N O L FINALLY SELLS AET

By Urs M Dür

[The following is an updated version of what appeared in Freshly Minted May 1st 2003. The conclusions are similar, but new numbers were provided and added to shed even more light on this substantial deal. – ED]

Singapore listed Neptune Orient Lines (NOL) finally, after years of trying to divest itself of its profitable Atlantic basin tanker arm, sold American Eagle Tankers (AET) to Malaysia International Shipping Corp. (MISC) for a total of $1 ,02 billion in equity ($445m), dividend funding $75m) and assumption of debt ($500m according to sources at NOL). NOL, losing over $220m last year and levered 84% debt to book at the end of ’02 (far worse, needless to say, debt/NAV), needed to do something and by our estimation got a big premium for the AET assets even if one includes the goodwill and franchise value associated with AET, about 202% of NAV. We go over our estimates below.

JPMorgan, specifically Michael Borch, was financial advisor to NOL and Citibank to MISC. Both banks, while it appears at this stage that NOL got the better of the deal just as the Aframax market is going to get blasted with a 9% supply increase in a falling market, deserve a huge amount of credit for getting a deal, which many said was politically unfeasible especially as the Malaysian government, via Petronas, and the Singaporean authorities, Temasec, respectively controlling owners of MISC and NOL, are known political rivals not usually willing to cut each other some slack. Really, bravo to both banks.

Written by: carisk | Categories: Marine Money | May 1st, 2003 | Add a Comment

CONSOLIDATION, ITS MAKIN ’ ME WAIT

In a notice to the Oslo Stock Exchange on 7th April, World Nordic ApS, a company that is held by and represents the Sohmen family has stated that the company has acquired 16,575,106 A-shares in Bergesen d.y. ASA, constituting the total number of shares previously held by cousins Petter C G Sundt and Morten Sig. Bergesen, at a price of NOK 180 per share. The sellers have sold on the condition that the buyer puts forward an offer to the other shareholders, based on the same price, adjusted for the proposed dividend of NOK 7 per share. Regardless, the Sohmen family holds more than 50% of the venerable Norwegian blue-chip flagship before the offer goes to the other shareholders.

The combination of the assets of the two shipping empires will make one of the largest shipping entities in the world that is also significantly diversified and most likely will become and remain a private corporation.

Or will it? Once this deal is complete and presuming that it is fully successful, one is right to speculate that the combined entity might try to raise equity on the US public markets under a new name and registered offshore. This may take time and will largely be dictated by the combined entity’s balance sheet but it is a possibility. A possibility that is also very likely some time down the road.

Written by: carisk | Categories: Marine Money | April 1st, 2003 | Add a Comment

NYSE Tankers Raise $1.64b 60 Days! (AET to come?)

By Urs Dür

The title depicts what was announced between mid-December 2002 and mid February 2003. It is a deceiving title but we had to catch your eye. Firstly it’s deceiving since much of what was announced has been long in development and/or is yet to be finalized. Secondly, and probably most importantly, it’s deceptive because the fundraising and acquisitions are not done yet, nor in our humble estimation, likely by a long shot.

Of course what we are referring to is Teekay’s (NYSE: TK) $800m acquisition of Navion in December and their $1 44m sub-debt convertible equity (PEP) announced and priced on Febrauay11th. We are also referring to General Maritime’s (NYSE: GMR) $525m acquisition of Metrostar’s existing assets at the end of January and Stelmar’s (NYSE: SJH) $177m purchase of Comninos’ controlled Target Marine’s 6 MR new- buildings on 10th February. The amount raised by these transactions in this period is approximately $1 .64billion, give or take a few million on the variables. The combined tonnage of the tanker deals – which have attributes that effect four different sectors of the tanker market including shuttle tankers, suezmax, aframax and product tankers – is about 4.05 million tonnes not including the chartered-in tonnage of Navion and its associated franchise value for TK. But these are anecdotal figures for the sake of measurement of scope, lets have some fun people!

Equally interesting is what has yet to happen. Most notably the quest to sell, on the part of Singapore listed Neptune Orient Lines (NOL), American Eagle Tankers (AET) is ongoing amidst what has become the soap opera backdrop of NOL’s trials and tribulations of massive losses in the non tanker sectors and the upheaval in its management. No less than five companies; Teekay, General Maritime, Overseas Shipholding Group (NYSE: OSG), Tsakos Energy Navigation (NYSE: TNP), Stena and Malaysian national carrier MISC are in the running for this $750m, 3m ton (or, as we say with a smile, $250/ton purchase). Most readers know that the potential sale of AET has been going on for years like a bad serial soap opera, but with the recent regime change within NOL combined with its massive losses and a good tanker market, we think that AET can be done this year and is likely done sooner rather than later.

Written by: carisk | Categories: Uncategorized | March 1st, 2003 | Add a Comment

Deal of the Year – 2002 M&A and Joint Ventures

In shipping charter parties, a good broker makes both parties feel that they have won the negotiation, while it is likely that both have yielded more than they would have at the start. In shipping M&A brokers and advisors too are involved, but, unless the deal is an obvious one between friendly parties, this “good broker” dynamic is often lost because the deals are done in a public forum.

2002 was a down year in shipping in general and while there were some notable successes this year, see below, just as notable was the abundance of big merger ideas that did not come to fruition. Think about what did not happen in 2002 (so far):