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Risk Off? – Frontline Closes within its Self-Imposed Deadline
While not a joyous conclusion to the year, the announcement of the successful completion of the restructuring of Frontline does at the very least bring a sigh of relief to all the parties involved. While we have covered the details of the transaction in prior issues, we would highlight the following key elements.
The newly formed “risk” tanker company, Frontline 2012 acquired five VLCC newbuilding contracts, six modern VLCCs, including one time charter and four modern Suezmax tankers from Frontline for $1.121 billion based upon fair market values. In addition, the new company assumed $666 million in debt associated with the vessels and newbuilding contracts as well as $325.5 million in remaining newbuilding commitments. Based upon a year-end book value of $1.428 billion, Frontline will incur a book loss of $307 million.
Resurrected – TBS Deleverages
On Wednesday, TBS International plc announced agreements with its bank lenders on terms to reduce its leverage. TBS and its main bank syndicates led by Bank of America and DVB Group Merchant Bank have agreed to exchange the current outstanding senior debt for new senior debt and equity. The terms provide for the full repayment of the amounts owed to the syndicates over a significantly extended maturity period, while keeping current management in place. TBS’ other lenders Credit Suisse and AIG have agreed on similar terms. The transaction led by The Royal Bank of Scotland was concluded with the bank agreeing to accept redelivery of the six collateral vessels in exchange for a full release of all amounts owed to that syndicate. Unfortunately, the terms of these agreements do not provide for any residual value in the common and preferred equity. We suppose you can call this a negotiated pre-packaged bankruptcy without the courts and the expense.
New Sevan Successfully Places Shares
On Monday, Sevan Marine ASA announced that its offering and listing of up to 21,037,428 shares was fully subscribed. At an offering price of NOK 6.70/share gross proceeds raised were NOK 149,950,768 or approximately $25 million. Proceeds of the offering will be used for near term liquidity and general corporate purposes.
Part of the restructuring of the company, these shares were directed to former shareholders of Sevan and the unsecured bondholders who received unsecured bondholder shares in the unsecured debt conversion. This offering also provides for the listing of the directed placement of 21,047,276 new shares towards an affiliate of Teekay Corporation for NOK 141 million and the 5,261,595 new shares already issued pursuant to a conversion of the 14% Sevan Callable Senior Unsecured Bond Issue 2010/2014.
With a Little Help from Your Friends – SinOceanic Shipping ASA’s Parent Steps into the Void
Earlier in the year, SinOceanic Shipping ASA (“SINO”) announced the acquisition of three 13,100 TEU container vessels, the MSC Vega, MSC Altair and MSC Regalus together with 15-year time charters to MSC. The vessels are scheduled to be delivered from Hyundai in January, February and April 2012 respectively. The three vessels were purchased en bloc for $464.8 million, with $58 million in pre-delivery and deposit installments financed through shareholder loans from SINO’s sponsor and largest shareholder, Oceanus International Investment AS, a company owned by HNA Group Co. Limited, who is the ultimate beneficiary of a 33.33% shareholding in SINO.
Funding on Call – Navios Acquisition Taps DVB
Earlier this month, Navios struck again. Utilizing its financial prowess, the Navios team again accessed the bank market for the funding of two newbuilding LR1 product tankers, under construction at Sungdong Shipbuilding, with delivery in Q4 2012 and Q1 2013. The new term facility for up to $51 million, to be drawn in two advances, was provided by DVB Bank to Navios Maritime Acquisition Corporation.
Step One Complete – Frontline 2012 Equity Sold
In an upsized offering, Frontline 2012 Ltd concluded a private placement to a small group of large institutional investors of 100 million new shares priced at $2.85/share raising gross proceeds of $285 million in excess of the original $250 million contemplated initially. Of the shares sold, Frontline Ltd was allocated 8.71 million shares representing approximately 8.8% of Frontline 2012. Frontline’s main shareholder Hemen Holdings, controlled by John Fredriksen, was allocated 50 million shares or half the offering.
Kirby Expands & Consolidates
Last week, Kirby Corporation announced that it had acquired the coastwise tank barge fleet of Seaboats Inc. consisting of three 80,000 barrel tank barges and tug units for $42.3 million in cash. With an average age of five years, the barges, which are sisters to the four Kirby currently operates, and the tugs currently operate along the East Coast. Kirby financed the purchase by drawing down on its $250 million credit facility.
Why Own When You Can Lease – Sourcing Alternative Financing for PB Offshore I DIS
Currently circulating in the market is an interesting Norwegian silent partnership from R.S. Platou Finans involving the acquisition of an AHT under an 8.5 year bareboat hire/purchase structure and the subsequent chartering out of the vessel to Petrobras. Platou has established PB Offshore I DIS (“PB1”) with Vestland Marine S.P. z.o.o. as the disponent owner and technical manager of the project with a 10% ownership interest.
PBI has agreed to bareboat charter-in the Anglian Princess, a 16,500 bhp AHT built in 2002 in China. Owned by the JP Knight Group Ltd, the vessel has just been redelivered from a ten year contract with the UK Coastguard. With a charter-free value of $21 million, the vessel will be chartered-in “as is” by the partnership, which will undertake, together with the technical manager Vestland, the modification work necessary to comply with the Petrobras’ tender requirements. Once completed, the vessel will be delivered to Petrobras under a four option four year time charter. Petrobras intends to use the vessel for tanker offloading support
An Old Hanseatic Tradition – Komrowski and E.R. Capital to Merge
Yesterday, Komrowski Holding and E.R. Capital Holding announced their plans to merge their shipping activities. The combined company will operate 162 ships of around 9.4 million DWT, which will make it Germany’s largest shipping company in terms of fleet capacity. The combined fleet will consist of 120 containerships, 25 bulkers, 13 offshore vessels and 4 multipurpose vessels.
Transocean goes All-In Raising $1.08 billion in Equity and $2.5 billion in Debt
During the last days of November, Transocean Ltd re-jiggered its balance sheet through an equity follow-on offering and the issuance of serial bonds. First up was the follow-on offering for 26 million shares with a green shoe of a further 3.9 million shares. The offering was priced, through an accelerated bookbuilding process, at $40.50/share (based upon an exchange rate of CHF 0.9215/USD), a discount of 11.8% from the prior day’s closing price when the offering was announced. Proceeds of the share offering will be used to partially re-finance the company’s acquisition of Aker Drilling ASA, which was originally financed from cash and assumption of Aker’s outstanding debt. The replenished cash will be applied to the expected repurchase of approximately $1.7 billion of its 1.5% Series B Convertible Senior Notes due 2037 that holders may require it to re-purchase in December 2011. Barclays Capital and Credit Suisse acted as joint book-running managers of the offering.
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