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Middle East Meets West – Leasing Award West

Nominations in this category were few and far between. Whether it was a conspiracy of silence or largely quiescent KG and K/S markets, we are not sure. Also limiting leasing activity was the inability to raise leverage, which meant equity returns were not sufficiently inspiring to attract investors. However Pareto proved both assumptions wrong in putting together a noteworthy transaction with Havila. In this instance, Havila wanted to control two 4,900 DWT PSVs that were for sale from the owner who contracted them. An outright purchase was difficult for Pareto due to its substantial orderbook and the resulting stretched banking relationships. Pareto solved the problem by structuring a K/S that would acquire the two vessels with a project cost of NOK 740 million and bareboat charter them to Havila for eight years. The financing consisted of an equity raise of NOK 180 million and senior debt of NOK 470 million shared between DVB and the Norwegian export credit agencies, GIEK and Eksportfinans. And lastly Pareto provided a mezzanine piece of NOK 90 million. In defense of our thesis on a lack of bank debt, we would note it is a lot easier to arrange bank debt with ECA credit support and a subordinated loan underneath. For the investors, the projected IRR was 20%, an attractive return for this structured deal.

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Written by: | Categories: Deal Of The Year Awards, Marine Money | February 1st, 2011 |

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