Banking Crisis? Not an Issue for BW Group or NOL

2012 is broadly expected to be challenging for both shipping lenders and borrowers. As long as the Euro debt crisis persists and continues to worsen, capital will become increasing scarce. Even shipping companies at the top of the pyramid are busy strengthening their balance sheets and making sure that they have adequate funds to meet capital expenditure requirements in the coming years.

One of the world’s leading maritime companies BW Group has successfully completed a USD 1.5 billion seven-year revolver in mid-November. According to market sources, the proceeds will be used for refinancing and the participants are largely from the previous revolving facility. Pricing is said to be “slightly higher” than the previous revolving facility, although it remains highly competitive in today’s tight market conditions. Continue Reading

FSL Gets Refinancing Done in Tough Market

Last Thursday, First Ship Lease Trust (“FSL Trust”) announced that it has Successfully entered into a loan agreement with a syndicate of eight lenders for a six year amortising term loan of USD 479.6 million, secured against its current portfolio of 25 vessels. The new term loan facility will be used to refinance all its maturing bank loans with an outstanding loan balance of USD 483.1 million (refer to Table A). The remaining loan balance of USD 3.5 million will be repaid in cash from FSL Trust’s internal funds.

The new term loan facility is provided by a syndicate of banks led by ABN Amro, Singapore Branch and Overseas-Chinese Banking Corporation (“OCBC”) as mandated lead arrangers and bookrunners. The other mandated lead arrangers are Bank of Tokyo-Mitsubishi UFJ (“BTMU”), UniCredit Bank, Singapore Branch (“UniCredit”), Sumitomo Mitsui Banking Corporation, Singapore Branch, Korea Development Bank, ITF International Transport Finance Suisse (Zurich-based wholly-owned subsidiary of DVB Bank) and KfW IPEX-Bank. Four out of five existing lenders in the maturing revolving credit facilities – BTMU, UniCredit, OCBC and SMBC took positions in the syndication. German bank Helaba is conspicuously missing in the latest line-up, but FSL Trust attracted the strong support from four new lenders (one Asian and three European) in today’s tough credit market.  Continue Reading

ECAs Continue to Take the Centre Stage

In a market where the availability of commercial debt remains rationed, Export Credit Agencies (“ECAs”) supported financings continue to be an important funding source in many major shipping transactions.

Last month, the Japan Bank for International Cooperation (“JBIC”) concluded two loans agreements with K Line Offshore for the financing of one anchor handling tug supply (“AHTS”) vessel and one large platform supply vessel (“PSV”). Established in October 2007 to expand the group’s upstream energy resource development-related business, K Line Offshore is 95% owned by Japanese mega carrier Kawasaki Kisen Kaisha. Continue Reading

Vietnamese Banks Finance USD 227 million FPSO

During the end of July, a syndicate of six Vietnamese banks, led by PetroVietnam Finance Corporation and Vietnam Commercial Bank for Industry and Trade (“VietinBank”), provided PV KEEZ USD 227 million for the financing of an FPSO for the Chim Sao field in offshore Vietnam. This six year project financing transaction also saw the participation of Cathay United Bank, Indovina Bank, Shinhanvian Bank and SeA Bank.

The deal is particularly significant because it is the first syndicated US dollar facility provided by Vietnamese banks to an overseas company. PV KEEZ is a Singapore-based special purpose joint venture owned by PetroVietnam Transportation Corporation, EOC Limited, Ezra Holdings and KSI Production. Continue Reading

DVB Group Merchant Bank (Asia) Finances Brazilian Shipbuilder

In September, a syndicate of international banks led by DVB Group Merchant Bank (Asia) provided a USD 420 million export credit supported loan facility to OSX 1 Leasing B.V., a subsidiary of start-up Brazilian shipbuilder OSX Brasil S.A. The loan facility had a tenure of 8.5 years, priced at a rate of LIBOR + 4.25% p.a. and will be used to finance the acquisition and conversion of OSX’s first floating production storage and offloading unit (FPSO) referred to as the “OSX 1 FPSO” currently under conversion at Keppel Shipyard, Singapore. The unit will be operated by OGX Petróleo e Gás LTDA, a subsidiary of OGX Petróleo e Gás Participaçoes S.A. in the Waimea prospect in BM-C-41 in the Santos Basin offshore Brazil.

Norton Rose (Asia) LLP advised the lenders. Allen & Overy advised OSX and Cameron McKenna acted for OGX.

Bank of China in Action Again, What’s New

Bank of China has extended a USD 179.55 million buyer’s credit facility to STX Pan Ocean recently in relation to the South Korean shipper’s acquisition of three 17,600 DWT bulkers ordered at Jiangsu New Century Shipyard. Jiangsu New Century Shipyard is one of the largest private shipbuilding groups in China who has built over 100 ships for owners in Denmark, United Kingdom, Germany and Italy. This successful transaction was initiated by Bank of China’s branch in Jiangsu province, upon news of STX Pan Ocean’s difficulty in securing finance for the ships. This year, STX Pan Ocean has earmarked USD 203 million to invest in 6 vessels. Continue Reading

Bank Debt Returns to Normalcy?

One of the major concerns on the minds of many would be the pile of toxic collateralized mortgage paper that remains on banks’ balance sheets and this will continue to restrict the banks’ ability to extend new credit. Likewise, shipping banks face the same tricky task of valuing the shipping assets on their books based on current market prices. Basel II requires banks to set aside more capital to riskier assets whenever the security cover reduces, and this could potentially limit capital for lending. The process of writing down book values has yet taken place and moving forward, it is absolutely crucial that bank losses on shipping remain limited or the industry could risk losing a number of lenders. There has already been a material contraction in ship lending capacity among major shipping banks.

2009 has been a busy year for the ship financiers, not so much for lending but more in terms of restructuring and workouts. Lending terms as one would expect have become more stringent in 2009 and not only has the advance rate been lowered to 50-60%, banks prefer shorter tenors between 3 and 5 years. This is in stark contrast to the 10 to 12 year tenors banks were offering shipowners during the shipping boom just a couple of years back. Bankers call this a return to basics. Continue Reading

Step Up Asian Banks

As we fill in our deal tables week after week, we note that anecdotal evidence points towards local banks increasing their financial support to their domestic clients. In Thailand, Thoresen Thai Agencies (“Thoresen Thai”) has secured a USD 200 million three year term loan from a syndication of mainly Thai banks – Kasikornbank, Krung Thai Bank, Export-Import Bank of Thailand (“EXIM Thailand”) and Mizuho Bank, Bangkok Branch. We gathered that the pricing is set at 250 bps above LIBOR and the facility will be used to expand the company’s business in transportation, energy and infrastructure.

Thoresen Thai’s subsidiary Hermelin Shipping is currently in the process of acquiring Unique Mining Services (“UMS”) which is expected to be completed by mid December. The credit line will certainly come in handy if Thoresen Thai is able to make a full acquisition of UMS, estimated to cost at least THB 4.5 billion (USD 135.6 million). Established in 1994 and listed in the Market for Alternative Investment of Thailand since 2004, UMS is involved in the coal trading business through importing coal to the various industrial customers in Thailand. Continue Reading

Back to the Future – Genco’s New Credit Facility

On Monday, Genco Shipping & Trading announced it had received a bank commitment for a new $320 million senior secured amortizing term loan facility. Underwritten by Nordea Bank Finland Plc, Bayerische Hypo- und Vereinsbank AG, Sumitomo Mitsui Banking Corporation and DnB NOR Bank ASA, the five year facility is subject to definitive documentation.

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