Links
Paragon’s ATM
We missed Paragon Shipping’s filling of two weeks ago in which the company offered to sell up to 15 million common shares from time to time through Cantor Fitzgerald & Co. pursuant to a Controlled Equity Offering Sales Agreement (“CEO”) with Cantor dated October 12, 2010. The CEO is a supplement to the company’s $500 million shelf registration dated February 2010. Sales under this agreement will be deemed to be “at-the-market” equity offerings. Under the terms of the CEO, Cantor will receive compensation of 2% of the gross proceeds for ATM offerings and 4% of gross proceeds of the sale of shares in a negotiated transaction. Proceeds will be used for general corporate purposes, which may include capital expenditures, repayment of indebtedness, and, as needed to enhance liquidity and to make additional vessel acquisitions, if appropriate. In fact, it is likely that the proceeds of the offering, together with borrowings under future credit facilities, will be used to finance the seven newbuildings (4 handysize and 3 Kamsarmax) being constructed in China that will begin to deliver in a year’s time.
“There Is No Joy in Mudville” – SeaCube Prices Well Below Range
In today’s volatile markets, just getting a deal done may be the ultimate measure of success. While SeaCube Container Leasing (“SeaCube”) had a good story, given rising container demand and its market position, the market did not react favorably. Originally, the Fortress Investment Group (“FIG”) intended to raise a minimum of $120 million by selling 7.5 million shares for $16 to $18/share. Instead they had to settle for a price of $10/share, a reduction of 41.2% from the midpoint of the range. The company however was able to increase the offering size to 9.5 million shares resulting in a capital raise of $95 million.
TEN Sells
On Tuesday, Tsakos Energy Navigation, after the market closed, announced a share offering of 7,623,328, shares, of which 896,861 would be purchased by entities affiliated with the Tsakos family. The offering, which includes a green shoe of 1,008,968 shares, is being done by a prospectus supplement to its shelf registration dated July 14, 2009. Proceeds of the offering will be used for fleet expansion and for general corporate purposes.
Problem Solved – Seaspan Carefully Crafts a Solution to Equity Issue
Seaspan Corporation never takes the easy route. Faced with equity capital needs, the simple solution would be to issue more common equity, but that option was never on the table as it would dilute existing shareholders, an anathema to management. In fact, the company has planned and executed six different transactions over the last two years to resolve the issue, all the while protecting the cash flow and value to its shareholders. But before we get to the solution, it is worth clarifying the issue. The company not only has sufficient capital to fund its future newbuilding commitments, it has an excess of debt capital. However it was not all accessible because of the need to be in compliance with the equity gearing ratio covenant in its credit facilities. In short, there was only an equity need from a covenant perspective. Therefore, if new common equity issuance is unacceptable and, in reality, unneeded, the solution can only lie in the reduction of assets and liabilities.
Never Enough – Hapag-Lloyd Extends Bond Issue
Based upon the very strong reception for its previous $700 million issue of Euro and Dollar bonds, it comes as no surprise that Hapag-Lloyd announced on Monday the offering, in a private placement, of an additional EUR 150 million of 9% Senior Notes due 2015. This brings the total raised to in excess of $900 million. The notes will be issued under the original indenture dated October 8, 2010. This incremental amount further aids in the continuing clean-up of the balance sheet.
DOF Subsea Finalizes
Earlier this month, DOF Subsea tested investor appetite by circulating a preliminary term sheet for a senior unsecured open bond issue, which we covered in detail in our October 7th issue. The company was looking to raise a minimum of NOK 650 million and closed the books when offers of NOK 750 million were received.
Serial Convertible Issuer – Seadrill Again
When it comes to financing his offshore drilling company, Mr. Fredriksen likes convertible bonds. With two issues already in place, $1 billion due in 2012 and $500 million in 2014, Seadrill Limited last week sold $650 million of senior unsecured convertible bonds. The original offering size was $550 million with an increase option of $100 million, which was exercised. As a large and regular seller of this financial instrument, which is particularly attractive to hedge funds, the company’s offer attracted strong demand and was oversubscribed within hours. Market talk indicates that there was sufficient interest at the $950 million level. Buyers included the usual investors interested in the offshore industry as well as a number of large buyers not typically found in the sector.
Shipping IPOs Stage a Comeback – Costamare Files
With the IPO market for shipping shares quiescent since March, Costamare Inc. broke the ice last week and filed its F-1 to begin the process of an initial public offering of its shares. The company is offering 13.3 million shares, which will represent 22.1% of the shares outstanding immediately after the offering, without giving effect to the green shoe. The expected price range is $15 to $17. Assuming pricing at the midpoint, gross proceeds will approximate $213 million and the market value of the company will be $965 million. Proceeds will be used for general corporate purposes and potential future acquisitions. The company may also use a portion of the net proceeds, together with debt financing, to fund it’s already contracted containership acquisitions. Finally, pending any of the preceding, the proceeds may be applied to temporarily reduce outstanding indebtedness. The company intends to pay a quarterly dividend of $0.25/share, which is based upon a payout ratio of 60% to 70% of distributable cash flow. This equates to a yield of 6.25% on the midpoint price. More details on the transaction are included in our Guts of the Deal shown below.
Bonheur Bond
Based upon strong investor interest, Fred. Olsen’s Bonheur ASA successfully sold an upsized NOK 600 million three-year senior unsecured bond issue last week. With an original borrowing limit of NOK 500 million, the offering of floating rate notes was upsized by a NOK 100 million. Guaranteed by its sister company, Ganger Rolf, the notes were priced at 3 month NIBOR + 400 bps. Proceeds will be used for general corporate purposes. Details of the transaction are shown in the Guts of the Deal herein.
ACLI Receives Platinum Touch
On Monday, American Commercial Lines Inc. announced it had entered into a definitive agreement to be acquired by an affiliate of Platinum Equity, a private equity firm “specializing in the merger, acquisition and operation of companies that provide services and solutions to customers in a broad range of business markets.” The transaction has an enterprise value of $777 million), which implies a 7.4X TEV/EBITDA multiple using a LTM EBITDA of $104.9 million as of June 30th according to John Parker of Jefferies. Continue Reading
The Official Guide To Marine Finance Providers
Shipping Index
