FPSO Cidade de Paratay Contracted and Financing Arranged

Last week, a joint venture comprised of SBM Offshore N.V., Queiroz Galvao Oleo e Gas S.A. (“QGOG”), Nippon Yusen Kabushiki Kaisha (“NYK”) and ITOCHU Corporation announced that it, together with QGOG, had entered into 20-year charter and operating agreements with BM-S-11 Consortium, owned 65% by Petrobras SA (Operator), 25% by BG Group, and 10% by Petrogal Brasil Ltda, for the operation of the FPSO Cidade de Paratay on the Lula Nordeste field. This field is located in block BM-S-11 in the Santos basin in the pre-salt area offshore Brazil in water depths of 2,100 meters.

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Marrying the Bankers’ Greatest Nightmare with the Advisors’ Dream – Omega Navigation Files Chapter 11

Last Friday, after the markets closed, Omega Navigation Enterprises Inc. announced that it along with certain subsidiaries had filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The filing seeks protection for the publicly listed company and all of its 100% owned vessel owning companies. Excluded from the filing is the company’s technical vessel manager, Omega Management, Inc. as well as two subsidiaries which hold part interests in five on the water vessels and two newbuildings under construction.

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K-Sea Financing in Place – Kirby Taps Banks

On the last day of May, Kirby Corporation entered into a $540 million five-year unsecured floating rate term loan facility led by Wells Fargo, BofA Merrill Lynch and J.P. Morgan. Lenders include BTMU, Branch Banking & Trust Company, Compass Bank, RBS, U.S. Bank, Amegy Bank, Bank of Texas, Comerica, Keybank, Mizuho, Northern Trust and Royal Bank of Canada. Proceeds of the loan will be to provide financing for Kirby’s acquisition of K-Sea Transportation Partners L.P., with the amount drawn dependent on the final breakdown of the merger consideration between stock and cash.

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Talent Finding New Homes!

Dahlman Rose & Co Add Powerhouse Chairman
Well know financier Kim Fennebresque has joined Dahlman Rose as the firm’s Chairman.  The move continues the investment bank’s enormously successful development built on commitment to client service, top shelf independent research and superior personnel recruitment over the past half dozen years.  In fact the current move should accelerate the firm’s growth and strengthen it’s already considerable platform.

Mr. Fennebresque joins Dahlman Rose after a distinguished career, which started at The First Boston Corporation in 1977.  His career path since then could be used as a business school model for just how to gain valuable experience, contacts and skills needed to lead a successful investment bank. Mr. Fennebresque left First Boston in 1991 to join Lazard Freres as a General partner where he remained until joining UBS to lead that bank’s Mergers & Acquisitions and Corporate Finance departments.

Then in 1998 he joined SG Cowen, the US subsidiary of Societe Generale.  He served as President, CEO and Chairman for most of his tenure at Cowen.  It was that sort of reputation which led the US Treasury to ask him to join the Board of GMAC.
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Precious Shipping

It may not be fresh news anymore, but we thought it would be interesting to take a closer took at Precious Shipping’s USD 250 million featured among Dealogic’s Top 15 Shipping Loans in 1Q2010. In January, Thailand’s dry bulk shipping company Precious Shipping secured a new USD 250 million secured term loan facility with a syndicate of lenders comprising Bank of Tokyo Mitsubishi UFJ (“BTMU”), Bank of Ayudhya, Kasikornbank, Export-Import Bank of Thailand and Thanachart Bank, making this possibly the second largest shipping loan in Asia in 1Q2010. This transaction was led by BTMU’s team in Singapore, which demonstrates the bank’s strategy in using Singapore as a platform to widen its geographical reach.

Precious Shipping will be making use of the loan facility to finance up to 60% of the dry bulk ships (details in the accompanying table). The company has recently concluded its plan to sell its oldest 25 ships and is in the process of rejuvenating its fleet by acquiring younger and bigger vessels. In addition to the two second-hand ship purchases, Precious Shipping has contracted 18 brand new ships at ABG Shipyard in India and signed long term charter contracts for three cement carriers. Continue Reading

Bank Debt Returns to Normalcy?

