Courting Quintana

Like many closely watched deals, especially those of the public variety where publicly reported information is strictly regulated, the headlines that came out over the past months regarding Quintana’s future were sometimes conflicting and often confusing. And with good reason; many insiders could not have said in early January what the future of the company would be, nor were they at liberty to share information about the details of the sale process. That said, we considered it worthwhile to take a deeper look at Quintana’s sale process, the offers the company received, and other alternatives they considered, as well as the valuations calculations and assumptions that formed the basis for Quintana’s ultimate decision to recommend Excel Maritime’s cash and share offer. Details have been made available to the public in advance of Quintana’s April 14 shareholder vote. Continue Reading

CMA’s Irish Feis

CMA’s 2008 Shipping Conference got off to a brilliant start on St. Patrick’s Day. It was not only bigger, 2,000 attendees by latest count, but if possible was one of the best ever in terms of content. Understanding that everyone is Irish on St. Patrick’s Day, the organ­izers brought Ireland to the conference much to the chagrin of the local pubs, Tiernan’s and Tigin. Bob Kunkel of Seacoast Electronics was serving Guinness and Harps at the Seacoast booth and then brought in the pipes and drums from the Rockland County Emerald Society for entertainment.

It is grossly unfair to gloss over the program, which is dedicated to every part of shipping, but it would also be impossible to describe it all. So instead we will exhibit our prejudice and focus on the market sessions.

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Further Diversification

Late Friday, Ship Finance announced that it had agreed to acquire two 17,000 DWT newbuilding chemical carriers for $60.2 million en bloc or $30.1 million each. The vessels will deliver in March and August 2008 at which time they will enter 10 year bareboat charters to Bryggen Shipping & Trading at a rate of $8,000 per vessel per day. At the end of the charter period, Bryggen has a fixed purchase option of $20 million per vessel. Interestingly, Bryggen has sub- chartered the vessels for 10 years on a bareboat charter to Sinochem International (Holding) Co., a leading China-based chemical logis­tics provider.

The transaction will be financed with a 10-year non-recourse senior loan facility of $49 million with the balance paid in as equity. The interest rate has been swapped to a fixed rate for the term. Average annual net cash contribution after debt service is estimated to be $1.4 million.

Transaction Report

Ship finance is all about maximizing value. As Quintana’s sale moves forward, TUI has announced that Hapag-Lloyd is officially in play, to the satisfaction of minority holder John Fredriksen. Mr. Fredriksen meanwhile, just after accepting the prestigious CMA Commodore Award from Morten Arntzen, announced that his interests had taken a 5.2% stake in Mr. Arntzen’s OSG, with a forward contract for an additional 1,628,300 shares that would bring his stake to 9.6%. With OSG trading at barely above half its net asset value last week, Mr. Fredriksen’s investment focus on shares rather than ships is hardly surprising, and a future combination for the two companies is certainly in the realm of possibility.

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Following on Quintana’s Success?

Using current phraseology, Aries Maritime Transport Limited (“Aries”) announced last Friday that its Board of directors has retained Merrill Lynch to assist the company in a review to evaluate strategic alternatives to enhance shareholder value. “These alternatives may include, but are not limited to the sale or merger of the company, other strategic transactions, potential capital raises and the continued execution of the company’s operating plan.” Continue Reading

2007 Deals of the Year

Marine Money is delighted to announce the winners of our 2007 Achievement Awards for excellence in the business of ship finance. It was a year that saw unprecedented ship finance volume. Public equity raised soared 193% from $5.8 billion in 2006 to $17.0 billion in 2007, M&A volume skyrocketed 172% from $11.3 billion in 2006 to $30.7 billion in 2007, and, credit crunch aside, even syndicated loan issuance climbed 23% from $76.4 billion in 2006 to $93.9 billion in 2007.

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Re-Inventing Oneself

Last week, Cao Deambrosio, Head of Business Development, of GE Transportation Finance (“GETF”) sat down with us to discuss its purchase of a minority interest in Aegean Baltic Bank (“AB Bank”), which closed on March 3rd. AB Bank is a specialty bank­ing institution serving the Greek based and global shipping indus­try. Based in Athens Greece, AB Bank is a leading arranger and provider of financing with $2.2 billion of loans under management. And as we know, loan management is highly remunerative in terms of fees and other income.

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Northern Offshore Finds Norwegian Solution

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K-Sea GP: Slice and Dice

How many ways can you take a company public? When it comes to an MLP, there are at least two, as evidenced last week by K-Sea GP Holdings LP’s (“GP Holdings”) announcement that it plans an ini­tial public offering of common units.

Formed in December 2007, GP Holdings’ sole cash generating assets are partnership interests in K-Sea Transportation Partners L.P. (“KSP”). KSP is a publicly traded limited partnership that pro­vides marine transportation, distribution and logistical services for refined petroleum products in the United States. KSP currently operates a fleet of 73 tank barges, one tanker, and 59 tugboats that serves major oil companies, oil traders and refiners.

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Banking on the Future

It’s starting as a trickle, but banks are again developing the comfort level to close new deals and owners are becoming accustomed to the necessary changes in pricing, terms and covenants. HSH Nordbank, our 2007 winner for Greatest Contribution to Ship Finance, has since the fall been fielding accusations that it had stopped its ship lending. Countering such concerns, HSH announced this week two loans it has closed for Greek shipping companies, both of which were arranged in 2008 – and so are not unfinished business from before the credit crunch.

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