Freshly Minted – February 17, 2000

BREAKING NEWS

Odfjell and Ceres Hellenic Shipping, the owner of Seachem, announced today that the companies will combine their chemical vessels to create the world’s largest owner and operator of chemical tanker tonnage. Seachem is the world’s fourth largest chemical tanker operator, with a total of 23 and an orderbook of 8 newbuildings for delivery in 2001 – 2003. Under the transaction, Odfjell will issue new shares to Ceres in exchange for the following assets: · 9 chemical tankers aggregating 335,000 dwt, built 1986 – 1988; · 4 newbuildings aggregating 160,000 dwt for delivery 2001-2002; · and in addition, Odfjell will purchase 100% of the shares in Seachem, the pool company. The transaction equals about $ 360 mill. investment on the combined company’s balance sheet. As part settlement, Odfjell will issue to Ceres a total of approximate. 4.9 mill shares at NKr 208 per share, in total the equivalent of about $126 million worth of equity. The transaction values Odfjell at approximately. NKr 4.6 billion before the issue of any new equity, and the combined company at approximately. NKR 5.6 billion. Furthermore, the solid financial standing of Odfjell will be kept through the funding of the transaction by 35% equity through the private placement. Odfjell’s shares (OSL:ODF) were up 10% in early trading in Oslo on Friday. The new company will have a market share of about 26% and will have an expected annual turnover is expected to increase from about NKr 4.3 billion to about NKr 5.5 billion during the first year after amalgamation. Book equity increases to about NKr 3.8 billion and, prior to the delivery of the aforementioned 4 newbuildings, total assets increase to about NKr 11.1 billion.

UPCOMING MARINE MONEY CONFERENCES

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SHIP FINANCE NORWAY, OSLO APRIL 13TH Continue Reading

Freshly Minted – February 10, 2000

UPCOMING MARINE MONEY CONFERENCES

SAVE THE DATE!

SHIP FINANCE NORWAY, OSLO APRIL 13TH

To follow up on the tremendous success from last year’s event, DnB and Marine Money are hosting the 2nd Annual Ship Finance Forum, Oslo on April 13th, at the Oslo Konserthus. This one day event is tailored for the Norwegian Ship Finance Community and we will create the perfect opportunity to learn the about the latest development on the financing sector. For more information please contact us at info@marinemoney.com

SHIP FINANCE ASIA, HONG KONG, APRIL 14TH

Recovering economies, improving shipping markets and the need for creative financing and balance sheet restructuring are the impetus for Marine Money’s 1st Annual Ship Finance Asia on April 14th. The event is being sponsored by American Marine Advisors, Hong Kong Shipowners Association, Intercargo, IRI and SwissRe. Topics to be covered include; securitization, off-balance sheet financing, insurance-based credit wraps, mergers and acquisitions, lender liability and appetite for public equity in Singapore and elsewhere. Festivities will begin with a cocktail at the Royal Hong Kong Yacht Club and will conclude with a harbor cruise and dinner in MoTatWan on Lamma Island. For those of you who have been contemplating a trip to the Far East, it will be an outstanding week to do business and we hope you will join us. For more information, we are, as always, only an email away at info@marinemoney.com

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Freshly Minted – February 3, 2000

UPCOMING MARINE MONEY CONFERENCES

SAVE THE DATE!

SHIP FINANCE NORWAY, OSLO APRIL 13TH

To follow up on the tremendous success from last year’s event, DnB and Marine Money are hosting the 2nd Annual Ship Finance Forum, Oslo on April 13th, at the Oslo Konserthus. This one day event is tailored for the Norwegian Ship Finance Community and we will create the perfect opportunity to learn the about the latest development on the financing sector. For more information please contact us at info@marinemoney.com

