2007

Eighteenth century French philosopher Voltaire once commented that doubt is not a pleasant condition, but certainty is absurd. Perhaps that provides some comfort as news of Bureau Veritas launching Europe’s largest private equity flotation of the year and Teekay Tankers taking out a new $800 million credit facility mixes with the pale of doubt cast over the global financial markets. Here we open with a review of a few important transactions before turning to a deeper commentary on shipping credit by a venture into Hamburg, wherein lies the heart of the market.

Teekay Tankers and Lenders Finesse Choppy Credit Markets

The borrower and lenders involved may have had to work a little harder than they are used to, but this week’s commitment on the Teekay Tankers credit facility is clear proof that the bank market is not struggling in the slightest for well structured deals offered up by well collateralized companies. At a time when a number of large corporate deals are struggling through a sluggish syndication market, this week Teekay Corp. and Teekay Tankers, a soon to be public offshoot of Teekay Corp., priced a 10 year, two tranche, $800m secured Revolver, with 5 years of no-amortization. The tranches were priced at LIBOR + 55 basis points and LIBOR + 60 basis points. This is amazingly tight pricing for a spin off that plans to trade vessels in the unremarkable spot market. The proceeds of the facility will be used to (a) refinance the bridge loan that HSH extended to help TK acquire OMI and (b) finance some additional vessels that will go into the soon to be public venture.

In our view, we would consider this execution to be remarkable IN ANY MARKET, never mind one in which the word “crisis” seems inextricably linked to the word “credit”, especially for big corporate deals.

This is only an excerpt of The Week in Review – 10/11/2007

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