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Akis is Back – Blank Check Equity Raise
Last week, Nautilus Marine Acquisition Corp., a newly-organized blank check company filed a registration statement to raise $60 million through the sale of 6 million units, consisting of one share of common stock and a warrant. The price for each unit is $10, with each warrant entitling the unit holder to purchase one share of common stock at $11.50. In addition, the company has offered the underwriters a 45-day option to buy an additional 900 thousand shares to cover overallotments. Details of the transaction are shown in the Guts of the Deal below.
“Simplicity is a Good Thing” – Stolt Issues Norwegian Bond
With summer just around the corner, Stolt-Nielsen Limited decided to take advantage of the long daylight hours in Oslo and went into the market to issue, in a private placement, new 5-year senior unsecured bonds. Initially, the transaction contemplated an equivalent amount of $200-300 million, split between a Dollar tranche and a Norwegian Kroner tranche, in order to attract a broader range of investors. The NOK tranche was expected to bear interest at NIBOR + 450-475 bps, with the Dollar tranche interest rate expected to be in the range of 6.50%-6.75% fixed. The proposed pricing reflects an issuer rating of BB+/BB with the bonds a notch lower at BB/BB-. The bonds are non-callable for life. Proceeds of the offering will be used for funding expansion opportunities and general corporate purposes.
Returns and More – A Graphic look at 1st Quarter Results (Redux)
Unfortunately last week, we inadvertently omitted an important dry bulk company, which happened to report its results earlier than most. To rectify the error, we have included them in the latest version of the graph shown below, which has also been updated to include additional companies which reported subsequently.
Why Wait? – OSG’s Forward Start Revolver
Last week, Overseas Shipholding Group, Inc. announced it had entered into a $900 million unsecured forward start revolving credit that matures on December 31, 2016. The company may begin to borrow under the facility on February 8, 2013, the date on which OSG’s current facility expires. With an interest rate of LIBOR + 2.75%, the new facility incorporates the same financial covenant package as the original facility as well as an “accordion feature”, which permits an increase in total availability of up to $1.25 billion through additional bank subscriptions prior to the start date. Even with the accordion feature, the availability is less than the original facility it replaces.
Odfjell Chooses a Strategic Partner for its Tank Terminal Business
After announcing back in December its intention to evaluate strategic alternatives for its Rotterdam tank terminal, Odfjell SE recently announced that it has decided to form a strategic partnership with affiliates of U.S. based private equity firm Lindsay Goldberg LLC, a private equity firm which manages $10 billion of equity capital and has extensive experience within the energy infrastructure business. According to the agreement, Lindsay Goldberg will acquire a 49% interest in each of Odfjell’s terminals in Rotterdam, Houston and the greenfield project in Charleston, which together, according to Pareto, represent approximately 40% of Odfjell’s total tank terminal business. Furthermore, Lindsay Goldberg would be a partner in developing new business in the European and North American markets.
A First Ever – Safe Bulkers Accesses Japanese ExIm Financing
On Tuesday, Safe Bulkers, Inc. announced that it had entered into credit agreements with Japanese governmental financial institutions in the amount of $122.4 million to finance three Japanese newbuilding Post-Panamax bulkers. One of the vessels delivered last year with the other two expected to deliver in 2011 and 2012.
Finally, the Right Opportunity Beckons – FSL Enters Into Sale-leaseback with Torm
Yesterday, First Ship Lease Trust (“FSL”) announced that it had entered into an agreement to acquire the M/T Torm Margrethe, a 109,672 DWT product tanker built in China in 2006. The vessel will then be immediately bareboat chartered back to the seller, a wholly owned subsidiary of Torm A/S for a period of 7 years with delivery expected this month. Recourse to Torm, the bareboat is structured with a purchase option at maturity, an early buy-out on or after the 5th anniversary and three 1-year options. As one might expect the purchase price values the charter. Clarkson values a five-year old at $41 million, implying a $5 million premium in this instance.
OGX Discovers the Difference between Success and Failure – 100 bps
Last week, OGX Petroleo e Gas (“OGX”), a company controlled by Eike Batista, successfully issued $2.563 billion of 7-year senior unsecured notes in a 144A private placement. Due to strong investor interest, the deal was upsized from the original amount of $2 billion and priced at par to yield 8.5%. The spread was 611 bps over like term Treasuries reflecting Moody’s B1 credit rating. Proceeds will be used to fund the company’s expected production and development campaign and for general corporate purposes. When the net proceeds are added to cash on hand, there will be sufficient liquidity to cover these expenses until the company can self-fund through its own cash flow. While unsecured the transaction is, in fact, underpinned by potential resources of 10.8 bbls of oil, according to petroleum engineers, DeGoyler and McNaughton. The structure of the transaction is shown below.
Marriage at Haakon VII’s Gate 1 – DHT to Acquire Saga Tankers
There are certainly many reasons for a merger, but the fact that the two companies’ offices are separated by two floors, while not meaningful, does make the logistics of the transaction easier, even though there are only two employees involved. On a less frivolous note, the proposed acquisition of Saga Tankers ASA by DHT Holdings, Inc. makes perfect sense for both parties. For DHT, it clearly was a means to continue the growth trajectory that began under the new management team and without additional leverage. For Saga shareholders, it can be viewed simplistically as a swift and timely exit. But, in fact, Saga shareholders now have a far better platform to participate in the tanker market.
The Rankings Methodology
We keep our methodology as consistent as possible from year to year so that it is possible to create a time series of data, or to just compare one year’s winner to another. Even with this in mind, though, it is important to update the methodologies and improve them over time. We constantly examine our financial ratios in order to better measure companies’ performance. The measures developed for the 2004 Rankings remain unchanged and are likely to remain so, giving us now six years of completely consistent comparison.
As a review, we define financial performance as companies’ ability to improve operating efficiency and to create shareholder value. Based on this understanding, we distinguish between performance ratios and financial strength ratios. The performance ratios focus on evaluating the operating efficiency and the ability to create value; while the financial strength ratios emphasize companies’ financial safety and health. While we do not believe that financial strength necessarily has direct impact on or is a direct indicator of companies’ performance levels, it provides a good benchmark from a creditor’s standpoint and ensures the sustainability of company operations, and we therefore believe it is a metric very worth calculating and considering, but also one that should be separated from overall financial performance.
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