MEO Club

Amid a spate of ship financing activities happening in Asia, Singapore based Miclyn Express Offshore (“MEO”) was able to secure USD 150 million facilities from an international club of lenders comprising Standard Chartered Bank, WestLB and Oversea-Chinese Banking Corporation. The facilities were used to pay down part of the group’s existing debt and the remainder was paid down out of the proceeds of a simultaneous initial public offering of MEO on the Australia Securities Exchange in Sydney.

Macquarie Capital (Hong Kong) Limited were sponsor and financial adviser to MEO and exited as a principal shareholder of MEO on completion of the listing. The Norton Rose team in Singapore had previously advised the shareholders of MEO on its sale to Macquarie and that role was instrumental in its appointment as lenders’ counsel. MEO was advised by Clifford Chance.

Big Motivation, Jumbo Ambitions

Zhejiang Shipping Group (“ZOSCO”) is working closer to its goal of joining the ranks of COSCO Group and China Shipping Group. The Zhejiang based shipping company has been rapidly expanding its dry bulk fleet over the past year and has recently signed a strategic agreement worth RMB 4 billion (USD 588 million) with Bank of Communications and Bank of Communications Leasing for the financing of 21 bulk carriers of sizes between 27,000 dwt and 57,500 dwt. It plans to expand its fleet capacity to 2 million dwt over the next three years with the eventual goal of reaching 5 million dwt in five years.

And to achieve that objective, ZOSCO is also busy preparing itself for an IPO in Shanghai this year. It plans to sell up to 100 million new shares to raise up to RMB 2 billion (USD 290 million) and the proceeds will be used to acquire 10 capesize newbuildings to be delivered in 2012. Established in 1980, ZOSCO is a subsidiary of state-owned transportation investment enterprise Zhejiang Communications Investment Group. It currently owns and operates 12 Panamax Bulk Carriers and Capsize Bulk Carriers. Continue Reading

Banks Go Nationalistic?

Banks are still very cautious towards lending to the shipping industry. But for it’s not all grim for the shipowners, especially those who are big and established. There are some anecdotal evidence that Asian banks have been stepping up efforts in supporting their domestic shipping clients especially in India, Taiwan, Thailand and Malaysia.

Shipping companies in these countries have ample access to competitively priced loans from their local banks and many of these loans especially in Taiwan and Thailand are structured in the form of club deals. Club deals are preferred because it is a more intimate arrangement with fewer participants and every participant has an equal status, share returns and diversify risks. Syndication deals on the other hand remain difficult to put together due to the recent unsavoury experience banks encountered in reaching a consensus when dealing with covenant breaches in a bigger group. Likewise, demand for syndication deals from Asian owners appears to be lacking and there is a preference to work with bankers they are familiar with. Asian shipowners seem to have been affected by the difficulties created by syndicates during the troubled market.  Continue Reading

Chinese Money

China has many intrinsic reasons for supporting the shipyards – either by offering direct loans to the yards or to their clients. The labour intensive shipbuilding industry uses steel from Chinese steel mills, which is another important source of employment for many people. Since its establishment in 1994, China Exim Bank has played an instrumental role in supporting China’s maritime industry, having granted shipping/shipbuilding related loans of over RMB 116.8 billion (USD 17.1 billion) in the domestic currency and USD 8.5 billion in greenback at the end of 2009. The bank has supported the financing of 3,722 China built vessels of an aggregate tonnage of 120 million dwt and moving forward, China Exim Bank will continue to assist shipyards in stablising their orderbooks and secure new orders through the provisions of seller’s credit and buyer’s credit, payment guarantees and advance payment refund guarantees.

This year, the policy bank will be focusing its attention on providing financial support to promote mergers and acquisitions among the shipbuilders, encourage them to move into higher end ships such as LNG and offshore construction vessels and invest in new shipbuilding technologies. These initiatives are very much in line with the policy guidelines stipulated by the Chinese State Council last year. Continue Reading

JBIC and NEXI Ramp Up Support for Shipping

More foreign owners are turning to government supported export credit agency (“ECA”) financing as an important alternative source of finance in bridging the liquidity gap. The benefits are straightforward. ECA financing provides credit enhancement to lenders, improves their appetite and offers longer tenure and cheaper pricing than wholly commercial sources of funding, but it remains uncertain how long this financing avenue will remain open for shipowners. As for now, the momentum appears to be gaining pace.

