Summer is upon us and, while not as busy as last year, there is still quite a lot going on. This week Global Oceanic Carriers decided to call it a day for its public listing in London while Svithoid Tankers announced a rights issue in Sweden. Aries Maritime meanwhile concluded its review of strategic alternatives and chose to maintain its independent public listing. Bocimar announced a joint venture with Conti7 for six handysize newbuildings while the Shipping Corp of India entered into a JV with the state run Steel Authority of India. Double Hull Tankers rebranded itself and broadened its mandate with a name change to DHT Maritime, reflecting both the impending phase-out of any tankers that are not double hull and the company’s interest in timely and selective acquisitions that include vessels other than tankers. Speculation continues to flutter about the potential acquisition of Hapag-Lloyd by NOL from TUI for somewhere in the realm of $6 to $8 billion plus. Last but not least Bank of America signaled a recommitment to the shipping sector with the initiation of coverage on four shipping companies.
In a welcome turn of events, the market was resoundingly upbeat this week. The pace of transactions picked up notably across sectors, and we can’t help but view this as a positive sign for the financing market going forward.
On the M&A front Excel and Quintana successfully closed their merger. Each issued and outstanding share of Quintana common stock was converted into the right to receive $13.00 in cash and 0.3979 Excel Class A common shares. The merger creates a combined company that operates a fleet of 47 vessels with a total carrying capacity of approximately 3.7 million DWT and an average age of approximately eight years. Stamatis Molaris stepped into the role of CEO of the combined company, while Hans Mende, Corbin Robertson III and Paul Cornell joined its board of directors. We were happy to hear that the deal was executed smoothly. Moreover, Nordea and the underwriting team were successful in syndicating the debt levels required to make the deal possible – without needing to bring market flex provisions into play.
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carisk | Categories:
Freshly Minted,
The Week in Review | April 17th, 2008 |
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TBS International this week amended and restated its existing Bank of America facility dating back to the summer of 2006. They increased the deal from $140 million (of which $65m was revolving and $75m was in a term loan) to $267.5 million (of which $125m is revolving and $142.5m is a term loan). TBS will initially draw down the full $142.5 million available under the term facility to pay outstanding principal and interest due on its existing facility, pay closing costs and for general corporate purposes.
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While shipping stocks are no longer booming, the underlying shipping markets remain healthy. Jonathan Chappell and his team at JP Morgan are looking for near-record tanker rates at the end of 2007 to drive up 1Q08 EPS for tanker stocks and also believe that the tanker spot markets will hold up better than expected going forward. On the dry side, Urs Dür at Lazard sent out a note this week to correct common investor misunderstandings regarding the BDI, noting that it is not correlated to near-term world trade. He also expects Chinese iron ore price negotiations to be completed by March 2008, which combined with low inventories in China should lead to near-term improvements for dry bulk freight rates. Omar Nokta and his team at Dahlman Rose note that the tanker market could see some support as AG March cargoes come into the market this week while also observing that the dry bulk market has gained some positive momentum, though this has yet to be reflected in stock prices.
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carisk | Categories:
Freshly Minted,
The Week in Review | February 14th, 2008 |
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Newly public TBS International announced late last week that the company has entered into a $25 million credit facility with the Bank of America and immediately drew down $7.8 million secured by a mortgage on the Chesapeake Belle. TBS said that advances drawn down under the credit facility will be used for working capital and to fund the purchase of additional vessels. The five year deal has heavy amortization of 50% during the first 2 years, 40% over the subsequent 2 years and the final 10% during the final year. TBS said in the a filing with the SEC that it will have the option of paying interest at Adjusted LIBOR plus 2.75% or 1.25% over a Base Rate.
UBS Prices American Commercial Lines Bonds at 9.5%
As yet another startling example of the excessive amount of liquidity currently splashing around in the high yield bond market, formerly bankrupt American Commercial Lines (NASDAQ: AMCOV.PK) priced $200 million of bonds at 9.5% last Wednesday. Initial “price talk” for the deal was 9-5/8-9-7/8, but demand was so strong (6x oversubscribed) that the B3/B- rated transaction priced at 9.5%. Sole bookrunner on the deal was UBS (who also provided the company with its credit facility) and Bank of America served as co-manager.
