Diogenes – Soft Circled

The tanker glut and the charter rate recession are finally near their end! Or so Lehman Brothers Inc. apparently thinks. The New York-based investment bank expects the growth rate in tanker demand to exceed the growth rate in tanker capacity. It believes that, as supply and demand factors exert upward pressure on tanker utilization, charter rates and tanker prices will follow. Lehman has backed its beliefs by putting up $10 million in a private shipping mutual type fund. It also acts without a fee as the Exclusive Placement Agency and Advisor for a $150 million private placement by Diogenes Investments Ltd. (Diogenes). It has “put their money where their mouth is,” to coin an old phrase.

This offering is for “qualified institutional buyers” under Rule 144A of the US Securities Act, or qualified accredited investors. There is an extensive listing of what it takes to be a qualified accredited investor. An individual must have income in excess of $200, 000 currently as well as in the past two years. If he or she has a spouse and invests jointly, then it must be $300,000. An institution must be a bank, an insurance company, an investment company, a broker-dealer, a retirement plan, etc. The offering is for 150,000 preference shares at a price of $1,000 a pop. In addition to Lehman’s $10 million subscription, Diogenes anticipates receiving a subscription from Harvard Private Capital Group for $25 million. The fund’s other Managers – in the persons of Karl Meyer, former chairman of Marine Transport Lines, and Dr. Paul Eckbo, head of Marsoft, the macroeconomic shipping advisory firm – have also contributed $2 million. A minimum subscription of $75 million is required for its first closing. The minimum investment per investor is $5 million. So, with Lehman and Harvard, Diogenes is almost halfway there.

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