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One Step Closer – Ridgebury Obtains Loan Commitment
In it’s latest amended filing, Ridgebury Tankers disclosed that it has arranged a $100 million two-year senior secured credit facility from DVB Bank. Borrowings under the facility will bear interest at Actual Interbank Market Rate plus 3.10%. In addition, there is an upfront fee of $3 million or 3% of the facility amount. The facility will be secured by first mortgages on the vessels together with the customary security and covenants required for loans of this type.
Genmar Buys Time – Amends Loan Agreement and Enters Into Bridge Loan
On Tuesday, General Maritime announced it had amended its Credit Agreement dated July 16, 2010 with Nordea Bank and DnB NOR to allow the company an additional year, ending September 30, 2011, in order to raise a minimum of $52.4 million in new equity (the balance needed to achieve 40% of the purchase price), which will be used to partially finance a portion of the purchase price of the last two vessels to be delivered under the Metrostar agreement.
Testing the Waters – Preliminary Marketing of DOF Subsea Bond Issue
With joint managers, Arctic Securities, First Securities, Nordea and Pareto leading the process, DOF Subsea, which is indirectly owned by DOF ASA (51%) and energy focused private equity firm, First Reserve (49%), began marketing a senior unsecured bond issue consisting of floating and fixed rate tranches. Indicative terms for the offering assume a maximum amount of NOK 1,000 million with a minimum of NOK 650 million with a tenor of 3.5 years. Pricing on the FRN is proposed at 3-month NIBOR + 650 to 700 bps with the coupon on the fixed rate at 9.80% to 10.30%. Proceeds will be used to refinance the NOK 500 million outstanding under DOFSUB01 due March 2011 with the excess for general corporate purposes. The Guts of the Deal for this transaction also contained herein provides a closer look at the terms.
Doesn’t Get Better – Hapag Lloyd Offering Upsized and Trades Up at the BreakImproving Leverage While Increasing Liquidity – Teekay Tanker Follow-On
Initially targeting $500 million in a two tranche offering of Euro and Dollar bonds, Hapag Lloyd benefited from strong investor appetite and upsized it’s offering by EUR 145 million ($200 million) an increase of 40%. In terms of final numbers, Hapag issued EUR 330 million of 9.5% 5-year Euro notes and $250 million of 9.75% 7-year Dollar notes.
The Euro notes and Dollar notes were issued at 99.5% and 99.37% respectively to yield 9.55% and 9.875%. At the break, both senior notes traded up at around 103.5%.
Improving Leverage While Increasing Liquidity – Teekay Tanker Follow-On
Utilizing last year’s shelf registration, Teekay Tankers Ltd. last Friday priced its follow-on offering of 8.2 million Class A shares of common stock at $12.15, a 6.6% discount to the closing price the day of the announcement (September 30th). Gross proceeds, exclusive of the 30-day green shoe, were approximately $99.6 million. Proceeds will be used to repay a portion of the outstanding debt under its revolving credit facility, which has a variable rate of interest equal to LIBOR + 60 bps. Previously, drawdowns under the revolver had been made for working capital, general corporate purposes and to fund the two loans totaling $115 million made to an Asian shipowner. The 3 year loans, swapped mainly to a fixed rate of 1.6%, are secured by first mortgages on two 2010 built VLCCs. The company anticipates being able to drawdown on the credit facility, which matures on November 28, 2017, to fund future acquisitions and for general corporate purposes. Details are provided in the Guts of the Deal below.
Nobody Should Be Happy
A Cautionary tale for Judicial Sales in the United States Goldfish Shipping S.A. v. HSH Nordbank
By Alfred J Kuffler, Esquire 1
The April 21, 2010, decision of the United States of Court of Appeals for the Third Circuit in Goldfish Shipping SA v HSH Nordbank should cause much concern on the part of those contemplating judicial sales in the United States.
The litigation grew out of the Bank’s foreclosure in Philadelphia of Goldfish’s purchase of the M/V Ahmet Bey, a Turkish Flagged vessel. The ship had been owned and mortgaged by the Karahasan interests in Istanbul. The former owners post sale interference with Goldfish’s operations produced the claim against the Bank, under the circumstances described below.
