Stena to Remove Investment Restrictions

Leading Swedish shipping group Stena Line is following in the footsteps of its associate Concordia Maritime by removing all investment restrictions on its quoted shares. If the plan is sanctioned by the Government and is approved by shareholders at the forthcoming annual general meeting, all of the equity will be quoted in free shares. At present, only 2m of the 16m shares are available to foreign investors. Commenting on the move, Stena director Mats Kling told Marine Money “We are opening up the shares in response to the increasing interest expressed by overseas investors.”    Continue Reading

Legislative Change to OPA: Only Answer for Lessors

The Oil Pollution Act (OPA) has sent everyone running for cover, but the big question is what cover and is it available? Virtually all interests connected with the financing, ownership and operation of shipping assets face potential liability under the contentious legislation enacted in the US last August. Various forms of insurance cover have been devised to accommodate OPA risks, but the threat of “unlimited liability” implicit in the act, makes it impossible to buy total immunity.

The exposure is tough for those with “direct control” over a vessel, such as the owner/operator and charterer. But it is that much worse for investors or title holders more remote from the daily running of the ship. In this context, the legal position of the financial lessor seems particularly exposed.

In a recent paper on the position of lenders and finance lessors under the OPA, W. Thaddeus Miller, partner in New York law firm Watson Farley and Williams, wrote “The position of the finance lessor is grim. It is liable for pollution claims jointly and severally with the bareboat charterer.  Where a pollution incident has been caused by gross negligence, willful misconduct or violation of Federal safety, construction or operating regulation, the finance lessor will be subject to unlimited liability, even though the real responsibility lies with the bareboat charterer or manager.” The finance lessor may be regarded as a secured lender in economic terms, but it is treated in the same way as an outright owner under the terms of the OPA.   Continue Reading

Nordstjernan Restructuring – Sells Laser Line

Norwegian industrial conglomerate Nordstjernan has sold its Swedish subsidiary Laser Line to the German shipping concern Hamburg Sud, part of the Oetker Group. No price terms have been released for the deal, still subject to the approval of the Swedish and German authorities, although Nordstjernan indicated that the sale will generate a capital gain of approximately Kr100m ($14.5m).

Laser Lines has been involved in liner traffic between Northern Europe and South America for more than 75 years, and currently operates five modern container ro/ro ships. In 1990, the company’s operating profit after depreciation was more than halved from Kr25.4m to just over Kr10m, mainly due to a downturn in traffic volume on the Laser Rosa service between Northern Europe and South America. The wholly owned Brazilian subsidiary Transnord was also hit by difficult economic conditions in Brazil at the start of the year.

Commenting on the sale, Laser chairman Rune E. Smedman told Marine Money, “The sale is part of a restructuring program, but is also aimed at developing new markets for Laser Lines. At present, the liner company is dependent on Nordic and Scandinavian cargoes for southbound traffic. Under the ownership of Hamburg Sud, the company will have access to wider European markets, and will have a better chance of expanding its market share.”  Continue Reading

MC Shipping: What Lies Ahead?

This should  be an easy stock to follow,” an MC Shipping shareholder stated recently.  The inference was that it is, in fact, not so easy to follow.  At the same time, the investor made it clear that he was not unhappy – just caught by surprise by the first quarter results.

There has been a recent wave of new investors into shipping, attracted by low share prices relative to even highly discounted asset values and the prospects of attractive dividend yileds  from operations rather than straight asset appreciation.  For the recent investors in shipping equities, there is little to be upset about.

In MC Shipping’s case, the stock moved up from $4.88 a share to $8 during the first quarter.  And, despite a first quarter dividend of only $0.25, it is conceivable that, for the year, the stock will yield a dividend return of around the 15% goal mentioned in its original prospectus.

For a business that most recently was sold to equity investors the world over as an asset play, the comment is a telling one for those companies with basic operational soundness to step forward and explain just why shipping deserves the attention – not just the dollars – of investors.  Continue Reading

Knud Larsen Latest in IPO Market

Despite the lackluster performance of the Danish stockmarket, recent IPOs have attracted good support. The forthcoming share issue of Knud I Larsen (SIF) will, therefore, be watched with keen interest by both Danish and international investors. In some respects, it represents a new landmark in the Danish stockmarket and, because of the unusual circumstances, may not necessarily be regarded as a litmus test for subsequent offerings. Larsen is the first private shipping concern to apply for a public listing in some time, and its IPO will coincide with its stock exchange debut.

The Copenhagen based company aims to raise Kr112.5m ($16.9m) through the issue of 25,000 shares at Kr4,500 each. Director Finn Larsen told Marine Money “The proceeds of the issue will be used to develop our business in container vessels and small product and chemical tankers. The share issue and public listing have been planned for a long time, and we believe that it is now the right time to go the stockmarket.”   Continue Reading

Investa Takes Stake in Euronav

The ownership structure of tanker operator Euronav has radically changed with the introduction of a new partner and four ships. The Norwegian Investa Group has bought a 43% stake in the Isle of Man based venture, simultaneously selling four ships to the company. The sale of the ships was negotiated independently of the acquisition by Investa of a stake in the company. No price details regarding either transaction have been released. Reports circulated by brokers that the ships changed hands for around $100m have been denied by the company.

