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Teekay LNG goes to the Shelf
Having filed its F-3 shelf registration on October 20th (effective on the 29th), Teekay LNG Partners wasted no time and announced on Monday the offering of 3.5 million common units with a green shoe of a further 525,000 shares. On Tuesday the company announced that the shares were priced at $24.40, which is a discount of about 5% to Monday’s close at $25.67 just before the announcement.
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All Eyes Are On Genmar
We know that General Maritime’s dynamic duo, Messrs Georgiopoulos and Pribor are on the road marketing their $300 million senior unsecured notes offering due in 2017 and so, while they are busy selling we thought we would take a read of the high yield market.
Earlier this week, Navios Maritime Holdings closed its successful $400 million private offering of first priority ship mortgage notes due in 2017. Rated BB-/Ba3, the coupon on the notes was 8.875% and was priced to yield 9.125%. The company escrowed $105 million of the proceeds to provide additional financing to complete the purchase of two new vessels with the balance used to repay existing credit facilities.
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DnB NOR Markets Hires New Analyst
Kelvin Li has just joined the Corporate Finance team at DnB NOR markets as an analyst. He had a year’s working experience at UBS Investment Bank in New York as an analyst with the investment banking team. Kelvin holds a Bachelor of Business Administration (Higher Distinction) from the Ross School of Business at the University of Michigan, Ann Arbor.
K-Sea Too
What is a week without another follow-on offering? As last week ended, K-Sea Transportation Partners (“K-Sea”) announced a public follow-on offering of 2.9 million of its common units and a green shoe of 435 thousand shares utilizing its existing shelf registration.
The shares were priced at $19.15, a 6.6% discount to the prior day’s close at $20.51.
Of the net proceeds of $52.9 million, exclusive of the green shoe, approximately $47 million will be used to repay indebtedness under the company’s revolver, which currently has $139.9 million outstanding and the remainder will be used to make construction progress payments under shipbuilding contracts. LaSalle Bank, Wachovia Bank and KeyBank are lenders under the facility as well as affiliates of the underwriters and will receive more than 10% of the net proceeds of the offering.
The joint book running managers for this offering are BofA Merrill Lynch and Wells Fargo. RBC Capital Markets and UBS are co-lead managers, with DnB NOR, KeyBanc and Stifel Nicolaus serving as co-managers.
We provide further details in the Guts of the Deal below.
More Equity On the Way?
Speaking of the markets, one, in particular, has done well lately, which has certainly cheered both investors and investment bankers. Yes, the stock market, as measured by the DJIA, has increased about 40% from its low of 6627 on March 6th to its close on Thursday of 9256. While we do not pretend to be market seers, the rise is as mysterious to us as how quickly the stimulus appears to have worked in China. Rather than try and understand it, we intend to sit back and enjoy it.
With the stock market at these levels, there should continue to be more follow-on offerings as soon as everyone returns from vacation. With the bank market somnolent, the equity markets appear to have a monopoly on capital raising. While we remain unflagging in our belief in the return of high yield, raising equity to de-lever and repair balance sheets seems like a useful exercise in the interim.
Fixing Debt
Also, last week, Commercial Barge Line Company (“CBL”), a direct wholly owned subsidiary of American Commercial Lines Inc. (“ACL”) announced the private placement and pricing of its $200 million 12 1/2% senior secured second lien notes due July 15, 2017. The notes were issued at a price of 95.181% yielding 13.13%. Concurrent with this offering, CBL and ACL will close on a new four-year $350 million senior secured first lien asset-based revolving credit facility.
The proceeds of the notes and the credit facility will be used to repay ACL’s existing credit facility, to pay certain related transaction costs and expenses and for general corporate purposes.
The book-running managers for the notes were Bank of America, UBS, SunTrust and Wachovia.
Investing and Investment Banking
The market is depressed. The people are not.
The debt markets exist. But you are looking at a lot less for a short term costing a lot more. A lot of the banks will be properly back into the game by 2010. It will help to have companies based in ship finance exporting countries.
The capital markets exist. The bond market is open at very reasonable rates. The equity markets are open for existing issuers but valuations are poor.
We may have a rebound this year thanks to stimulus plans and fiscal loosening, but the underlying damage is done. Banks will eventually HAVE to account for their losses. The write-downs have to come from somewhere and government debt is hardly the answer. Unless they wait years with the balance sheets impaired.
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DnB NOR Chief Bullish Expansion Set – Lending Grows
It is always a pleasure to hear from someone with a fresh and confident outlook, and such was the happy occasion when the Norwegian American Chamber of Commerce presented Rune Bjerke the Group Chief Executive of DnB NOR at an early evening, late summer event in New York. Mr. Bjerke joined the Bank leaving the successful Hafslund ASA where he was CEO. And as he noted the switch to banking left some of his friends perplexed it was the sort of challenge that appealed even though his start date approximately coincided with the start of the Sub Prime crisis.
Capital Market Strength Makes Winners all around in ATB GMR Transaction
In a market in which issuing new equity at or above net asset value is nearly impossible, and at a time when high payout shipping companies are struggling to grow, General Maritime’s all stock acquistion of Arlington Tankers not only makes perfect economic sense – the cashless and symbiotic nature of the deal is probably a blueprint for a few more transactions to come.
Double Hull Tankers Follows On
April was certainly the month the shipping equity markets sprang back to life – at least for follow-on offerings. Seaspan (SSW) was out first on April 10 with an offering that raised nearly $240 million, followed by Teekay LNG (TGP) on April 17 with a $165 million offering. Then this week Double Hull Tankers (DHT) saw the positive trend and took the opportunity to position themselves for future acquisitions by raising $84 million with the offering of 8,000,000 shares at $10.50 per share in a deal led by Merrill Lynch and UBS with Dahlman Rose also acting as an underwriter. The offering was upsized by 1,000,000 shares on the back of strong institutional demand, though it priced at a relatively steep discount of 12% to where the shares were trading when the transaction was announced just one day before. The accompanying graph shows how the price performance of SSW, TGP and DHT post offering announcement compare. Continue Reading
The Official Guide To Marine Finance Providers
