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New Sevan Successfully Places Shares
On Monday, Sevan Marine ASA announced that its offering and listing of up to 21,037,428 shares was fully subscribed. At an offering price of NOK 6.70/share gross proceeds raised were NOK 149,950,768 or approximately $25 million. Proceeds of the offering will be used for near term liquidity and general corporate purposes.
Part of the restructuring of the company, these shares were directed to former shareholders of Sevan and the unsecured bondholders who received unsecured bondholder shares in the unsecured debt conversion. This offering also provides for the listing of the directed placement of 21,047,276 new shares towards an affiliate of Teekay Corporation for NOK 141 million and the 5,261,595 new shares already issued pursuant to a conversion of the 14% Sevan Callable Senior Unsecured Bond Issue 2010/2014.
Batten Down the Hatches – Hoegh LNG Finds It Isn’t that Easy
Despite being the hottest sector in shipping, Hoegh LNG Holdings Limited encountered headwinds in its initial public offering. The company hoped initially to sell 15-25 million shares at a price range of NOK 38 to 54 in order to raise gross proceeds of approximately NOK 810 million to NOK 945 million ($198-282 million). As part of the offering, which consisted of an institutional tranche, a retail piece in Norway and an employee offering in Norway, Leif Hoegh & Co. Ltd, the parent agreed to subscribe for up to $20 million worth of shares to maintain a minimum 55% interest post-IPO and over-allotment option. For further details, see the Guts of the Deal below.
More Gas – Hoegh LNG files IPO
Last week, Hoegh LNG Holdings Ltd. (“HLNG”) began the IPO process. The company intends to sell 15-25 million shares with a 10% green shoe. Using the targeted price range of NOK 38 to 54, gross proceeds of NOK 810 million to 945 million ($198-282 million) are anticipated. In Norwegian fashion, the offering will consist of an institutional offering, a retail offering in Norway and an employee offering in Norway. In order to maintain an ownership position of a minimum of 55% post-IPO and overallotment, the company’s parent, Leif Hoegh will subscribe for $20 million in the aggregate of shares. Proceeds of the offering will be used to partially finance two 170,000 cbm Floating Storage and Regasification Units (“FSRU”) which will be delivered in 4Q 2013 and 1Q 2014 at an estimated delivered cost of $550 million. In addition the company has arranged a loan to daughter company, Hoegh LNG Limited, which it will guarantee, in the amount of the lesser of $272 million or 50% of the contract price of each FSRU, plus project costs of $25 million. Financial covenants include minimum equity of $200 million, minimum combined cash of $20 million before delivery of the first vessel declining to $15 million thereafter, positive working capital at the guarantor and minimum value clause equal of not less than 135% of the outstanding. After delivery, the loan term is three years based upon a 15 year amortization to a balloon. In terms of cost, there is an upfront fee of 130 bps, a margin of 300 bps and a commitment fee equal to 40% of the margin. This is just the beginning. The company also has options for 1 + 1 + 2 additional FSRUs. More details on the offering are shown below in the Guts of the Deal.
Buying Shares – Seadrill and Golar LNG Buyback Shares
The Fredriksen companies have been busy buying shares lately as a result of certain triggering events. In the case of Seadrill, the parity value of the five year convertible bond issue due in 2012 exceeded 130% of par value for at least 20 days out of a period of 30 consecutive trading days allowing Seadrill to redeem the bond at par plus accrued interest. This, in turn, will likely result in the bondholders exercising their conversion rights. Of the original $1 billion, there is $749.5 million in bonds outstanding. Should all the bondholders convert all the remaining bonds at the $27.80 conversion price (Wednesday’s closing price was $33.59, making the exercise a no brainer), Seadrill will have to issue approximately 27 million new shares. In order to reduce the total outstanding number of shares, Seadrill began to repurchase shares and has since acquired 1.65 million shares at an average price of NOK 184.11 bringing its holdings of treasury shares to approximately 1.8 million.
Like the Energizer Bunny, Sevan Drilling’s IPO Keeps Going and Eventually Succeeds
In early April, Sevan Drilling ASA, a wholly owned subsidiary of Sevan Marine ASA (“Selling Shareholder”), announced a global offering of its shares of up to NOK 3,270 million (~$595) by way of a combined secondary offering of existing shares by the Selling Shareholder and a primary issuance of new shares. The offering would consist of an institutional offering, a retail offering to Norwegian investors and an employee offering. The share price is to be established through a book building process for the institutional offering. Based upon an expected price range of NOK 16-21 per share, the company expected a primary issue of up to 120 million new shares (~$350) and 64 million secondary shares (up to ~$245 million).
NOCC Fills Coffers with Private Placement of Shares
Last week, Norwegian Car Carriers successfully concluded the bookbuilding process for the private placement of equity, which was oversubscribed. The company issued 33.783 million new shares at a price of NOK 3.70/share raising gross proceeds of approximately NOK 125 million. Proceeds will be used for acquisitions and general corporate purposes. The transaction was managed by ABG Sundal Collier and RS Platou Markets.
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The Next Best Great Thing
Based upon all the activity in Norway, the harsh environment is the flavor of the moment. Just in the past few weeks, equity offerings for Aker Drilling and Discovery Offshore are in process or were just concluded. Not to let a good thing go by, Mr. Fredriksen decided to create a new drilling company focusing entirely on harsh environment operations, which has been named North Atlantic Drilling Limited (“NADL”) reflecting its chosen operating area in the North Atlantic Basin. Seadrill Limited will spin off six of its nine harsh environment units into the new company. NADL’s new fleet, with an average age of 11.2 years, will consist of 3 semi-submersibles, 1 drillship and 2 jack-ups, one of which will deliver next quarter. All but the newbuilding are currently working in Norway. A seventh unit currently in the final stages of negotiation will also join the fleet when delivered.
Prosafe Bonds
Last week, Prosafe SE successfully issued NOK 500 million of five-year floating rate bonds, priced at three-month NIBOR + 3.50%. The issue was substantially oversubscribed and was priced at par. Proceeds are to be used for the partial refinancing of the outstanding bond PRS03 due in March 2012 and for general corporate purposes. In fact, in connection with the offering Prosafe purchased $46.4 million of that security at par. ABG Sundal Collier and Pareto Securities acted as joint arrangers of the issue. More details are included in the guts of the deal below. Continue Reading
Skunked in New York, Success Outside
Having been unsuccessful in New York in its efforts to sell up to $400 million of ten-year senior unsecured notes in December, Ship Finance International Limited played it safe and stayed closer to home in its latest capital raising effort. The earlier effort, which was tied to a tender offer for its 8.5% Senior Notes due 2013, was stymied by weakening market conditions in the debt capital markets due to the sovereign debt issues in Ireland. Although investors pulled back from the new issue market, the Ship Finance story, we understand, was well received. In concluding our story, we wrote: “Now more than ever, in a world where information flows at the speed of light, it is not merely fundamentals that determine your future, but macro events as well. A quiet news week may be just what the doctor ordered.”
“The Market Is Hot” – The Theme of Yield Continues
While the action in bonds this week continued in Norway, New York joined the fray with Ship Finance’s latest offering. The beauty of Norway’s market is its speed and simplicity but Wall Street is the place for longer tenor dollar denominated deals such as Ship Finance’s ten year senior unsecured offering.
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