One of the major concerns on the minds of many would be the pile of toxic collateralized mortgage paper that remains on banks’ balance sheets and this will continue to restrict the banks’ ability to extend new credit. Likewise, shipping banks face the same tricky task of valuing the shipping assets on their books based on current market prices. Basel II requires banks to set aside more capital to riskier assets whenever the security cover reduces, and this could potentially limit capital for lending. The process of writing down book values has yet taken place and moving forward, it is absolutely crucial that bank losses on shipping remain limited or the industry could risk losing a number of lenders. There has already been a material contraction in ship lending capacity among major shipping banks.

2009 has been a busy year for the ship financiers, not so much for lending but more in terms of restructuring and workouts. Lending terms as one would expect have become more stringent in 2009 and not only has the advance rate been lowered to 50-60%, banks prefer shorter tenors between 3 and 5 years. This is in stark contrast to the 10 to 12 year tenors banks were offering shipowners during the shipping boom just a couple of years back. Bankers call this a return to basics. Continue Reading

Step Up Asian Banks

As we fill in our deal tables week after week, we note that anecdotal evidence points towards local banks increasing their financial support to their domestic clients. In Thailand, Thoresen Thai Agencies (“Thoresen Thai”) has secured a USD 200 million three year term loan from a syndication of mainly Thai banks – Kasikornbank, Krung Thai Bank, Export-Import Bank of Thailand (“EXIM Thailand”) and Mizuho Bank, Bangkok Branch. We gathered that the pricing is set at 250 bps above LIBOR and the facility will be used to expand the company’s business in transportation, energy and infrastructure.

Thoresen Thai’s subsidiary Hermelin Shipping is currently in the process of acquiring Unique Mining Services (“UMS”) which is expected to be completed by mid December. The credit line will certainly come in handy if Thoresen Thai is able to make a full acquisition of UMS, estimated to cost at least THB 4.5 billion (USD 135.6 million). Established in 1994 and listed in the Market for Alternative Investment of Thailand since 2004, UMS is involved in the coal trading business through importing coal to the various industrial customers in Thailand. Continue Reading

A Noble Breed

Last week, our sister publication Freshly Minted reported on Maersk’s successful EUR 750 million (USD 1.3 billion) five-year bond. This was the shipping conglomerate’s first bond issuance, following a recent equity offering of USD 1.7 billion. In Asia, commodity trading house Noble Group has likewise found tremendous success in raising funds, suggesting that investors and bankers are getting warmed up to investing cash again. Continue Reading

Watson, Farley & Williams LLP Advises in High Profile KOGAS Project Financing

The Singapore office of Watson, Farley & Williams LLP (“WFW”) advised on the high profile Korea Gas Corporation (“KOGAS”) refinancing for three 1999 built LNG carriers.  The 138,200 cbm built LNG carrier “Hanjin Muscat” is on bareboat charter to Hanjin Shipping Co., Ltd, the 138,100 cbm built LNG carrier “SK Summit” is on bareboat charter to SK Shipping Co., Ltd. and the 135,000 cbm built LNG carrier “Hyundai Technopia” is on bareboat charter to Hyundai Merchant Marine Co., Ltd.  All three LNG carriers are operating under long term contracts of affreightment with KOGAS. Continue Reading

BTMU Supports Trada Maritime

Trada Maritime has successfully secured USD 35 million from Bank of Tokyo-Mitsubishi (“BTMU”) for the acquisition of new vessels this year. The Indonesian shipowner hopes to secure additional loans from another foreign bank and two Indonesian banks for more ship acquisitions. Local media reports also suggest that the company is planning to issue bonds worth 1.5 trillion rupiah (USD 150 million) next year for capex needs and has an ambitious plan to spend USD 315 million to purchase vessels over the next five years. Last September, Trada made its debut on the Indonesia Stock Exchange and raised Rp 500 billion (USD 54 million). The management’s ability to execute its expansion plan in today’s economic downturn will soon be put to the test.