Links
With apologies to Walt Disney:It’s a small world…. but a huge deal
In John Fredriksen’s world, a company’s value is directly related to the dividend it pays. Sufficient cash is retained to grow the business with maximum leverage added. The excess cash is then paid out to the shareholders as dividends. It doesn’t hurt, of course, that Mr. Fredriksen is a major shareholder in each of his portfolio of companies and therefore the largest recipient of this largess. It is the classic John Fredriksen formula and it works due to his successes and persona. In fact, it is his response to the long-standing argument in financial theory as to whether a company should hoard its cash as opposed to returning it to its shareholders. This theory postulates that a company should “retain and re-invest earnings as long as returns on the investments exceed the returns stockholders could obtain on other investments of comparable risk.”
From New York to Oslo
Marine Money Conferences span the Globe. One of our central beliefs is that every nation has a maritime industry, some are larger than others, but the fact is the movement of goods by water either internationally or coastwise is fundamental to economic growth. The other central belief is that ships, like any big-ticket wasting asset will always need competitive capital sources. So we take enormous pride in bringing these two powerful forces, capital and shipping, together, around the world.
The Week in Review
Doubts about the global economy and gravity-defying oil prices were sidelined this week by extraordinarily robust shipping – and hence ship finance – markets. Polys and Nicolaos Hajionnaou’s Safe Bulkers came out with the first US IPO filing we have seen in some time while TBS and Genco both went to market with follow-on offerings. SPAC Seanergy announced a deal with Restis and 70% of Navibulgar at long last looks set to go to German-Indian consortium KG Maritime. In the private equity markets, Tufton Oceanic Middle East announced a new investment $50 million joint venture investment company with Kuwait Finance House. Reportedly the largest ever ship finance loan to a Turkish shipping company was closed for Kiran Holdings, and Ship Finance found $700 million in debt finance for the $850 million sale leaseback
Direct from Imabari City, Japan
For the first time in our history, Marine Money held its 3rd Annual Japan Ship Finance forum in the traditional island of Shikoku. Despite being the smallest of Japan’s four main islands, Shikoku plays an extremely vital role in the world’s maritime industry as the home to many established Japanese shipyards and shipowners who collectively own about five percent of the global fleet.
US Shipping: An Advisors’ Dream!
While the shipping industry enjoys a remarkable period of prosperity, in a tiny corner of the world chaos appears to reign for the moment.
The small chaotic corner we refer to is the U.S. Flag community, where teams of lawyers are as important as a strong balance sheet, and the right shipyard, political and labor relationships are as fundamental to a CEO’s skill set as shipping market expertise.
DryShips Update
DryShips on Wednesday commenced the mandatory offer period for the acquisition of all outstanding shares of Ocean Rig. The period will run through June 11th. In the meantime, wholly-owned DryShips subsidiary Primelead Limited has upped its stake in Ocean Rig to 75.1%. This includes the 4.4% stake Cardiff had retained, which was sold to DryShips at NOK 45 per share last week. Meanwhile the bulk market has been booming and at press time DryShips’ stock price has rebounded to $105.68.
Notable Items
Bjorn Moller noted on the Teekay conference call Thursday that vessels are sailing more slowly to conserve fuel costs and the effect is good for the freight market.
The Wall Street Journal Smart Money Stock Screen highlighted DryShips as one of eight companies that have impressive earnings growth and prospects. Others mentioned included Apple, Walt Disney and CA, the Application Software company.
Banking News
In other debt news, a Sevan Marine affiliate has taken out a $300 million senior debt project finance facility for the Sevan Voayageur. GE Energy Financial Services and GE Transportation Finance acted as mandated lead arrangers. Allen & Overy, in turn, advised GE on the transaction. The limited recourse financing will include both pre and post construction financing that will convert into a $300 million amortizing term loan following the delivery of the Sevan Voyageur to Oilexco in the North Sea, where it will begin five years of contracted employment. The Sevan Voyageur is an innovative cylindrical floating oil production, storage and offloading unit. This is not the first time Sevan, GE and Allen & Overy have worked together. The trio successfully completed a $400 million debt facility for the Sevan Driller in 2007.
Nordea, DnB, ING Arrange $3 billion Facility for BW Group
Jumbo loans have officially returned with the announcement by BW Group that it has executed a 5-year $3 billion facility with a consortium of 11 banks, which committed a total sum of $5 billion against BW Group’s $3 billion requirement. Nordea, DnB and ING acted as bookrunners of the facility, and they were joined as mandated lead arrangers and underwriters by Svenska Handelsbanken, Swedbank, HSH Nordbank, Danske Bank, Fortis Singapore, OCBC, Deutsche Bank and HSBC.
NATS Completes Follow-on, TBSI Goes into the Market
Following successful follow-on offerings by Seaspan, Teekay LNG, and Double Hull Tankers and a placement by Pacific Basin, Nordic American Tankers has seen it fit to raise equity to repay borrowings in the immediate future and for expansion in the longer- term, per its business model. NAT has sold 4,000,000 common shares in the offering and underwriters’ have exercised their option for a 310,000 share over-allotment, raising $173 million in gross proceeds. Morgan Stanley led the offering while Dahlman Rose acted as co-manager.
The Official Guide To Marine Finance Providers
Shipping Index
