As readers of these pages know, the second quarter of 2005 was expected to be the most active 3-month period for raising shipping equity in history. The first quarter closed with the pricing of the Diana IPO, and everyone was set for lots of action – and then a funny thing happened: nothing.

March 30th rolled by and as we moved into the fabled 2Q05, no fresh deals came to market. There were a few filings made both confidentially and publicly, one as recently as this week, but no new deals have priced or gone on roadshows. At the same time, Diana stock crumbled below its offering price almost immediately, and Excel and DryShips share prices have deteriorated.

But now something really interesting has happened. News came out that B+H Ocean Carriers has hired Pareto to raise equity through an international offering, which excludes U.S. investors. The deal is not unlike the one that Pareto, which has proven itself to be the most powerful and hardest working firm of its kind in Oslo, did for Stolt Nielsen. It was Pareto, we believe, that orchestrated B+H’s recently purchase of 3 OBOs that are chartered to Sempra, one of which was done through a K/S fund.

So what does this mean? B+H is no stranger to Oslo. Although the company is based in Rhode Island, it has strong ties to Norway, with an office there run by Sverre Ditlev-Simonsen and most a large proportion of banking done with Nordea. But what is interesting about this deal is the fact that such an offering, using Reg F, may be a way for foreign private issuers to raise equity capital more quickly. Moreover, there are loads of capital in Europe looking for deals that are not U.S.

Another potential scenario is that B+H has found a strategic partner that wants a listing in the U.S. and seeks to accomplish this by acquiring a substantial, perhaps even a controlling, interest. If rumors of a $100 million offering are accurate, it would mean that Michael Hudner, who controls more than 75% of the company, would dilute his interest to below 50% as B+H currently has a market capitalization of about $95 million. The move has the potential to make a lot of sense for both parties, as B+H, even with more than half its EBITDA contracted for the next 12 months and beyond, has an older fleet that needs to be renewed.

Whether B+H is selling to financial or strategic investors, the increase in liquidity and dry powder for dealmaking can only be a huge positive for the company.

B+H Ocean Carriers announced on Wednesday that it has now taken delivery of all three mid-1990s, double hull combination carriers that it had agreed to acquire for $110.2 million. Each of these vessels was simultaneously delivered to Sempra Energy or Glencore, the major oil companies with which they have 5-year time charters. Here’s where it gets interesting; B+H specified in the press release EBITDA for the next 12 months at the level of $48-50 million. The depreciation cost is set to be $13.1 million over this period and interest expense to be approximately $3.4 million. These expenses subtracted from $49 million, the midpoint of the expected EBITDA range, yield earnings of 32.5 million over the next 12 months. This boils down to roughly $8.00 per share, implying that B+H is selling at a price to earnings multiple around 3x, about 35-40% over the industry average. Although many of the company’s tankers will be phased out in the coming years, the important thing is that their earnings are virtually guaranteed, with 98% of the fleet’s vessel days fixed through March 2006. For investors who believe the company can continue to do good accretive deals that lower the age of fleet, this company is a good bet.

B+H Gets Back in the Game

B+H Ocean Carriers (AMEX: BHO), the Rhode Island-based owner of vintage product tankers, has emerged from the shadows with a very interesting transaction this week. The company has purchased three mid-90’s-built double-hull OBOs from Christen Sveaas for $110.2 million, bringing their total OBO fleet up to 4 units. Upon the delivery of the vessels in March, they will go immediately onto five-year time charters to what we understand is a major energy company. This deal is somewhat reminiscent of the one that General Maritime did with Glencore on its OBOs last year. The appeal to the charterers is that the ships can carry “energy cargoes, both wet and dry, comprised principally of fuel oil, clean petroleum products and coal,” B+H said.

B+H Ocean Carriers (AMEX: BHO), the Rhode Island-based owner of vintage product tankers, has emerged from the shadows with a very interesting transaction this week. The company has purchased three mid-90’s-built double-hull OBOs from Christen Sveaas for $110.2 million, bringing their total OBO fleet up to 4 units. Upon the delivery of the vessels in March, they will go immediately onto five-year time charters to what we understand is a major energy company. This deal is somewhat reminiscent of the one that General Maritime did with Glencore on its OBOs last year. The appeal to the charterers is that the ships can carry “energy cargoes, both wet and dry, comprised principally of fuel oil, clean petroleum products and coal,” B+H said.