One View on Shiplending & The Current Korean Crisis

by Alan Ginsberg

Time and again we hear it: the longer term health of the shipping finance requires a good bloodletting. But, for more than a decade, it hasn’t happened. The current Asian financial crisis would appear to provide the raison d’etre for the shiplending markets to take a good pounding. Of course, it’s always the other guy we want to put down onto the canvas.

So, where do we begin? To start, we want freight rates to drop just enough to force owners to scrap the old ladies. The turn of the year forces owners of mature tonnage to confront fifth special surveys and dry-dockings with the hope being that enough owners will recognize that there is no payback return on their investment and thus no reason to keep holding on. Next, we want to put a damper on speculative ordering; slowing down shipyard capacity is also not a bad idea. Continue Reading

Seacor Smit: At Home in the Capital Markets

Marine Money maintains an active database on the financials of more than 140 public and private shipping companies. With over ten years of data in many cases, Marine Money analysts are able to map the effectiveness of corporate strategies, financing techniques employed, and identify value. We use the data for benchmark valuations, investment profiles, and to track trends and uncover opportunities.

For purposes of illustration, we have taken Seacor Smit, Inc., (NYSE:CKH) a company that has consistently matched corporate transparency and capital markets sophistication with a growth strategy to produce better-than-average value for its shareholders. Even more to the point for this article, is the simple fact that capital markets transactions become “easier” the more you do. Continue Reading

Residual Value Insurance Adding Value to Ship Finance

by Thomas A. Orofino, President, R.V.I. Associates

As an insurance based service provider to the asset based lending, banking and lease finance industry, the main issue that confronts our company daily is where is our Value Added. One area in which RVI Associates is in the position to add value is ship financing, an industry that is facing increased demands as vessel owners modernize their fleets and build new ships to meet stricter environmental requirements such as OPA 90. Continue Reading

Our Man in Hong Kong

by K.K. Chadha

Currency Troubles Benefit Samudera
Singapore-listed Asian feeder operator Samudera Shipping Line says it will benefit from Southeast Asia’s currency turmoil as its earnings are in US dollars.

“The currency turmoil has worked in our favour,” said chief executive Randi Effendi. “We will see some real currency gains and will be able to comfortably meet our profit forecast for 1997.”
The company, which gained a listing three months ago, expects 1997 profit to rise 14 percent to S$11.4 million (US$6.8 million), with sales forecast to increase 26 percent to $245.3 million. Continue Reading

Oilfield Services Stocks Get Drilled

On January 26th, the offshore service sector, last year’s darlings of the US stock markets, took a bit of spanking by traders. While the stock prices of offshore companies have been steadily eroding for several weeks, as the charts indicate, the bears ran unusually fast and furious on January 26th after – indeed, during – a conference call given by Tidewater.

Ironically, it was during that very call that Tidewater posted better than expected fiscal third quarter earnings. But despite Tidewater’s impressive result, the market seems singularly unimpressed, and focused instead on what lies on the horizon for the sector. Continue Reading

Meet the Cleanup Crews

The Oil Pollution Act of 1990 mandates that tanker owners have resident in the United States an individual or corporate entity, designated the “Qualified Individual” (QI), who will act as the “owner” during a spill response. This person is expected to sign checks paying for the response. With spill cleanup costs running in the range of $3,000 to $10,000 per gallon of oil spilled, the responsibility for effective Qualified Individual services is extraordinary. Over the past seven years, those of us in the spill response business have invested millions of dollars and hours in establishing, drilling and improving response practices. Continue Reading

A Cautionary Tale for Dry Bulk Owners

A recent bunker spill involving a dry cargo vessel in Humboldt Bay, California illustrates a clear message to vessel operators – especially those who operate non-tanker vessels in North American waters: Be Prepared or Pay the Price.

There are few people today who do not realize that “a spill is a spill is a spill” in US waters. That is, the same rules will apply to any vessel spilling oil into US waters as apply to a tanker under the Oil Pollution Act of 1990. The simple fact is that, for those few who do not know, the consequences can be punitive.

In the event that a vessel spills oil, it will be required to make all the appropriate and legally required notifications. The US Coast Guard will expect an aggressively managed response. If not satisfied with the response effort, the Coast Guard or other State authorities involved are likely to take over the response effort. The public and community may either support the response or condemn it in the media, and perhaps later the courts, if you do not respond quickly and effectively. The owner/operator will be subject to the Natural Resource Damage Assessment claims process. Continue Reading

Pegasus Shipping: Facing Down Adversity

by Alan Ginsberg

Pegasus Shipping (Hellas) Ltd. is shipping’s most recent contribution to the high yield market. On November 19, 1997, the Peraticos Family in Greece raised approximately $139 million (net of expenses) for the purpose of augmenting its existing six vessel panamax tanker fleet through the acquisition of an additional six vessels.

According to Pegasus, the purpose of the bond offering is to take advantage of the characteristics of the North-South American Trade Routes (principally the increasing U.S. demand for oil, coupled with the suitability of panamax tankers for this dirty trade and barriers to entry created by environmental regulations necessitating increasingly higher operating standards). Additionally, Pegasus states that it benefits from strong relationships with major charterers and operates a well-maintained and well-managed fleet. Continue Reading

PanOceanic Bulk Carriers: Just Under the Wire

by Alan Ginsberg

PanOceanic Bulk Carriers Ltd.’s $100 million offering of First Preferred Mortgage Notes in December brought to a close the shipping industry’s busiest year ever for accessing the high yield segment of the capital markets. By our calculations, approximately $1.2 billion was raised by seven issuers on both a secured and unsecured basis (The figures are higher if Cambridge’s two oil major bareboat charter newbuilding deals [Golden State and Windsor] are factored in.) We saw some old names rise from the grave and some new names, as well as newly formed companies, take the plunge. While the majority of projects were for identified secondhand tonnage, there were also funds raised for newbuildings. As might be expected, tanker projects led the way, but there were also funds available for dry bulk and container feederships. Only the reefer segment was conspicuously absent. Looking to the year ahead, as counter-cyclical investors, we see the clock is ticking on the wet side, increasing promise on the dry side, particularly if the markets come off enough, and plenty of room for specialty tonnage. Continue Reading

Hvide Marine: Déjà Vu (All Over Again)

by Jim Lawrence

When Hvide Marine Chairman Erik Hvide addressed Marine Money’s ship finance conference in June of 1995, it was a full year before the company’s successful public offering. At the conference, though, he espoused the theory that financial muscle accrue to companies with focus and which meet a certain size. While he certainly had the vision in 1995, he has spent the last two and a half years developing on his concept of size.
The company’s 1996 public offering was simply the beginning. The combination of Erik’s ambitious plans and the financial acuity of John Blankley and his finance team has, until very recently, greatly rewarded company investors, lenders, bankers and investment bankers alike. Continue Reading