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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.”
GulfMark to Acquire Rigdon Marine
GulfMark Offshore, Inc. (NYSE:GLF) today announced it had entered into a definitive purchase agreement to acquire Rigdon Marine Corporation (RMC), a major operator of technologically advanced offshore supply vessels. The purchase will add the RMC management team, an experienced group of mariners and a fleet of modern vessels designed to support the expanding demand in the deepwater Gulf of Mexico
Trico Makes $810 million Bid for DeepOcean
Last week Trico, which only relisted in 2005 after undergoing a restructuring, announced the acquisition of 51.5% of Oslo listed DeepOcean and the intent to offer NOK32 per share for all remaining shares, valuing the company at $810 million. The offer price represents a 28% premium to DeepOcean’s May 15 closing price of NOK 25 per share, an amount that can be taken as a sign of strong interest by Trico in making a complete acquisition. Correspondingly DeepOcean’s management and board have recommended the offer to their shareholders.
Transaction Report
It was great news for the equity markets this week when Safe Bulkers got out its Merrill Lynch and Credit Suisse- led IPO. While the deal did price $1.00 below its $20-$22 target range, it’s been so long since we’ve seen any shipping IPOs that the very fact of a new deal getting done is a good sign. But the real interest this week was in the oil market, and Marine Money could not have asked for a better time to host its 10th annual Norway Ship & Offshore Finance Forum. The gathering was full of those hearty souls that will shape the next generation of oil production and discovery, financing and building machines to pull oil out of 12,000 feet of water, through thousands of miles of crusted salt, and anywhere else it can be found. The gathering formed the epicenter of the activity that is the focus of the better part of the world’s citizens.
US Shipping: An Advisors’ Dream!
While the shipping industry enjoys a remarkable period of prosperity, in a tiny corner of the world chaos appears to reign for the moment.
The small chaotic corner we refer to is the U.S. Flag community, where teams of lawyers are as important as a strong balance sheet, and the right shipyard, political and labor relationships are as fundamental to a CEO’s skill set as shipping market expertise.
Double Hull Tankers Follows On
April was certainly the month the shipping equity markets sprang back to life – at least for follow-on offerings. Seaspan (SSW) was out first on April 10 with an offering that raised nearly $240 million, followed by Teekay LNG (TGP) on April 17 with a $165 million offering. Then this week Double Hull Tankers (DHT) saw the positive trend and took the opportunity to position themselves for future acquisitions by raising $84 million with the offering of 8,000,000 shares at $10.50 per share in a deal led by Merrill Lynch and UBS with Dahlman Rose also acting as an underwriter. The offering was upsized by 1,000,000 shares on the back of strong institutional demand, though it priced at a relatively steep discount of 12% to where the shares were trading when the transaction was announced just one day before. The accompanying graph shows how the price performance of SSW, TGP and DHT post offering announcement compare. Continue Reading
Neptune Offshore
Norway and the offshore industry, at least from the perspective of finance, have become synonymous and Pareto Private Equity (“Pareto”) has played a key role in this development. This week Pareto announced the successful private placement of equity on behalf of Neptune Offshore AS and Neptune Subsea IS, a Norwegian partnership similar to a K/S, with private and institutional investors. The deal was placed in the Norwegain market and sold quickly. The capital raised ($25 million) on behalf of Neptune Offshore will primarily be used to acquire a controlling equity interest in Neptune Subsea IS which will be the contracting party for two Ulstein SX 130 design multipurpose offshore vessels to be built at Sinopacific Shipbuilding in China for delivery in the 1st and 2nd quarter of 2010. To pay for the newbuildings, Pareto raised an additional $50 million together with a $25 million shareholder guarantee on behalf of Neptune Subsea. The investor group included both hedge funds and strategic investors all of whom have long experience in the offshore industry.
Defensive Maneuver?
While some companies issue new debt, others refinance. OSG announced on Tuesday that it would redeem all $176.11 5 million outstanding of its 8.25% senior notes due 2013 at a price of 104.125%. We expect that the lower interest rate will offset the premium paid.
The timing of this buy-back is interesting in light of Frontline’s recent share purchase. The resulting increase in share price presumably makes the share buy-back program less attractive. And, assuming that the redemption is funded partially by OSG’s cash on hand, does the reduction in cash make a potential acquisition more costly for the acquirer who would have had access to that cash in order to fund the purchase? On the other hand, one can counter this argument by saying the removal of this expensive debt makes the company more attractive on an overall basis. All we can do is sit by the sidelines and watch these grandmasters’ next moves in this exciting game of chess.
Lauritzen Kosan and Tailwind in JV
With loan to value ratios falling substantially faster than vessel prices, it’s more important than ever for owners with ships on order to come up with creative ways to source additional equity. Lauritzen Kosan has been successful in doing just this with five of the 15 newbuildings it has on order. It was reported this week that the company has formed a 50/50 joint venture with Bergen-based lessor Tailwind. The joint venture company, LKT Gas Carriers, took delivery of its first vessel this year. By 2010 it is to take delivery of a total of five ethylene/LPG carrier newbuildings ranging from 8,000 to 9,000 cbm. The ships will be flagged in Singapore and commercially operated by Lauritzen Kosan.
Spring Awakening (with apologies to the Broadway show)
After being in hibernation or at least in the doldrums, the finance markets are showing signs of activity this week. First out of the blocks, Seaspan gave a double barrel blast. Last Friday, Seaspan announced it had entered into a new term loan facility in the amount of $235.3 million to finance the acquisition of two of its previously acquired 13,100 TEU vessels. The facility was fully underwritten by Sumitomo Mitsui Banking Corporation at a weighted average rate of 0.70% over LIBOR. It is important to emphasize the fact that it was fully underwritten and that the rate, albeit low, was above their historic average weighted cost of below 0.60%. Moreover, Seaspan notes that they now have sufficient credit agreements, with locked-in attractive rates, to fully fund the company’s debt requirements for the entire contracted fleet of 68 vessels while leaving an incremental $550 million in immediate liquidity to capitalize on acquisition opportunities.
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