Like the entire universe of marine-related high yield deals, ACL is already trading at 104, which brings the yield to worst down to 8.8%. The new bonds have a 10-year tenor and are non-callable for 5 years. Other extraordinary examples of successful shipping bond issuance and post transaction price tightening include CSFB’s deal for Ultrapetrol, Jefferies’ deal for Trailer Bridge, Jefferies/
Goldman Sachs deal for Hornbeck and UBS’ deal for Horizon Lines. Although the equity market has been receiving all of the headlines in recent months, largely due to where we are in the shipping cycle, the fact remains that high yield, especially when used to fund 100% acquisition cost, remains an incredibly cheap source of equity that, with today’s yield, is competitive compared to the German tax leasing market. Even deals with a CCC, or “triple hooks” rating, are getting done at phenomenally low rates.
What is particularly impressive about the deal is the valuation. Although ACL is leveraged 4x EBITDA, the fleet is comprised of barges that are toward the send of their useful lives. Therefore, the company will have to be very successful and aggressive in renewing their fleet or growing their business in order to meet the bullet refinancing that will occur in 10 years. The bonds are not the only instruments that are trading well. The company’s newly listed stock, which trades on the pink sheets, is trading at about $30, giving it a market capitalization of about $300 million.
As yet another startling example of the excessive amount of liquidity currently splashing around in the high yield bond market, formerly bankrupt American Commercial Lines (NASDAQ: AMCOV.PK) priced $200 million of bonds at 9.5% last Wednesday. Initial “price talk” for the deal was 9-5/8-9-7/8, but demand was so strong (6x oversubscribed) that the B3/B- rated transaction priced at 9.5%. Sole bookrunner on the deal was UBS (who also provided the company with its credit facility) and Bank of America served as co-manager.
Like the entire universe of marine-related high yield deals, ACL is already trading at 104, which brings the yield to worst down to 8.8%. The new bonds have a 10-year tenor and are non-callable for 5 years. Other extraordinary examples of successful shipping bond issuance and post transaction price tightening include CSFB’s deal for Ultrapetrol, Jefferies’ deal for Trailer Bridge, Jefferies/Goldman Sachs deal for Hornbeck and UBS’ deal for Horizon Lines. Although the equity market has been receiving all of the headlines in recent months, largely due to where we are in the shipping cycle, the fact remains that high yield, especially when used to fund 100% acquisition cost, remains an incredibly cheap source of equity that, with today’s yield, is competitive compared to the German tax leasing market. Even deals with a CCC, or “triple hooks” rating, are getting done at phenomenally low rates.
What is particularly impressive about the deal is the valuation. Although ACL is leveraged 4x EBITDA, the fleet is comprised of barges that are toward the send of their useful lives. Therefore, the company will have to be very successful and aggressive in renewing their fleet or growing their business in order to meet the bullet refinancing that will occur in 10 years. The bonds are not the only instruments that are trading well. The company’s newly listed stock, which trades on the pink sheets, is trading at about $30, giving it a market capitalization of about $300 million.
Written by:
carisk | Categories:
Bonds,
Freshly Minted | February 17th, 2005 |
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ACL to Issue $200 million in Bonds through UBS, Bank of America
Tugboat and river barge operator American Commercial Lines LLC has announced its intent to issue $200 million in 10-year, B3-rated bonds. The proceeds will be used to pay debt after the company emerged from bankruptcy protection on January 11. ACL is rated B2 by Moody’s and B+ by Standard & Poors, both with a stable outlook. The notes are set to price on February 8, with estimates in the range of 9%. UBS and Bank of America are managing the offering.
Tugboat and river barge operator American Commercial Lines LLC has announced its intent to issue $200 million in 10-year, B3-rated bonds. The proceeds will be used to pay debt after the company emerged from bankruptcy protection on January 11. ACL is rated B2 by Moody’s and B+ by Standard & Poors, both with a stable outlook. The notes are set to price on February 8, with estimates in the range of 9%. UBS and Bank of America are managing the offering.
Written by:
carisk | Categories:
Bonds,
Freshly Minted | January 27th, 2005 |
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