2007

Breaking News: OSG America Prices at $19 per Share

In the midst of gun-shy investors and a Dow that had just fallen by 400 points, OSG America priced at the low end of its range to raise $142.5 million. Retail demand was very strong and institutional demand was solid, though somewhat price sensitive due to the more general stock market jitters. OSG retained a 75% stake in the company and will be able to extract more equity over time as it drops in new vessels. Comparables traded down over the marketing period – Capital Product Partners by 12%, Teekay LNG by 7% and Seaspan and Danaos by around 11%, leading to price sensitivity among investors but also allowing for upside in early trading. Meanwhile OSG successfully illuminated the value in its Jones Act assets, improving its cost of capital. The success of the deal is a testament to the strength of the company’s story and management team, led by Maritrans management alum Jonathan Whitworth, and the underwriters, Citi and UBS, together Merrill Lynch, Raymond James and DnB NOR Markets.

Volatile stock market or not, shipping is establishing itself as a leading equity issuer in the US this fall. Navios Maritime Partners, Navios’ MLP, is set to price early this week while CMA CGM’s Global Ship Lease has filed for an IPO and is getting ready to launch. Meanwhile Teekay Tankers, another MLP, and Fortress’ SeaCastle are also waiting in the wings and expected to debut before yearend. There is no question shipping executives around the world have woken up to the arbitrage opportunity available in MLPs or simply through the separation of asset ownership and commercial operation. And they are offering to US investors the opportunity to pick up some of that value.

This is only an excerpt of The Week in Review – 11/08/2007

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