Special Purpose Acquisition Companies

By Matt McCleery

For the past couple of years, there has been a breakthrough literally every few months in the relationship between the U.S. capital markets and the shipping industry. The result of this series of watershed events is that even the most experienced players have come to the conclusion that almost anything is possible these days – and that the conventional wisdom about what can or cannot be done should be tossed out the window.

For example, in December 2003, the separation of vessel ownership and management created through Frontline’s Ship Finance International changed the way public companies can be valued, marketed and structured. A few months later came the oft discussed but never before used Master Limited Partnership. This equity structure, pioneered by K-Sea Shipping, replicated by U.S. Shipping and soon by Teekay LNG Partners, combined shipping’s strong cash flow with favorable tax treatment to value shipping companies without any regard for net asset value.

But the fun didn’t stop there. A few months later the next watershed moment came when Top Tankers exceeded all expectations and proved that you didn’t have to start out big to access the public markets, so long as you had a compelling business plan and identified acquisitions to buy with the fresh money.

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