SHIP FINANCE ASIA, HONG KONG, APRIL 14TH

Recovering economies, improving shipping markets and the need for creative financing and balance sheet restructuring are the impetus for Marine Money’s 1st Annual Ship Finance Asia on April 14th. The event is being sponsored by American Marine Advisors, Hong Kong Shipowners Association, Intercargo, IRI and SwissRe. Topics to be covered include; securitization, off-balance sheet financing, insurance-based credit wraps, mergers and acquisitions, lender liability and appetite for public equity in Singapore and elsewhere. Festivities will begin with a cocktail at the Royal Hong Kong Yacht Club and will conclude with a harbor cruise and dinner in MoTatWan on Lamma Island. For those of you who have been contemplating a trip to the Far East, it will be an outstanding week to do business and we hope you will join us. For more information, we are, as always, only an email away at info@marinemoney.com Continue Reading

A giant leap for Deutsche VerkehrsBank AG, …into the top 10 of shipping finance

by Kevin Oates

Sometimes acquisitions make good sense. Such is the case with DVB and Nedship. It had been rumoured since October but eventually confirmed in December that the German bank Deutsche VerkehrsBank AG (“DVB”) would acquire the Dutch specialist shipping bank Nedship Bank from its parent Rabobank. The transfer of ownership is due to take place in April 2000 providing it gets approval from the relevant banking regulatory authorities in both countries. Unlike many mergers and acquisitions which end up with excess resources, both human and tangible, this coming together seems to be a perfect match with each party benefitting from the strengths and supplementing the weaknesses of the other. Will it however be beneficial for shipowners seeking financing or will it close two doors and open just one?

Deutsche VerkehrsBank AG
DVB AG has for 75 years focused on providing financial services to the transportation industry, mostly however land and air based transport. The Group has 750 employees with offices all over Germany and in Basle, London and New York. The bank was owned by German railways until 1995, when it came under the control of DG Bank which has a 65% shareholding. Additionally the cooperative Sparda banks own 13%, Kravag, an insurer focusing on insuring road transport has 10% and the German railways still holds 1%. Indeed a bank with a focus on transportation!!!
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KING’S PAWN or KNIGHTSBRIDGE? Analysis of Knightsbridge Tankers, Ltd.

by Geoff Uttmark

A change of monumental proportions in the shipping industry that has taken place gradually over four decades is the transfer of risk of tanker ownership from the oil majors to independent ship owners. What had once been an 80/20 division between owned and chartered-in tonnage has now been reversed by a disinvestment process that presumably enabled the major oil companies to deploy their capital more lucratively elsewhere. Given the essentiality of transporting on the order of 2000 million tons per annum of oil across the globe’s seas, departure from direct ownership of tankers by the oil majors is all the more remarkable, since in the time span in which the companies discovered they need not own tanker assets to derive essential services from them, seaborne transport strategies of most of the companies focused away from period charters in favor of spot fixtures. This turned conventional risk-reward theory on its beam ends because, other things being equal, modest financial returns, which are the norm over time in tanker shipping, are supposed to be accompanied by high likelihood of their realization, and vice versa. Hence, pensioners settle for passbook interest, while Street studs go naked on puts. The tanker industry apparently sees things differently. Not counting rare crises like closure of the Suez Canal or the Gulf war, tanker owners generally earn about 4% on assets while incurring large financial risks, this while the share of oil transported by independent owners has been increasing. The contradiction has been described in bleak terms by INTERTANKO:

“Tanker transportation has not provided the healthy, long-term return on capital that a company involved in industrial shipping would expect to earn.”
- INTERTANKO
Market Research Group 4/99
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Drydock Costs Put Focus on Accounting Methods

Back when more cars on American roads were American made, the land battleships had huge bumpers. “Joe lunch bucket” types took to embellishing those bumpers with stickers like “Mechanics do it with torque” – “it” of course being whatever one’s favorite, or second favorite, organ might conjure. Unfortunately, before this new American art form could migrate from street-parked Chevrolets to cul de sac BMWs, bumper size was in retreat along with the rest of American auto-making. Too bad. The gray-suited, Eagle Scout bean counters might finally have won their day in the hay with “Accountants get the timing right.”