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One Times EBITDA
By Matt McCleery
“There is no way in hell that I am going to Greece,” Robert Fairchild laughed dismissively to himself as fell into his $2,400 Aeron chair. He grabbed the sixteen-inch high stack of mail that had accumulated during his three-day sojourn to Hamburg, leaned back and placed his Gucci loafers next to the Bloomberg keyboard on his desk. So what if the physically fit German shipping banker in the fashionably tight suit had told him Greeks were the only ones capable of consistently generating a 20% return in the shipping industry. He was not going to Greece, he told himself again. He was just going to let go of his ridiculous fantasy about owning ships and naming them after his mother and his wife and daughter. It was time to retreat to the relative safe waters of distressed junk bonds and merger arbitrage.
Despite the disappointment of his brief and aborted voyage into vessel owning, it felt damned good to be back in his native environment. As he gazed over the budding treetops of Central Park, he went to work opening his correspondence. But there was no correspondence. There was only the blizzard of bills that had accumulated over the span of 72 hours: the lease payment for his ultra safe Range Rover, the tuition bill from the private school where his twins attended kindergarten. There was the twice annual property tax for the house in Amagansett, summer camp tuition, his usual whopper of an American Express bill and the deposit due for a Vermont ski house rental. Then there were the professionals: two shrinks, an orthodontist, a speech pathologist, an interior decorator, two lawyers and a tax accountant whose invoices were all subtly marked “payable upon receipt,” which meant they were due now. But when he looked up and found himself staring at a photograph of his beautiful wife and five children, three of whom he had plucked from an orphanage in the Far East, he was reminded of the purpose for his toil and he felt anything but vanquished.
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A Look at the Numbers – “You got to know when to hold ‘em, know when to fold ‘em”
By George Weltman
One does not often hear public companies these days speaking about going private. And why should they? In today’s world of limited bank lending, access to capital is paramount, with liquidity a close second. The world has changed immeasurably from the past when public shipping companies worried about the lack of recognition or respect that their shares received, what perhaps could be called the Rodney Dangerfield syndrome.
Years ago, shipping shares were on no one’s radar and China had yet been admitted to the WTO. Other than OSG, TK and NATS among others in the U.S., shipping shares were mainly traded on international exchanges, where shipping held some importance.
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Times Change and an Industry matures
The fundamental premise of the “gotcha” deal, a historical hallmark of the shipping industry in which one party must lose for another to win, appears to be losing prominence as the industry matures in the capital and industrial markets.
Take the charter market for example. In the days when the credit quality of time charterers was hardly scrutinized, there was an entire (thinly capitalized) industry based on the principal of correctly guessing the direction of the charter market and making a spread between the long and short term rates. When the charter market was rising, time charter operators made a fortune. Gotcha. When the market fell, they vanished. Gotcha again.
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How I Learned to Stop Worrying About Cargo and Love the Index
By Robert Kunkel, AMTECH
Dry bulk investment during the recent boom has lately been driven by the indices. This was a consequence of the Baltic Dry Index (BDI) being labeled as a “very good leading indicator preceding movements in global stock markets.” Why not? On May 20th of 2008 the Baltic Dry Index had reached its peak of 11,793 points. And then six months later, being a “leading” indicator, it fell to its lowest point, 763 points. An indication of the coming financial crisis, a failing U.S. economy, Chinese iron ore disputes, and a rush to overbuild in the larger ship segments. Obviously the booming orderbook didn’t heed the “leading” indicators or we didn’t understand what drove the BDI.
When analyzing the “demand” segment of the dry side supply/demand balance it’s easy to see how the Baltic Dry Index has become so influential in the investment process. It’s not so easy to understand why. Is there too much information? Is investment or finance unfairly influenced by the speed in which that information now travels? Or is the volatility of the large ship segment, locked into China as the key geographic region and carrying a single commodity making the analysis too simple. Where is the shipping expertise in this simple analysis? But then again, why think. The index curve will tell you everything you need to know. Why struggle to make money the “old school” way through cargo choice, triangulated trade and COAs when you can earn the “average” and not be criticized for market performance.
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The Official Guide To Marine Finance Providers
Shipping Index
