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Euronav & OSG Credit Facility
On Monday, OSG and Euronav jointly announced a $500 million senior secured loan to finance the acquisition of TI Asia and TI Africa, both built in 2002, by joint venture companies equally owned by Euronav and OSG and the conversion of the ships into FSO service vessels. The vessels are scheduled to deliver to Maersk Oil Qatar on the Al Shaheen field offshore Qatar and start operations respectively in July and September 2009.
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Largest FPSO Project Loan Ever
BTMU and Fortis, as Coordinators, announced this week the successful closing of a $585 million project loan to finance the conversion and subsequent operation offshore Brazil of the FPSO Espirito Santo. The FPSO is owned by SBM Offshore (51%) and MISC Berhad (49%) and upon delivery will enter into a 15 year charter to Shell Brazil.
Despite the challenging market conditions, a total of 11 banks (BNP Paribas, BTMU, CIC, DnB Nor, Fortis, ING, Mizuho, Rabobank, RBS, Sociiete Generale and SMBC) participated in the financing. The loan was significantly oversubscribed which all owed for final take downscaling for all syndicate members.
The Week in Review
While there are rumors of a number of IPOs in the works, volatility and uncertainty has all but brought the US equity markets to a stop, and we don’t expect to see much more done over the summer. Bank debt has not proved as much of a problem for shipping. Most recently this week Deutsche Bank and HSH Nordbank acted as MLAs on a $753.1 million loan for E. R. Schiffhart GmbH & Cie KG to finance ten capesize bulkers currently under construction in Korea by the Hyundai Group with delivery expected throughout 2010. BNP Paribas, Commerzbank and Dresdner Kleinwort joined DB and HSH as arrangers while Deutsche Schiffsbank came in as a co-arranger for the deal, which finances 71% of the $1,056 million project cost and covers both pre and post-delivery financing. Notably Ralph Bedranowsky of Deutsche Bank and Harald Kuznik of HSH both hailed the deal as an example of “the global shipping market…returning to reasonable, market-consistent valuations…”
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Where is China in the Ship Demand Cycle…Take a look at their Energy Demand
By Joel McCormick
With China’s banks bursting with domestic savings, foreign banks could be squeezed out of energy- related shipping projects by as much as 40 or 50 basis points—and foreign institutions will have to be more creative in structuring deals, using tax lease and other vehicles, to get in the game, cautions a Hong Kong- based shipping banker.
Arnold Wu, BNP Paribas’ Hong Kong-based Asian head of shipping services told Marine Money that China’s first liquefied natural gas (LNG) terminal to be built across the border from Hong Kong in southern Guangdong province is being almost entirely underwritten by Chinese banks. Beginning 2005, the terminal, the first of a projected three along the China coast, is slated to begin receiving LNG from Australia’s Northwest Shelf delivered by transport franchise holders COSCO and China Merchants. Continue Reading
Lauritzen Kosan and Tailwind in JV
With loan to value ratios falling substantially faster than vessel prices, it’s more important than ever for owners with ships on order to come up with creative ways to source additional equity. Lauritzen Kosan has been successful in doing just this with five of the 15 newbuildings it has on order. It was reported this week that the company has formed a 50/50 joint venture with Bergen-based lessor Tailwind. The joint venture company, LKT Gas Carriers, took delivery of its first vessel this year. By 2010 it is to take delivery of a total of five ethylene/LPG carrier newbuildings ranging from 8,000 to 9,000 cbm. The ships will be flagged in Singapore and commercially operated by Lauritzen Kosan.
Doing Business After the Credit Catharsis
Bank debt has long formed the sturdy foundation of the shipping capital markets. Exotic instruments come and go, but the ship mortgage and the syndicated bank loan remain and thrive. Typically banks fulfill their role quietly, helping clients to grow and modernize their companies without fanfare. At times, perhaps, they help a little too much. Continue Reading
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