The ships involved in the transaction are the 423,600 dwt ULCC Vendela built 1975, and three Aframax tankers built 1980/81 – the 81,300 dwt Caribbean Star and the 87,000 dwt Canadian Liberty and Mega Pilot. Negotiations about the deal started earlier this year, following the departure of Mercurius Gruppen, which ran into financial difficulties. Shares held by the Swedish partner were initially sold to another founding member, Compagnie Nationale de Navigation (CNN) of France, and later to Investa. CNN, part of the Worms Group, formed Euronav with Mercurius in 1989 to expand its European bulk operations. Following the recent structural changes, CNN now controls 43% of the equity, with the remaining 14% held by private investors.   Continue Reading

Global Ocean Carriers Seeks Perpetual Status

The real money in shipping, says Michael G. Jolliffe, president and CEO of Global Ocean Carriers Ltd., isn’t to be made in chartering ships, but in the sale and purchase market.

This is the basic reason why the management of Global, which is holding its annual meeting on May 21 in Geneva, Switzerland, is seeking to turn the company into an ongoing concern.

Like many of the shipping IPO’s set up in the late 1980′s, Global Ocean was set up as a company with a limited life span. To attract investors to the shipping industry, the company purchased older vessels, passed along cash-flow to shareholders in the form of dividends, and planned to dispose of its fleet when prices turned up.

But the market has zigged when many in the industry thought it would zag. Last summer, dry cargo rates as measured by the Baltic International Freight Futures Index hit their lowest level since the summer 1987, bunker fuel prices zoomed last fall after the Iraqi invasion of Kuwait, and secondhand ship values plummeted – though in recent months they have begun to rise. Continue Reading

Fixed or Floating – Is It Time to Swap?

Since January short-term interest rates have moved down more than a full percentage point to their lowest levels in over four years.  Thus, while few people are predicting an immediate end to the recession, most bankers contacted agreed the move would have a positive impact on both the banks and the borrowers.

From the banks persective the downturn in interest rates has come at a very opportune moment.  One banker from a major money center bank in the United States told Marine Money  that the drop would help the banks to strengthen their balance sheets and improve their profits at a time when they are struggling with the new capital adequacy requirements.  While refusing to be quoted, he mentioned that this would necessarily mean that borrowers would be looking at higher spreads on their loans, an increase from 25 to 100 basis points.

On the corporate side,  the drop will likely have some of the positive psychological effect that is intended by reducing the cost of capital for borrowers.  More importantly though, as one senior Norwegian banker said it will have a positive effect on the profits of highly leveraged companies by reducing interest expense and freeing up cash for principal repayment. Continue Reading

Bardelmeier and Jones Return to Great Lakes – Buy Ashland Fleet

We don’t mean to make it sound like a trip down memory lane, but Roger Jones Sr. and William Bardelmeier are returning to the Great Lakes by participating in the acquisition of Ashland Oil Co.’s Cleveland Tanker fleet.

The two began their maritime careers while in school sailing on the Great Lakes in the 1940′s and worked together at Oglebay Norton’s Columbia Transportation division before later joining US Steel and forming Jones, Bardelmeier & Co. Ltd. in the 1960s.

Now Ashland has agreed to sell their Great Lakes fleet – two self-propelled tankers and a barge – to a private company called Patriot Shipping Inc. which has the same partners as Jones, Bardelmeier. The deal is subject to approval by the US Maritime Administration.

Besides Mr. Jones and Mr. Bardelmeier, the other partners of Patriot are William Braithwaite, Walter Mitchell, and Roger Jones Jr.     Continue Reading

Tanker Quality More Critical Than Age for Oil Majors Chartering in the Wake of OPA

The question of oil pollution and tanker safety looms larger than ever, following the Haven disaster. However, perhaps its real significance may lie not in the scale of the disaster, which was bad enough, but in the timing. The campaign for more restrictive environmental controls in the US is gathering momentum, and this incident will give further ammunition to the OPA legislators. Last August, the US Government implemented the controversial Oil Pollution Act (OPA), and coincidental to the Haven accident, Admiral Kime, commandant of the US Coast Guard, was delivering a criticism, of existing industry safeguards during a speech in Norway, which many fear is a prelude to even stricter US unilateral action.

It is clear that shipowners face the brunt of the responsibility, but several state laws now make the cargo owner, terminal owner and charterer also liable. A number of major maritime law firms have commented recently that the loose term “operator” described in the provisions of the OPA could be extended to include the charterer of the ship as well as its owner, manager and financier.

Increased Charter Screening    Continue Reading