Links
Let It Pour! – The Window is Open
At least with respect to the shipping/offshore finance world, Oslo, for the moment, is the center of the universe. Since our move into publishing, approximately six years ago, we have never encountered the volume of deals derived from a single source in such a short period. Beginning with Teekay Offshore’s offering on January 16th, the Norwegian bond market has successfully concluded six transactions in the offshore space and has at least two deals including one shipping deal pending. Total volume concluded was NOK 4,450 million equating to approximately $760 million, making it a very successful two weeks. All were floating rate, senior unsecured notes priced in NOK. And not surprisingly, given the currency, the interest came largely from Nordic investors. Moreover, we understand that there are more deals in the pipeline. It should continue to be a very interesting month. We begin our coverage chronologically.
Tim Brennan to Leave Heidmar in the Spring
After 19 years with the company, the board of Heidmar announced on Tuesday, January 24, that it had with regret, accepted the resignation of its CEO, Tim Brennan. Mr. Brennan will remain at the company for a mutually agreeable time in order to assist in the transition to a new management structure. The Board has commenced a search for a new CEO. In the interim, Charles Tammara will serve as CEO until a replacement is found.
A Work Around – Seller’s Credit
It is obvious that that the best outcome in terms of value is to sell an “old lady” as a trading vessel rather than to scrap it. With their long expected useful lives and easy cargo, car carriers are such viable sales candidates and therefore it is no surprise that the Norwegian Car Carrier’s 51% controlled company, Bergshav Car Carriers K/S, announced the sale of the 1988 built car carrier Hyundai No. 203 as part of its fleet upgrading process. Unfortunately, financing for 24 year old vessels is simply not available. The solution for the company was to offer an interest bearing 30 month seller’s credit, secured by a first mortgage on the vessel. According to its terms, 68% will be paid in 2012, 20% in 2013 and 12% in 2014. The sale, once concluded, will provide net proceeds after repayment of the bank debt of about NOK 40 million. Unfortunately, the company will incur a book loss as the sales price was below book value.
Joining Forces on Two Fronts – Grindrod and Vitol Combine Coal Businesses
Last week, Grindrod Limited and the Vitol Group announced that they have entered into an agreement under which Vitol will acquire from Grindrod a 35% interest in the company which owns the Maputo coal terminal concession for $67.7 million. In addition, Vitol and Grindrod will enter into a partnership (65% Vitol / 35% Grindrod) to combine their respective sub Saharan coal trading businesses.
Pre-Launch – GasLog’s Preliminary IPO Filing
Last week, GasLog Ltd., Peter Livanos’ private LNG carrier company, filed an F-1 as the beginning of the IPO process. While most of the details are blank, the one number provided is the maximum offering price which is indicated to be $350 million.
According to Gary Wolfe of Seward & Kissel, GasLog is an early victim of the SEC’s decision in December to curtail its non-public review process for foreign private issuers that are first time filers. Previously, foreign private issuers had the option of submitting their initial registration statement on a non-public confidential basis. Under the new rule they have to be filed publicly via the SEC’s EDGAR website. As journalists, we have no complaints; however this rule raises issues for new issuers, which we will discuss in a future article.
“That Was Easy” – Prosafe Issues NOK 500 million Bond
As a regular issuer, Prosafe SE knows the ropes, which was evident with the elapsed time between the announced offering and the closing of the books a mere hour and a half. Then too it’s a niche business in oilfield services making it an easy sell these days. In a substantially oversubscribed offering, Prosafe sold NOK 500 million of 5-year senior unsecured bonds. The bonds, sold at par, were priced at NIBOR +3.75%. In connection with the offering, the company bought back NOK 121 million of PRS06 PRO, which bonds mature on October 14, 2013, at 102.87%. At the end of December, those bonds were trading at 101.47%. The remaining proceeds will be used for general corporate purposes. More details on the transaction are included in the Guts of the Deal below.
A Review
The Shipping Man—A Novel by Mathew McCleery, Published by Marine Money International (2011), ISBN: 978-0-9837163-0-3
Novels set in the world of merchant shipping are few and far between. When they appear they are sometimes tales of derring-do. As in how our hero springs an old rust bucket free from detention from some backwater racketeer. At other times we might expect to read a convoluted tale of salvage or piracy where our hero loses and regains his ship and his reputation, pausing only to retain the affection of the girl. There is also the well-worn narrative fiction written from the point of view of the man on deck (merchant marine division). The Shipping Man mostly eschews these formulae by concentrating on the dichotomy between money and ships, comparing and contrasting the shipping industry as we now find it, lolling in a slump after the longest boom in the sector since the late 18th Century, with the investment banking industry, not exactly everyone’s favorite walk of life since 2008.
Socializing Technology
By Robert Kunkel
Editor’s Note: In case you have not yet had the opportunity to look at a shipping conference program recently, you might be unaware that whatever audience is targeted- technical, financial or commercial- there is a panel discussion on the environment and the future of ship design. While everyone raises the green flag, we all know ultimately that fuel savings or economics is the driver of that discussion. Yet, the means to that end requires thought not fiat. The full impact of regulated obsolescence is unknown and cries for open and intelligent debate. The following is Mr. Kunkel’s opening salvo.
On July 15, 2011 mandatory measures to reduce emissions of greenhouse gases from international shipping were adopted by the IMO MEPC. Issued as an amendment to the MARPOL Annex VI Regulations, the regulation adds a new chapter 4 making mandatory the Energy Efficiency Design Index (EEDI) for new ships, and the Ship Energy Efficiency Management Plan (SEEMP) for all existing ships. Read the regulation again- the intent of the measures is to eventually affect ALL ships.
Is It Time…?
Last week Terry Gidlow and Andrew Simmons, of Inchcape Shipping Services (“ISS”), met with us, and untold others, in order to present their concept for a Maritime Asset Management service as part of the process of refining the product. While we have all been through shipping crisis before, there is less certainty today that we can continue to kick this can down the road. This time, they believe, the banks are going to have to do something with their non-performing assets as few prognosticators suggest the market is going to improve anytime soon. While there is little new with the concept, the Inchcape organization provides some unique advantages. They brand themselves as “a world of local expertise” and that is an understatement given the fact that they have 275 offices in 65 countries with in excess of 3,500 employees. Think about the value of that network. Add to that a long history of providing a wide range of services to the industry and the fact that they have “no dog in this fight”. Their intention is to build upon their strengths and be a simple fee-based service provider.
NAT Raises Equity for Growth
On Wednesday, after the market closed, Nordic American Tankers Ltd. announced the sale of 5.5 million common shares in an underwritten overnight public offering based upon its broad effective shelf registration dated September 28, 2009. The offering was priced today at $14.10/share, a 9.4% discount to yesterday’s closing price of $15.57/share. Total gross proceeds of $77.55 million will be used to strengthen the company’s resources, to fund future acquisitions and for general corporate purposes. The bottom line however is growth as the company remains “…determined to pursue its strategy of accretive growth.” There is further good news for the purchasers as these shares will be eligible for the dividend expected to be made in early March. Details of the transaction are shown below in the Guts of the Deal.
The Official Guide To Marine Finance Providers
Shipping Index
