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NOCC Fills Coffers with Private Placement of Shares
Last week, Norwegian Car Carriers successfully concluded the bookbuilding process for the private placement of equity, which was oversubscribed. The company issued 33.783 million new shares at a price of NOK 3.70/share raising gross proceeds of approximately NOK 125 million. Proceeds will be used for acquisitions and general corporate purposes. The transaction was managed by ABG Sundal Collier and RS Platou Markets.
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The Next Best Great Thing
Based upon all the activity in Norway, the harsh environment is the flavor of the moment. Just in the past few weeks, equity offerings for Aker Drilling and Discovery Offshore are in process or were just concluded. Not to let a good thing go by, Mr. Fredriksen decided to create a new drilling company focusing entirely on harsh environment operations, which has been named North Atlantic Drilling Limited (“NADL”) reflecting its chosen operating area in the North Atlantic Basin. Seadrill Limited will spin off six of its nine harsh environment units into the new company. NADL’s new fleet, with an average age of 11.2 years, will consist of 3 semi-submersibles, 1 drillship and 2 jack-ups, one of which will deliver next quarter. All but the newbuilding are currently working in Norway. A seventh unit currently in the final stages of negotiation will also join the fleet when delivered.
Don’t Fight the Tape – ACL I Done
We scratch our head in wonder and realize there is much for us to learn. Certainly this week we understand that logic may not prevail against the appetite for yield, or as Mr. Market reminded us, “don’t fight the tape”.
Last week we described in some detail why we thought ACL I’s unsecured Senior PIK Toggle Notes (“Notes”) were not a good idea and since the deal was oversubscribed and upsized it clearly is not worth repeating the litany here. Instead, we will focus on the deal itself, details of which are highlighted in the Guts of the Deal contained herein.
Almost There – Aker IPO
Having successfully concluded the bond issue and secured an underwritten commitment for the refinancing of its existing bank debt with a new five year $900 million secured bank loan facility from DnB NOR, Nordea and SEB, Aker Drilling began the bookbuilding period for its IPO last week. The company is looking to raise up to NOK 3.6 billion, with the number of shares issued ranging from 189.5 million to 133.3 million depending on the price. The indicative price range is NOK 19 to NOK 27/share for the offering. Based upon the number of shares post-issue (282.5 million to 226.3 million), the shareholding of new investors would range from 58.9% to 67.1%. Finally, the post-issue market capitalization could be as low as NOK 5.4 billion to as high as $6.2 billion.
Prosafe Bonds
Last week, Prosafe SE successfully issued NOK 500 million of five-year floating rate bonds, priced at three-month NIBOR + 3.50%. The issue was substantially oversubscribed and was priced at par. Proceeds are to be used for the partial refinancing of the outstanding bond PRS03 due in March 2012 and for general corporate purposes. In fact, in connection with the offering Prosafe purchased $46.4 million of that security at par. ABG Sundal Collier and Pareto Securities acted as joint arrangers of the issue. More details are included in the guts of the deal below. Continue Reading
Sound Bites
The Hellenic/Norwegian-American Chambers of Commerce 17th Annual Joint Shipping Conference was held on Tuesday. It began with Morgan Stanley’s Fotis Giannakoulis telling us everything we need to know about everything to make a decision in these uncertain markets. But for us it is all about finance, so we provide below some sound bites from the conference:
The Five-Year Plan
We are approaching another “bubble” moment. This time it is in the high-yield market. On Tuesday, the WSJ reported that the yield on “Junk” is approaching an all-time low, falling below 7% for the first time in six years. “The quest for yield is extending a terrific run for junk bonds. They are already up 2.57% so far this year, following returns of 15.2% in 2010 and 57.5% in 2009, according to the Merrill Index.” And it is not only in the rate, covenant-light terms have returned evidencing the bargaining strength of the issuer.
Managing Liabilities
While the world looks for a long-term contracted revenue stream, in these difficult times, it also behooves companies to carefully manage their liabilities, as another means of managing their cash flow.
“…Ask and you shall receive…”
The overriding theme of capital being available to existing companies continues. Both DHT Holdings Inc. (“DHT”) and Teekay Tankers Ltd successfully concluded overnight follow-on equity offerings last week and both were well received.
DHT initially announced plans to offer 8 million shares in an underwritten public offering, “subject to market conditions.” Market conditions were certainly good with the transaction approximately 3 times oversubscribed. The offer was upsized approximately 93% to 15.5 million shares, which included an exercised underwriter’s option to purchase up to 2.025 million shares to cover overallotments. The shares were offered at a discount range of 8-10% of the closing price on February 3rd of $5.08. The strong demand resulted in the transaction being priced at $4.65/share equal to a discount of 8.4%. Proceeds will be used for general corporate purposes, which may include, without limitation, vessel acquisitions, business acquisitions or other strategic alliances, reduction of outstanding borrowings, capital expenditures and working capital.
The Suez Canal – the Effects of Distance on Trade Is that all We Should Be Worried About?
By Robert Kunkel
“Canal Talk” has shifted from the expansion of Panama to the possible closing of the Suez. Earlier this week, the Suez Canal website suddenly disappeared from the internet, providing a shock to shipping. This despite the fact its disruption is most likely the result of President Mubarak’s crackdown on Internet service providers throughout the country. The networks are reporting protest scenes in Cairo but what has not been covered is a full-scale confrontation taking place in Suez dangerously close to the operation of the canal. Latest reports indicate the military has taken over the operation and shut down surrounding terminal operations. How those operations are progressing and what services are being affected is difficult to determine as disruptions in communications throughout Egypt is delaying the information flow. It is clear the internet disruption is extensive. While the www.egypt.gov website is down, the Suez Canal is still open and most likely will remain that way as long as it is under military protection.
The Official Guide To Marine Finance Providers
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