHAT GIVES?
Stolt Offshore’s (NASDAQ: SOSA) share price has taken a huge beating of late. The main reasons behind it – the US Gas price fall, reduction in rig rates in the Gulf of Mexico, and a big (330kshare) U.S. SOSA trade with a market reaction in Norway recently – have been exacerbated/ amplified by low volumes in the sector of late. The company, which lost $0.44/share last year has turned things around a bit. Wall Street consensus estimate has the company earning $0.21/share this year and $0.87/share in 2001.
The company’s guidance on EPS for this year is in line with those estimates noting that $0.15 – $0.20/share will be earned in Q3, with the earnings release to come on September 25th and company guidance EPS for the year stands at $0.20-$0.35/share. The company will give no guidance on the share until the 2002 business plan is in place, due November 2001.
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Clarification
Last week in our article on D/S Torm we were guilty of a number of errors, which are clarified below:
We misstated the differential in MR earnings between East and West. In fact, on a yearly basis the differential between the two basins is $2.7 million.
We deeply regret our statement that product carriers could not be built in China at this time. What was meant was that the new shipyards coming on stream in China will mainly build dry cargo vessels initially as tankers are too sophisticated to start-up with. There are a number of yards in China building product tankers.
With respect to dry cargo, Torm does intend to grow the model but to change and grow it in the present environment would be suicidal.
We deeply apologize for our errors.
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