Who Got the Better Deal?

Last week, the settlement agreement, between entities controlled by U.S. Shipping L.P. (“USS”) and Blackstone/Cerberus, with respect to the joint venture to finance, construct, own and manage U.S. flag product carriers, was made public in court filings. We would venture to say that it is impossible to determine whether either company got fair value for its investment, other than to say the settlement was negotiated in good faith with the intervention of a mediator. It is worth noting that the debtor, USS, had little leverage, given its minority interest and bankruptcy status. Moreover, it is currently hard pressed to finalize its reorganization and pre-packaged exit from Chapter XI. The Blackstone/Cerberus parties, on the other hand, have the controlling interest and deep pockets and ended up assuming USS’s interest in the partnership, as we will detail later on.

In the case of Blackstone/Cerberus, the admonition of being careful for what you wish for comes to mind. Substantial dollars have already been invested and lent into the now 100% controlled joint venture which now requires increasing amounts of capital to complete the remaining three ships. Two ships, delivered this year, are currently operating in perhaps one of the worst markets for the Jones Act sector in recent memory and the prospects do not look promising. The third delivers in December and will be followed by the last two in 2010. This could be a veritable money pit.
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DnB NOR Chief Bullish Expansion Set – Lending Grows

It is always a pleasure to hear from someone with a fresh and confident outlook, and such was the happy occasion when the Norwegian American Chamber of Commerce presented Rune Bjerke the Group Chief Executive of DnB NOR at an early evening, late summer event in New York. Mr. Bjerke joined the Bank leaving the successful Hafslund ASA where he was CEO. And as he noted the switch to banking left some of his friends perplexed it was the sort of challenge that appealed even though his start date approximately coincided with the start of the Sub Prime crisis.

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US Shipping: An Advisors’ Dream!

While the shipping industry enjoys a remarkable period of prosper­ity, in a tiny corner of the world chaos appears to reign for the moment.

The small chaotic corner we refer to is the U.S. Flag community, where teams of lawyers are as important as a strong balance sheet, and the right shipyard, political and labor relationships are as fun­damental to a CEO’s skill set as shipping market expertise.

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