The Mighty Phoenix

The Phoenix is the ultimate symbol of immortality. In Egyptian mythology, it was a lone bird which lived in the Arabian Desert for 500 to 600 years and then consumed itself in fire, rising renewed from the ashes to start another long life. Having reinvented itself after a series of bankruptcies and changes of name and business activities, Phoenix International Industries seems to be appropriately named.
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A Full Forward Calendar (of restructurings)

The high yield market may be open again but, for most shipowners, the land of big chunks of non-amortizing debt will permanently reside in the eerie twilight between dream and nightmare. The week that we went to press, inflows were $740 million and seven new deals, none in shipping, were priced, though it would have to be a pretty clean shipping deal to get done amidst the present wreckage. While there is a flurry of activity around deals that appear set to default, very few bonds are trading, and sellers continue to outnumber buyers.

Despite the dearth of new shipping deals, the forward calender is full – of restructurings that is. The same cast of characters that put many of these deals together has shifted its focus on how to take them apart. No matter what your sector or capital structure, 1999 will most certainly be the year of the restructuring and, even despite the lack of principal repayments, high yield is no exception. The question is: can all the king’s horses and all the king’s men put some of these thin companies back together again? The answer is that, for a fee, anything is possible. As for the investors, those with good research and a hearty appetite for risk will find the secondary market for shipping issues an absolute playground in 1999. Jefferies has emerged as the newest player in shipping restructuring, with various market sources telling us that they are working on Ermis.
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Equity Market

Most of the recent gains that have been seen in the global shipping equity market were erased over the last four weeks. Even the seemingly invincible Dow Jones is struggling to reach new record levels as investors are increasingly moving into the bond market in search of safety. The Dow Jones closed at 9,331 on Tuesday February 9, which is almost exactly the level it reached before the Asian crisis reared its ugly head. As can be seen in the graph “Let’s all move to New York”, the Oslo Stock Index has had problems getting back to its July level. It is currently 23% lower and seems to have troubles staying above the 1,000 mark for more then a trading day or two. On February 9th, it closed at 1,002.

This phenomenon, if one can call it that, must take some of the blame for the poorly performing Shipping Index in Oslo, which is shown in the graphs on the next pages. So even though shipping stocks generally have been performing under par for the last 6 months, for those stocks that are listed in Oslo, some of the blame must be put on the overall performance of the Oslo stock market. The Oslo Shipping Index is currently 38% lower than last June and 42% below January 1st 1998.
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Company News

SEA CONTAINERS LTD., a marine container lessor, passenger transport and hotels operator, announced it has acquired Express Navigation, Inc. from Holyman Ltd. of Australia in a $5 million transaction. Express Navigation provides services with three passenger ferries between Wall Street’s Pier 11 on Manhattan’s East Side to Highlands and Atlantic Highlands in New Jersey and Pier 4 in Brooklyn. The three ferries are owned by subsidiaries of Hydrolines, Inc., a Delaware company which has time chartered them to Express Navigation on long term charters.
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Chasing Bjørn

While we believe that Bjørn Aaserod of Cambridge Fund Management is a creative financial engineer, in our opinion his ability to run Navigator Gas has been significantly diminished by his failure to provide basic corporate governance. Mr. Aaserod’s precarious financial situation has prevented him from registering the notes and has caused several judgment liens to be filed against his present and former organizations. We believe that these factors, taken in their totality, have damaged the company by creating an extremely unstable and distracting environment which will make chartering the Navigator ships more difficult. In an industry well known for backbiting and gossip, we are afraid that the combination of Mr. Aaserod’s financial feats and exploits has made him less desirable to major charterers.

While we do not believe everything we read in the trade press, in the words of JP Morgan, every transaction should be assessed on the basis of the character, collateral and credit of its principals. We think these criteria have been damaged. As a result, we believe that equity holders, bondholders and underwriter CS First Boston should encourage a shipowning company with deep pockets and a serious commitment to the gas sector to purchase Mr. Aaserod’s equity in Navigator Gas.
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50 Ways to Leave Your Lover

With the shipping high yield market as dry as a charter broker’s mouth on a Saturday morning, and most investment bankers either staying clear of it completely or involved in restructuring a deal gone south, shipowners must look elsewhere for financing. Whether it is to seek new lines of credit or to refinance the existing structures, the door to knock on is the one which provides good old-fashioned commercial bank lending.

While most shipowners might expect to get the door slammed in their faces, after talking to commercial banks all over the world, we at Marine Money feel that owners might be in for a surprise. All banks have told us that their main objective is to do more with their existing client base. This said however, with the exception of the banks involved in Lygnos and other banks nursing their bleeding portfolio of Greek drybulk owners, most banks are trying to generate new business with existing clients.
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Ship Mortgages – January 1999

Ship Mortgages – January 1999 Continue Reading

Lawyers – January 1999

Lawyers – January 1999 Continue Reading

Industry Data – January 1999

Industry Data – January 1999 Continue Reading

High Yield – January 1999

High Yield – January 1999 Continue Reading