Hvide Marine: At a Glance…

by Meng Gao and Alina Ionescu

OVERVIEW
Hvide Marine Incorporated is an energy services company, serving both the upstream and downstream segments of the markets. Hvide’s primary business centers around the off shore energy, product, and chemical carrier sectors.

In it’s first full year as a public company, Hvide’s revenues and fleet size doubled while operating profits nearly tripled. Hvide is now the fastest growing maritime company in the United States.

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Good Faith: Caught in the Crossfire

By Matt McCleery

When Good Faith Holdings Limited realized that price talks for its $280 million offering of high yield bonds were drifting around 10.50%, it must have been particularly frustrated. After all, when the company began thinking about issuing high yield bonds, it looked as though if it could achieve a double B rating , it would price in the 8% neighborhood. During the winter and into the spring a string of thin deals backed up the market and in May Enterprises came to market with a double B and priced at 9%, becoming the first four-B deal to price more than 300 basis points over. In June double B rated Cenargo was priced to yield 10% and became “last done” before Good Faith would come to market. In the meantime, DLJ, Good Faith’s joint lead underwriter with Goldman Sachs, failed to get Fredricksen’s aggressive ULCC Sea Transport done and was simultaneously trying to control the damage from another of its under performing junk bond deals, Premier Cruise Lines, which plummeted in both price and ratings after it was brought to market.
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Credit Watch

Standard and Poor’s placed its double BB- minus corporate credit rating and senior unsecured ratings of Alpha Shipping PLC on CreditWatch with negative implications. The Credit Watch listing reflects deterioration in the company’s financial profile due primarily to a continuing decline in the dry bulk carrier freight rates. Alpha Shipping’s capital structure is aggressive, with total debt to capital of 85% at the end of April 1998. For the six months ended April 30, 1998 the company reported a net loss of $4.5 million, compared with a net income of $11.8 million (including a gain of $11.1 million on the disposal of vessels) in the same period the preceding year. The Credit Watch action is expected to be resolved after discussions with Alpha Shipping’s management.
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Attorneys’ Fees in Maritime Arbitration

by Donald J. Kennedy, Partner, Carter, Ledyard & Milburn, New York

INTRODUCTION
Maritime arbitrators in New York are increasingly awarding attorneys’ fees to the prevailing party which represents a significant shift from ten years ago. What is the background for this change, and what factors do the arbitrators consider in making an award of attorneys’ fees? Before discussing the “Considerations When Awarding Attorneys Fees” recently approved by the Society of Maritime Arbitrators, it will be helpful to look at the practice in the United States of awarding attorneys’ fees.
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Walking the Walk, Talking the Talk on Akti Miaouli

We’ve done an informal poll of some of the investment banks and, not to our surprise, it looks like there were more “I-bankers” in Greece for Posidonia 98 than in the cumulative history of the event.

So we thought it was important for our readers (all of whom are either potential issuers of high yield bonds, advisors, or hope to share in the spoils in some manner) to learn some of the more colorful lingo, so that when you run into these guys in London or New York in the coming months, you will be more than able to hold your own.
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On Credit Watch: PanOceanic Bulk Carriers Ltd.

Credit News From Standard & Poor’s

On Credit Watch: PanOceanic Bulk Carriers Ltd.

Date: 29/5/1998 – Standard & Poor’s today placed its single- ‘B’ corporate credit and senior unsecured ratings of PanOceanic Bulk Carriers Ltd. (PanOceanic Bulk) on Credit Watch with negative implications.

The Credit Watch listing reflects the possibility that the company may have to use its credit facility ($5 million as yet undrawn), together with the remaining net proceeds of the Note Offering from December 1997 available cash to meet its interest payment on June 15, 1998. The company is highly leveraged, with net debt to capital at 85% at the end of March 1998, and interest payments on the $100 million per year. The company had approximately $17 million in the Escrow Account at the end of March 1998; this can be used only to meet interest payments provided that, among other conditions, the company loan to value ratio, after giving effect to such payments, does not exceed 0.85 to 1.0. Continue Reading

TBS gets high yield fever

by Matt McCleery

Executive Summary
If single B-rated companies are known as “story credits” in Wall Street parlance, then we think that the stories of TBS Shipping, and its recent trip to Wall Street, are both worth listening to.

Despite a thin equity base and high advance rate against mortgaged vessels, we are impressed by this tweendecker owner/operator’s strong relationships with blue chip clients, 1-2 year contracts, excellent operating history, and long term commitment to the high level of customer service required in running a liner transportation company.
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Movers & Shakers

American Marine Advisors  has established a wholly owned subsidiary, American Marine Securities, Inc., to act as a registered broker dealer for the sale of public debt and equity.  Along with an equity investment into AMA from Dutch bank DNI and the provision of a $100 million facility to enable AMA to offer bridge financing on select transactions, the new AMA now resembles its architects’ strategic plan for the company.  Company CEO Morten Arntzen, pictured above, has delivered rapidly after his move from Chase.
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Van Ommeren’s walk down the aisle

As with most logical business combinations, the signs were there a long time before the official announcement. Back in December 1996, Van Ommeren and Pakhoed joined forces to develop a 175,000 cbm tank storage terminal in the port of Zuhai, PRC. Under the name VOPAK, the cooperation was to be limited to the Zuhai project. But if teaming on one project is good, can teaming on all projects be better? For stockholders of both companies, the answer would appear to be yes, though not without some qualification.

On 2 March of this year, Van Ommeren and Pakhoed announced their intention to merge under the name VOPAK. A ruling by the European Commission’s Merger Task Force is expected in October. Approval of the merger is expected with only minor divestitures to ensure adequate level of competition in markets where the two companies are both heavily concentrated, such as in Rotterdam tank storage facilities. If approved by the Commission, VOPAK will become a world powerhouse in integrated transport, storage and distribution of chemicals, petroleum products and specialist shipping services. Continue Reading

Projected Impacts on Infrastructure

by John Vickerman

To handle next-generation container ships, as well as overall increases in container traffic, U.S. ports will require significant-and costly-physical improvements. Depending on the port, required improvements could include: deeper draft navigation channels; larger turning basins; larger and faster wharf cranes; larger terminals with more land for container storage; upgraded intermodal rail connections (preferably on-dock); and upgraded highway access.

Navigation Channels
Panamax vessels typically draft 38 feet. Allowing 2 feet for vertical ship movement and 2 feet for underkeel clearance, these ships require a 42-foot channel. With Post-Panamax vessels, draft increases to around 42 feet (fully loaded) and a 46-foot channel are required. With mega container ships, typical draft is estimated at 46 feet (fully loaded), requiring a 50-foot channel.
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