This week, Société Générale Corporate & Investment Banking (“SocGen”) and The Bank of Tokyo-Mitsubishi UFJ, Ltd. (“BTMU”) announced that they have jointly provided Danish shipowner J. Lauritzen A/S a JPY 15.53 billion (USD 166.2 million) 12 year senior secured facility for the export of five handysize bulk carriers and one capesize bulk carrier. The vessels will be constructed at Imabari Shipbuilding, Hakodate Dock and other Japanese shipyards. The most interesting feature in this transaction would be the participation of Nippon Export and Investment Insurance (“NEXI”), one of the two Japanese export credit agencies. NEXI will provide buyer’s credit insurance coverage on 97.5% of political risks and 95% of commercial risks for the loan and this is the first time that NEXI has provided export insurance cover for a shipping asset based transaction without the support of Japan Bank of Cooperation (“JBIC”). Continue Reading

And the winner is….

While “It was 10 years ago last month that the Nasdaq tech bubble burst” may not have quite the same ring as the Beatles’ song, “Sergeant Peppers Lonely Hearts Club Band” (“It was 20 years ago today that Sergeant Pepper taught the band to play…”), the March 2000 NASDAQ peak prompted us to dig into the Marine Money vaults for our April 2000 issue where we attempted to describe the internet euphoria’s impact on shipping and the dreams of riches the founders of maritime-related internet companies had.

To see what has happened since then is really a case study in “creative destruction”.  Our article listed 27 companies that were internet start-ups or internet initiatives of existing companies.  We even included Marine Money in the list with our own dreams of striking it rich!  Luckily we were one of the survivors although we never struck it rich!  Out of 27 companies we listed, besides Marine Money other survivors included Oceanconnect (bunker procurement), MarineProvider (ship procurement), PrimeSupplier (marine procurement since renamed SeaSupplier), and SynchroNet (container repositioning).
Continue Reading

The More Things Change; the More They Stay the Same, Relatively Speaking

Last year, we began our discussion of Dealogic’s 1Q 2009 Syndicated Shipping Loans Tables with the following sentence: “A quarter, particularly the first one, does not make a year, but according to the first quarter Dealogic tables, which we received today, the axis of the ship finance world has tipped eastward.”  However, we also should have recalled from our studies of Eastern religions that nothing is permanent and the world is forever changing. In a diminished quarter, in volume terms, the Europeans have come back, but still the number one spot in both the Bookrunner and MLA table has gone to a Japanese bank, Mizuho, followed by perennial leaders DnB NOR and Nordea. Mizuho’s finish is an outstanding accomplishment having moved up from the middle of the pack to pass it’s main local competitors, SMBC and Mitsubishi UFJ. Despite a fair amount of movement in the standings, it is still early in the year and we are not ready to make a call with respect to the earth’s axis. We leave you to peruse the tables and make your own judgments with respect to how the banks finished.
Continue Reading

“Curioser and Curioser!”

Last week, we observed that TBS International had filed Form 4s (insider trading) with the SEC that related to the disposal and acquisition of shares, in late March, by beneficial trusts controlled by Mr. Joseph Royce, the President, and his wife. In this instance, Mr. Royce and Mrs. Royce chose to convert 1.25 million and 1.1 million Class A shares for the like amount of Class B shares. There is absolutely nothing untoward in the transaction but as the title suggests we were intrigued.
Continue Reading

Missed Opportunity? Asset Play Loses Attraction?

There is a disadvantage associated with the public markets particularly in the case of raising capital for an SPV. While capital can be raised it does take time and more importantly you are forced to tip your hand, unless you do it with a SPAC or are a private company with cash.

In this case, two companies were vying for investors to acquire containerships at today’s depressed levels. Diana Shipping announced their intention to invest $50 million back in January for a minority stake in the venture with the balance being raised in a private offering to institutional and accredited investors. Then in February, the company noted that its $50 million investment was equivalent to a 38% interest in the new company. However, due to a change in the size of the offering announced this week, Diana’s $50 million investment now represents approximately 60% of the new company’s common shares, implying total available proceeds of approximately $83 million.
Continue Reading

Bigger is Better

NewLead Holdings Ltd. last week filed a shelf registration to issue up to $500 million of common shares, preference shares, warrants and debt securities. Proceeds from the offering are intended to be used for general corporate purposes, including general working capital and possible future acquisitions.

The company currently has approximately 79.5 million shares outstanding of which about 18.9 million (23.8%) are held by non-affiliates. The market capitalization of the company is approximately $62 million as of Monday with shares closing at $0.78.
Continue Reading