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52 Weeks of Shipping Transactions
Navios Comes Full Circle
Less than 10 days after making its first public F-1 filing, SPAC Navios Maritime Acquisition Corporation successfully priced its 22,000,000 unit IPO at $10.00/unit to raise gross proceeds of $220 million. The deal timetable was ultimately compressed and the deal well oversubscribed by a mix of SPAC investors, shipping fundamental investors, and those who have been following Navios. Units had traded up a half a percent at close today to $10.05 in pleasant contrast to the Dow’s 358 point fall.
The successful issue of the SPAC in itself is evidence of an improved market, and good news for First Class Navigation, which is understood to be currently in the market with a $125 million SPAC. However there is clearly more to it than that. More and more it’s been the “who” mattering as much as the “what” in shipping deals, and nowhere is this more important than a SPAC – where the “who” or the “jockey” is exactly the part of the deal investors bet on. Angeliki Frangou’s success with the International Shipping Enterprises SPAC and its subsequent Navios acquisition and her sharpened roadshow skills no doubt were major forces behind the deal’s success, particularly as both SPAC and shipping investors are familiar with her track record and her story.
As to the specifics of the deal, Navios Maritime Acquisition Corp (“NMAC”) is seeking to acquire one or more assets or operating businesses in the marine transportation and logistics industry, with a primary focus on businesses outside the dry bulk sector. Though some speculation has circulated regarding the use of NMAC as a way to spin out Navios’ logistics operations, the conflicts inherent between the two public companies are too deep to make such a deal attractive or likely, and it should be interesting to see what kind of target with which NMAC emerges.
JP Morgan and Deutsche Bank are acting as joint bookrunning managers on the offering, while S. Goldman Advisors is also participating. A 3,300,000-unit over-allotment option remains outstanding. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo and Fried, Frank, Harris, Shriver & Jacobson are acting as counsel to the underwriters while Reeder & Simpson is acting as counsel for the issuer.
Each unit in the offering consists of one common share and one warrant to purchase a common share at a price of $7.00. Sponsor Navios Maritime Holdings committed to purchase 7,600,000 warrants at $1.00 each simultaneous with the closing of the offering, amounting to a $7.6 million investment or about 3% of the company’s value. The sponsor is also making a $500,000 loan and will hold a 20% stake in NMAC. Backing up the deal’s credibility, NMH and NMAC CEO Angeliki Frangou entered into an agreement with JP Morgan and Deutsche Bank to place limit orders for up to $30 million of NMAC common stock to purchase any shares of our common stock offered for sale (and not purchased by another investor) at or below a price equal to the per-share amount held in our trust account as reported in our initial preliminary proxy statement filed with the SEC relating to the company’s initial business combination, until the earlier of (1) the expiration of the buyback period or (2) the date such purchases reach $30 million in total. She also agreed to vote all such shares in favor of NMAC’s initial business combination.
For a SPAC, of course, the IPO is just the beginning. Much like a private equity firm that has a new fund ready to invest, the real excitement should lie in the months (or year) ahead.
Transaction Report
As the conference season officially ends and the summer officially begins in the Northern Hemisphere, the deal market shows no signs of going on vacation. Angeliki Frangou successfully priced her second shipping SPAC in the US, the Oslo high yield market has picked up some of its lost momentum, and a certain Mr. Fredriksen continues to make sure the shipping deal market never gets too boring.
Faster Than a Speeding Bullet, More Powerful Than a Locomotive, and Able to Leap Tall Buildings in a Single Bound”
No, we are not talking about Superman, but if that was your guess you were close. In fact, we are referring to John Fredriksen, who may be, in financial circles, more powerful than Superman. On Wednesday, Frontline announced the acquisition of five suezmax tankers and the intention to partially finance them with a private placement of new shares. The private placement was successfully completed today in less than 24 hours.
The five double hull suezmax tankers were purchased en bloc at a purchase price of $240 million from Top Ships Inc. The vessels were built in the period from 1992 to 1996 and will be delivered between June and August 2008.
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DnB NOR Markets Takes Master Marine to Market for EUR 60 million Bond
After an unprecedented surge in Norwegian high yield volume from 2004 to 2007, the market, as with many debt markets, fell off dramatically in the first half of 2008. As oil prices continue to surge, however, offshore projects in particular have managed to attract investors and the high yield market for these deals in Oslo appears to be gaining some momentum, if at higher prices than in the not so distant past.
Clarification
Last week in our article on D/S Torm we were guilty of a number of errors, which are clarified below:
We misstated the differential in MR earnings between East and West. In fact, on a yearly basis the differential between the two basins is $2.7 million.
We deeply regret our statement that product carriers could not be built in China at this time. What was meant was that the new shipyards coming on stream in China will mainly build dry cargo vessels initially as tankers are too sophisticated to start-up with. There are a number of yards in China building product tankers.