On the subject of drydocking expenses, timing is only part of the challenge, albeit a very important part. The matching principle requires that revenues and the costs incurred in their realization should coincide, or match, as nearly as possible. But once the ship is in drydock, what is an expense incurred in achieving revenues to date and what is a capital improvement to be amortized over future accounting periods? And if it is indeed an income statement item, is accrual or expense accounting more appropriate? The magnitude and potential impact of the figures can be appreciated from estimates made a few years ago by Det Norske Veritas for average steel renewal on VLCCs per each Special Survey (Figure 1).
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Valuations: Did someone say food fight?

Those who look on with amazement at the activities of the London shipbroking fraternity can only assume that the traditional English custard pie throwing contests were the catalyst behind the recent clowning around the valuation circus.

The story so far… Valuations, for long a genteel source of either revenue for some or “imprimatur” for others, have become the newest cause celebre for the shipping community. London it appears has assumed the throne and has, in a purely defensive posture, become the unofficial industry spokesperson for ship valuations. As Shakespeare said: “Uneasy lies the head that wears the crown.”
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Danaos targets the Athens Stock Exchange But only if terms and conditions of entry are acceptable

by Kevin Oates

Danaos Holdings Ltd is the corporate entity of one of Greece’s foremost container shipping companies. Although established in the 1970′s as a bulk carrier tramp operator, Danaos has concentrated on the containership trade since 1983 and, according to recent Clarkson Research Studies, the company is now fifth in terms of independent global containership operators without their own liner service. Total TEU capacity is just over 50,000 and on order with delivery from 2001 are four 5,500 TEU containerships adding another 22,000TEU.

The stated objectives of the company are to provide “safe ship operation and to optimize performance in terms of efficiency and effectiveness as well as to ensure that both shore side and shipboard side, (all) international regulations are fully implemented.”

The performance story is good. Growth through re-investment of operational profits together with acceptable levels of gearing. Term employment with quality charterers. Steady upward development in terms of profitability and net worth. It all has the pleasant fragrance of the ingredients desired by the capital markets. And indeed the target of Danaos Holdings Ltd is just that – a flotation on the Athens Stock Exchange (“ASE”), probably during 2001. However Danaos is a very successful private company and states it will go public only if the terms and conditions of entry to the ASE are acceptable to the company.
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Freshly Minted – January 27, 2000

UPCOMING MARINE MONEY CONFERENCES

SHIP FINANCE NEW YORK

Dear Ship Finance Friends, after several years of working together on the annual ship finance forum, Marine Money Magazine and commercial conference organizer IIR are going separate ways. As a result, we anticipate that there will be 2 ship finance conferences in 2000. Marine Money will continue to hold our 12th anniversary conference in June, so please save the dates June 20-21st. For the last 12 years, Marine Money has been committed to bringing you the most valuable programs and best networking opportunities at the most reasonable price possible. We are totally committed to Marine finance. Our interests are your interests and we appreciate you support.

BEST PRACTICES FOR SHIP VALUATION: MARCH 29TH: BALTIC EXCHANGE

The valuation debate is reaching a crescendo with the creation of the London Valuation Panel and several other attempts to bring a more balanced approach to the practice of valuing ships. As brokers, bankers, investors and owners comment to us and look on in amazement, we think the time has come to open the floor to an exchange of ideas on how this practice should be standardized and codified. To wit, Marine Money will host a one-day conference in London on March 29th. The conference will feature speakers on all aspects of valuation: technical, legal and commercial and the day will end with an open debate on the subject. We might even bring in a bondholder, just for good measure. We hope you will join us. Continue Reading

Freshly Minted – January 20, 2000

UPCOMING MARINE MONEY CONFERENCES

SHIP FINANCE NEW YORK

Dear Ship Finance Friends, after several years of working together on the annual ship finance forum, Marine Money Magazine and commercial conference organizer IIR are going separate ways. As a result, we anticipate that there will be 2 ship finance conferences in 2000. Marine Money will continue to hold our 12th anniversary conference in June, so please save the dates June 20-21st. For the last 12 years, Marine Money has been committed to bringing you the most valuable programs and best networking opportunities at the most reason price possible. We are totally committed to Marine finance. Our interests are your interests and we appreciate you support.

BEST PRACTICES FOR SHIP VALUATION: MARCH 29TH: BALTIC EXCHANGE Continue Reading