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Paying it Forward
By Robert Kunkel
Japan has played an enormous role in modern shipping. Regardless of whether the reference is to shipbuilding and we recall the growth of IHI, Imabari, Mitsubishi and Kawasaki or to operators, like Sanko, NYK and Mitsui OSK, this small island nation has made an incalculable contribution to our industry.
Early last Thursday, an earthquake with a preliminary magnitude of 6.3 struck off the coast of Honshu. A day earlier, a 7.2-magnitude earthquake struck the same coast. On Friday, the most powerful earthquake to hit Japan in 100 years (measuring 9.0 on the Richter Scale) struck offshore, collapsing buildings, creating widespread fires and a tsunami with surging bulkheads of water up to 30 feet high. The damage and loss of life are sadly increasing every day. The greatest casualty of this event will be if those casualties are ignored and shipping does not respond to assist our friends in Japan, who by nature and custom are insular and tend to suffer in stoic silence.
A Coastwise Move – Kirby Acquires K-Sea
Kirby Corporation announced earlier this week an agreement to acquire K-Sea Transportation Partners L.P., an operator of tank barges and tug boats participating in the U.S. coastwise trade of refined petroleum products. The total value of the transaction is approximately $600 million, consisting of $335 million for the equity and the re-financing of $265 million of K-Sea debt.
“Every Which Way but Loose” – DnB Markets and Pareto Securities Market Structured Bond for Havila
Just when we think we have it figured out, the markets prove us wrong. Where we have believed recently that little consideration was given to structure, security and covenants, the Oslo bond market has shown us otherwise. It’s not always about yield; investors, in fact, do care. When a deal needs to be structured to deal with risk, it is.
A Huge China Bet – Carlyle and Tiger partner with Seaspan and the Washington Family to form a vehicle to invest in shipping in China, with Deutsche Bank playing key advisory role.
In a ground breaking transaction that achieved worldwide coverage, The Carlyle Group and Tiger Group Investments have formed a new company, tentatively named Greater China Industrial Investments LLC, in partnership with, Seaspan Corporation, the Washington family, Gerry Wang and Graham Porter that will invest in containerships, dry bulk and tankers. Mirroring the strategy of Japan in the 1980s, China, too, wants to control its freight and the new investment partnership seeks to capitalize on that desire.
Beyond Advisory
Last week, Evercore Partners took a major step forward in evolving beyond its staple business of advisory work. Although Evercore did receive its broker dealer license last year, the only public transaction in which it participated was the Safe Bulkers follow-on offering. But that is understandable given their herculean efforts in restructuring Danaos and Trico Marine Services. The company’s New Year’s resolutions clearly called for an expanding involvement in the capital markets.
Awilco Drilling – On Track
Awilco Drilling Limited was formed in 2009 to acquire two “workhorse” 3rd generation mid-water semi-submersible drilling units suitable for work in the UK sector of the North Sea. The sale of the rigs was a condition for the approval of the merger between Transocean and GlobalSantaFe.
Step Two – DHT Goes for Bonds
After successfully concluding a follow-on offering last month in which the company raised approximately $62.8 million, DHT Holdings Inc. is currently marketing a new five-year senior unsecured open bond issue in the Norwegian market. The bond is an open bond loan, under which subsequent tap issues may take place in the period from and including the issue date to and including the business day falling five business days prior to maturity. All tap issues will be subject to identical terms in all respects. The issue has a borrowing limit of NOK 600 million of which NOK 400 million will be drawn on the settlement day.
The net proceeds of the offering will be used for general corporate purposes, with the expectation that most of the proceeds will be used to fund future growth and vessel acquisitions. More details are provided in the Guts of the Deal below.
It’s Not Only Offshore – I.M. Skaugen Issues Bonds
This week I.M. Skaugen SE (“IMSK”) announced the successful placement of its NOK 350 million two-year senior unsecured bonds. The amount in NOK equates to approximately $63.1 million, falling between the minimum borrowing amount of $60 million and the maximum limit of $70 million. The issue is a floating rate bond with a coupon equal to NIBOR + 6.00%. Proceeds will be used to refinance existing debt and for general corporate purposes. Details of the transaction are shown below in the Guts of the Deal.
Beyond Conventional Market Analysis
By Robert Kunkel
How the protests and regime changes in the Middle East will affect the near term or long term tanker market is difficult to predict. Our interest may be considered narrow, as the world debates the global impact of the Middle East unrest. However. shipping and oil has taken a very central role in the reports including a possible closure of the Suez Canal, the collapse of governments creating new logistic paths or trade routes and the sudden reduction of crude production. These are only a few examples of the downstream effects of the events developing in the region. And downstream does not mean you need to be within earshot of the gunfire.
Skis On; Productivity Down – Conversations Between Nordic Events
Not us for sure, but now we understand the sudden decline in transaction since the rush at the beginning of the year. Norwegians have been playing hooky and sneaking out of work this week to watch the action in Oslo at the Holmenkollen where the 2011 FIS Nordic World Ski Championships are taking place. For the Scandinavians this is the equivalent of the World Series. While we did not have a chance to attend an event, we suspect that if the shipping markets continue at these levels there will be a number of shipowners strapping on skis and lining up at the ski jump.
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