With respect to dry cargo, Torm does intend to grow the model but to change and grow it in the present environment would be suicidal.
We deeply apologize for our errors.
Dresdner Loans
The German bank market was quiet for awhile as rumors suggested strained credit access was making both the economics and the execution challenging in the KG market. One by one banks have been signaling to the market that they are in full business. This week Dresdner Kleinwort announced that it had closed a $132 million financing for a Dr. Peters special purpose vehicle, Dr. Peters Younara Glory VLCC. Dresdner acted as mandated lead arranger on the 11- year loan while KfW IPEX-Bank, Dekabank and M.M. Warburg & CO all participated in the post-delivery and equity bridge financing for the VLCC Younara Glory.
Dresdner and Dekabank also recently closed an $84 million financing for MS Hellespont Trustful GmbH & Co. KG. The term loan financed the suezmax tanker Hellespont Trust.
DWT Goes Public
Someone had to grab this great ticker symbol and it was no other than Britannia Bulk Holdings Inc. With the assistance of Goldman Sachs and Banc of America Securities, as joint bookrunners, Britannia announced today that it was commencing an initial public offering of 8,333,333 shares of its common stock at a proposed offering price of $17 to $19 per share. At the midpoint, the gross pro-ceeds would be $150 million. Certain principals have granted the underwriters the right to purchase up to 1.25 million shares in the aggregate at the initial public offering price to cover over-allotments.
GulfMark Offshore Makes the “First Call
Last week, in what GulfMark’s Chairman David Butters termed a “transformational event”, GulfMark announced the acquisition of Rigdon Marine Corporation (“RMC”), a major operator of technologically advanced offshore supply vessels in the Gulf of Mexico. The RMC fleet of 28 vessels (21 on the water) includes next generation deepwater supply vessels, ultra modern crew and fast supply vessels. The combination will create an organization of over 2,000 employees and 90 vessels, capable of working in virtually all OSV markets, with an additional 16 vessels of several different designs scheduled for delivery through 2010.
The Kiran Holding $440 million syndicated loan Celebrated along Bosphorus
While shipping bankers in Norway at Marine Money’s Oslo event were expressing concern that bank funds should not automatically be counted upon in the current environment, Kiran Holding held a Gala Dinner celebration in Istanbul on Tuesday, 27 May 2008. Some 70 people attended. Guests enjoyed a cruise along the Bosphorus up to the trendy waterfront A’jia Restaurant on the Asia side, where banking support of shipping was very much in evidence. As we reported in FM last week, Kiran Holding signed one of the biggest syndicated loan deals in the history of the Turkish maritime sector, securing a $440 million facility with a most impressive syndicate of banks including: Bank of Tokyo-Mitsubishi UFJ, Calyon, Emirates Bank, HSBC, ING, Lloyds TSB, MashreqBank, Royal Bank of Scotland, Deutsche Shiffsbank Dekabank Deutsche Girozentrale, and Fortis Bank. Eurofin also acted as advisor to Kiran Holding.
According to Kiran Holding Vice President Tamer Kıran, the loan will be used to re-finance the Kiran Asya, a 2005 built 66,000-dwt vessel, and the 29,000-dwt Zeynep Kiran, which was built in 2001. The remainder of the loan will be used to cover the expenses of six newbuildings the Group has ordered from shipyards in China. The loan also provides $100 million in performance guarantees.
Commenting to the gathering of bankers and friends, Kiran Holding Vice President Mr. Tamer Kiran, “I would like to thank [our banks], which have all trusted both in us and our project and participated in this magnificent deal. A deal which proves that even under the current difficult credit conditions of the industry, good projects of good companies can still be financed by committed shipping banks.”
Mr. Lambros Varnavides, Managing Director, The Royal Bank of Scotland Plc, who could have been speaking for all the banks, stated, ” Kiran Holdings is set to be one of the biggest Turkish shipping powerhouses”
Marine Money notes with fondness the age-old story of the company’s origins, a story that can be seen in the best shipping companies all over the world, and that even at a moment of corporate achievement need not be forgotten.
Turgut Kiran, Honorary Chairman, told the audience, “My father was a much loved and highly esteemed mariner. Having lost him at a young age, I grew up listening to stories about him. Perhaps, this is why I was drawn to the marine world. Our children have learned the business well. We started in 1959 with 2-3 people and today we have 1,500 employed”
The theme is important to shipping worldwide as it evolves for the future. Mr. Kiran added, “Kiran Holding has always been committed to modern corporate values; with its strong determination of moving forward and achieving the best at all times and under all circumstances. Our foremost purpose is to create a more institutional, professional and higher level grounds for future generations as one of the leading brands in the Turkish marine sector.”
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