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Marine Money Brings the Ship Finance Industry to Imabari City, Shikoku Island
We are pleased to announce that the 3rd annual Japan Ship Finance Forum will take place May 14-15 at the Imabari Kokusai Hotel in Shikoku Island. Together with our official partner Sumitomo Mitsui Banking Corporation (SMBC), we have put together a program that we believe will be of value to the local Japanese ship owners and financiers as well as foreign players looking at Japan.
DryShips Launches Bid for Ocean Rig, Plans Ultra Deepwater Spin-off
When DryShips first purchased a 40.4% stake in Ocean Rig from Cardiff Marine in December 2007 for $405 million, shareholders were perturbed and correspondingly punished the share price. Why had a dry bulk play entered the rig market, they wondered? And why did DryShips purchase interests from George Economou’s private company Cardiff Marine just weeks after Cardiff had purchased the interests itself – for a higher price? To Mr. Economou it was a shrewd business move and a good opportunity to diversify, but to shareholders it was perplexing and made the future more uncertain – and therefore more risky.
East Meets West
It has been eight years since the author of this article was last in Istanbul. In this timeless city, this is not a long time. While many things have changed, most thankfully have not. For us, it is a city of hope, where the secular and the religious world co-exist in peace. In the bustle of a thriving city, one still can hear and heed the call to prayer. Unfortunately, the one constant is of course the traffic. And finally, unlike shipping, the hotels caught on to a weakening dollar 18 months ago and now charge Euros making a visit here much more expensive. Nonetheless it remains one of the world’s most interesting cities.
Morgan Stanley Holds Investor Day in NYC
Considering the strength of the physical shipping markets, its good to see investment banks flogging undervalued but deserving shipping securities to the investment community. Morgan Stanley held such a parade of champions at their HQ in New York today and about 45 guests turned out including heavyweight investors, one of Teekay’s largest holders, hedge funds and such major commercial bankers as Kristin Holth.
Counterpoint!
At times, it is extremely difficult to portray the various perspectives of a transaction, particularly when it is in a public deal for obvious reasons. In light of our article last week, Seaspan’s management wanted to set the record straight and provide their insights into the process and in particular the timing and the rationale for being the first shipping public offering of the year despite the credit crunch.
OSG Defends the Flag
In a statement that was eerily reminiscent of an earlier time, OSG announced that the US ownership of its common stock at the close of business on April 15, 2008 was 77 percent. This is the minimum percentage of shares that must be owned by United States citizens in order to preserve the status of OSG as a Jones Act company, in accordance with the Company’s charter and bylaws.
Peter G. Goes Green
Having successfully formed two publicly listed shipping companies and backed one bunkering/logistics company in its listing bid, Peter Georgiopoulos has turned his attention to a different kind of challenge. He is embracing the twin goals of moving into private equity fund management and, more importantly, attempting to make the maritime industry more environmentally friendly.
Heidmar Move Signals Value of Pools
In a brilliant transaction for all parties, Heidmar Inc. announced Wednesday that Shipping Pool Investors Inc, (SPII), a company affiliated with the Cardiff Group whose founder is Mr. George Economou (DRYS), has entered into a definitive agreement to pur chase a 49% stake in the company. In a related transaction, senior members of Heidmar’s management will purchase a 2% equity stake in the company. Morgan Stanley, through its subsidiary Morgan Stanley Capital Group Inc. will retain a 49% ownership stake in the company.
Sentiment Turns
In a welcome turn of events, the market was resoundingly upbeat this week. The pace of transactions picked up notably across sectors, and we can’t help but view this as a positive sign for the financing market going forward.
On the M&A front Excel and Quintana successfully closed their merger. Each issued and outstanding share of Quintana common stock was converted into the right to receive $13.00 in cash and 0.3979 Excel Class A common shares. The merger creates a combined company that operates a fleet of 47 vessels with a total carrying capacity of approximately 3.7 million DWT and an average age of approximately eight years. Stamatis Molaris stepped into the role of CEO of the combined company, while Hans Mende, Corbin Robertson III and Paul Cornell joined its board of directors. We were happy to hear that the deal was executed smoothly. Moreover, Nordea and the underwriting team were successful in syndicating the debt levels required to make the deal possible – without needing to bring market flex provisions into play.
Bank Debt in 2006: Public Companies Take on Dry Powder & Lenders Wander the World
If the international ship finance business is a body, comprising complex system of vital organs, then commercial bank debt is its heart – and as you can see from looking just about every single transaction highlighted in this special issue of Marine Money – nothing functions without it.
Whether you are talking about XL Capital’s $1 billion investment grade credit wrap for CMA-CGM, Top Tankers sale/leaseback in Korea, Odfjell bonds in Norway, Quintana’s acquisition of Metrobulk or the dozens and dozens of public and private equity deals living and breathing in New York these days, the reality is that the financial returns needed to create virtually every capital structure in the global shipping industry are nourished by leverage – and that leverage comes from the bank debt market.
And so long as transaction activity is increasing in size and complexity, as it has been for years, we think that the market for bank debt will become even more vibrant. Continue Reading
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