Golden Ocean: Every Deal Has A Price

We hear it all the time: a done deal is a good deal. Whether a company with an initial public or secondary offering is able to hit its target share price and quantity, or a company raising debt in the public markets can achieve its interest rate and deal size, the bottom line is to get the deal done. By way of example, last fall OMI Corp.’s prospectus detailed its plans to issue 12 million common shares at $8 each. The deal got done at $7 per share with 10 million shares issued. While it is easy to look at a $26 million drop in gross proceeds (equal to nearly 30% of the total dollar value raised), and declare the issuance unsuccessful, the bottom line today is that the stock has recently traded at over $12 per share. Similarly, while neither B+H Equimar nor Global Ocean were under the same financial pressure as OMI was, it is highly unlikely that the opportunity to get their hands on ten-year money would have precluded either of them from paying another 100 basis points for their money if that is what the markets demanded. Therefore, by our definition, irrespective of terms and conditions, Golden Ocean Group’s high yield offering was successful.

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