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Sole Ownership – TOO Buys Teekay’s Remaining Interest in OPCO
Today, Teekay Corporation announced the sale of its remaining 49% interest in Teekay Offshore Operating L.P. (“OPCO”) to Teekay Offshore Partners L.P. (“TOO”) for a total consideration of $390 million, valuing the company at $796 million. OPCO currently operates a fleet of 33 shuttle tankers (including five chartered-in vessels), four Floating Storage and Offtake (FSO) units, nine double-hull conventional oil tankers and two lightering vessels.
Solstad Refinances and Improves Liquidity
Last week, just prior to the start of the ski fest (described below), Solstad Offshore ASA successfully completed a NOK 700 million floating rate open bond issue, under which it drew NOK 500 million. The offering was well received and was priced at NIBOR + 4.40%. Proceeds are to be used to refinance existing bond debt and for general corporate purposes. More details are provided in the Guts of the Deal below. As promised, upon the successful launching the company bought back NOK 21.4 million of SORE01 at a price of 100.13% and NOK 89.0 million of SOFF01 at par.
“Eleven Thoughts for 2011”
We genuinely appreciate someone putting himself out there by taking a position on the issues of the day. In his Dry Bulk Outlook for 2011, Gregory Lewis of Credit Suisse looked into his crystal ball raised some very interesting questions/ thoughts for the upcoming year and beyond, which we thought were worthy of repetition. We will put these in a time capsule and open them in twelve months and grade him on his performance.
The “Company Men”
By Robert Kunkel
Though many of us have experienced final scrap voyages to Alang as a result of age, overcapacity or falling freight markets, few have witnessed an actual newbuilding auctioned before the hull ever had a chance to taste saltwater. We had that opportunity last week in New Orleans and Alabama as the machinery, steel, partially completed modules and equipment for hulls 104 and 105 of the bankrupt American Heavy Lift virtual shipbuilding project were put on the blocks by liquidators Hilco Industrial and Myron Bowling Auctioneers.
A Nice Problem
The allocation of shares of North Atlantic Drilling Ltd. was delayed due to significant over-subscription. With the book over 20 times covered, the prime allocation criteria was based upon existing Seadrill Limited shareholding. Based upon the allocation, the company will have approximately 1,200 shareholders. Finally, the company is trying to arrange for a shareholder structure that will qualify for an immediate stock exchange listing. While shipping has lost its luster, the offshore is burning bright.
Navios’ Swap to Deconsolidate
In its 4th quarter earnings announcement, Navios Maritime Holdings disclosed its solution to the reporting issue involving the consolidation of Navios Acquisition Corporation’s results into its financial results due to its 53.7% ownership position. In order to get below the reporting threshold, the company has agreed to exchange approximately 7.7 million shares of Navios Acquisition stock for non-voting preferred shares. These shares will be convertible into shares of common stock of Navios Acquisition, after the second anniversary of the issuance to the extent the company will not own more than a 45% voting interest after any such conversion. We remain curious about the terms and, in particular, whether the shares will pay a dividend. The change is expected to be effective before the end of Q1 2011.
Expanding Relationship with Stealth Owner
Seacor Holdings Inc. expanded their relationship with Banc of America Leasing (“BofA Leasing”) during the fourth quarter of last year having entered into the sale-leaseback of two 1999 built Double Eagle Tankers, the M/T Oregon Voyager and the M/T California Voyager. The vessels were sold for $181 million en bloc, exceeding the combined book value of $69.3 million. As dictated by accounting standards, the gain of $111.7 million will be deferred and amortized over the remaining minimum fixed charter periods of 158 months in the case of one vessel and 143 months in the case of the other. These periods take you close to the financeable life of 25 years and probably the end of the fixed charter period with Chevron Shipping. Clearly monetizing this assets was an excellent deal for Seacor and for the Bank, as well, which has a 12 year stream of payments backed by a major oil company.
Aker Offering Successfully Completed; Rigs Ordered
Priced at the tight end, the initial public offering of shares in Aker Drilling ASA was successful completed this week with the book oversubscribed, reflecting strong investor interest. The company issued approximately 189.5 million new shares at a price of NOK 19/share raising total proceeds of NOK 3.6 billion, while creating a company with a market capitalization of NOK 5.4 billion and 1,800 shareholders. Approximately 97.4% of the shares were allocated to institutions with the balance to retail investors and employees. Aker Drilling’s parent, Aker Capital AS, will retain an approximate 40% interest in the company.
Leading Economic Indicator When It Works
There is no such thing as too much of a good thing or is there? The Wall Street Journal, in its Heard on the Street column on February 4th, learned that there was when they knocked the BDI, one of its long-standing leading economic indicators, off its pedestal. Initially, they blamed the weather, but then Jonathan Chappell of J.P. Morgan Chase explained the impact of overcapacity, the forgotten input, on the dynamics of supply and demand.
Distress Sale or a Steal – It’s All in One’s Perspective
After a protracted sale process, which began in early 2010, Affinity Equity Partners sold its 54.7% interest in Jaya Holdings for SGD 202.6 million ($158 million) with the intervention of Credit Suisse as sell side advisor. Purchased at the height of the credit boom in 2006, Affinity had acquired its stake in Jaya, which builds and operates offshore supply vessels, through a vehicle called Nautical Offshore Services, a private equity fund. As a result of the economic turndown in 2008 Jaya was unable to service the $233 million loan used to acquire the shares making the exit necessary.
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