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Reverting to the Mean?
Last week, Dealogic published its Bookrunner and MLA Tables for Syndicated Marine Finance Loans for the first half of 2011 and while growth is clearly evident, there is a noticeable defining trend. The offshore services sector, given its strength and capital requirements, is taking on a far more meaningful role.
On Hold
Yesterday, Prosafe Production extended its letter of intent to sell its turret and swivel business to National Oilwell Varco (“NOV”). As a consequence of BW Offshore’s voluntary offer to acquire all the outstanding shares of Prosafe, NOV had requested the extension until after the offer had been concluded and the future ownership structure clarified.
The Big Squeeze – Dealing with Prosafe’s Recalcitrant Shareholders
BW Offshore (“BWO”) last week received approval from the Cyprus Securities and Exchange Commission to acquire all the shares in the issued share capital of Prosafe Production.
(“Prosafe”) not already owned, directly or indirectly, by BWO in a process called a squeeze-out. In the squeeze-out, which is described in a document similar to a prospectus, the shareholders of Prosafe will be given the opportunity to choose either the already offered consideration of (i) 1.2 shares in BWO plus NOK 3 in cash or (ii) NOK 15.11 in cash, for each share held. All shareholders in Prosafe not having chosen to receive the consideration in form of alternative (i) within the specified time frame are deemed to have chosen the all cash alternative.
Lots of Moving Parts, But a Pure Play at the End – BW Offshore to Merge and Divest
The on-going saga of the merger between BW Offshore (“BWO”) and Prosafe Production may have reached its denouement. Back in July, BWO made a voluntary exchange offer for all the shares of Prosafe it did not own. The offer was conditioned on the outcome of the sale of Prosafe’s turret and swivel business to National Oilwell Varco (“NOV”) for $165 million. If the business were unsold the BWO would offer 1.2 shares in BWO plus NOK 2 in cash for each share of Prosafe. However if the business were sold, the cash portion of the consideration increased to NOK 5.25. Prosafe’s management was unexcited by the offer and stated, using the term of art, that it was evaluating strategic and financial alternatives, as the offer did not reflect the fair value of the company. As a consequence of being in play, the sale of Prosafe’s turret business was put on hold pending the outcome of the BW offer and its disposition remains uncertain today.
Maintaining Tradition
We were disappointed to learn yesterday that Randee Day’s temporary stewardship of DHT Holdings was coming to an end, although she will retain her position as non-executive director. The new management team will consist of Svein Moxnes Harfjeld, as President and CEO and Trygve P. Munthe as COO. Women will jocularly note that it took two men to replace a woman.
During her short five-month tenure, Ms. Day played key roles in positioning the company for flexible growth through the creation of the existing holding company structure, while coming to terms with dissident shareholders, MMI. The new management team can focus simply on strategically growing the company. Both gentlemen are highly experienced and qualified to awaken what until now has been a quiet cash flow generator. Mr. Harfjeld has held senior positions within the BW Group, including Group Executive Director and CEO of BW Offshore. Munthe most recently served as director with Arne Blystad and prior to that as CEO of Western Bulk, President of Skaugen Petrotrans and CFO of I.M. Skaugen. We expect that the new team is up to the challenge and wish them the best of luck.
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On Hold
Yesterday, Prosafe Production extended its letter of intent to sell its turret and swivel business to National Oilwell Varco (“NOV”). As a consequence of BW Offshore’s voluntary offer to acquire all the outstanding shares of Prosafe, NOV had requested the extension until after the offer had been concluded and the future ownership structure clarified.
As BWO’s offer was conditioned on the sale of that business, BWO has modified its offer accordingly. Instead of 1.2 BWO shares and NOK 5.25 in cash, the company will retain the stock component and reduce the cash portion to NOK 2 per Prosafe share. Finally, BWO is considering whether to withdraw its offer if it helps facilitate the closing of the sale of the turret business for the benefit of all shareholders.
Wedding Season or Offshore Consolidation Takes Two Giant Steps
Monday was a big day in the offshore sector with two major transactions announced. First BW Offshore (“BWO”) made a voluntary exchange offer for all of the shares of Prosafe Production Public Limited it does not currently own. The company is offering 1.2 BWO shares and NOK 5.25 in cash for each share, which consideration equates to NOK 16.21 based upon Friday’s closing price, valuing Prosafe at approximately NOK 4.1 billion or a 17% premium to Prosafe’s closing price on Friday. BWO currently owns directly or indirectly 23.88% of the total outstanding shares with a wholly owned subsidiary owning a further 6.1%. Presently BW Group owns 66.95% of the total number of shares in BWO and will be diluted to approximately 47% to 49% shareholding in the combined company based upon an acceptance level of between 90% and 100%. The combination will create an FPSO company with the diversification, presence, resources and competence to meet the increasing requirements from both clients and regulators.
BWO will finance the cash consideration from available credit facilities. In connection with the offer BWO has established a new bridging credit facility of $1.1 billion from BW Group on competitive terms with expiry in November 2011. The new facility together with the availability under the existing credit facility of $1.5 billion will be sufficient to finance the entire cash consideration and refinance Prosafe’s existing credit facilities, while providing capacity for growth.
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Game Changers?
In their 4th quarter earnings release, Golden Ocean Group Limited announced that its application for a secondary listing in Singapore had been approved by the Singapore Exchange (“SGX”). The company already has an operational presence in Asia and saw the opportunity offered by the July 2009 Memorandum of Understanding between SGX and the Oslo Bors (“OSE”), which facilitated a simplified and accelerated dual listing process between the exchanges. This will be the first secondary listing by a Norwegian firm under the new accords.
From our perspective, this is an interesting transaction. Not only is this an example of a western company seeking equity capital in the East, it also raises the question of whether the market would follow the trendsetter, John Fredriksen, who was the first to bring his company to the U.S markets. The successful listing of Golden Ocean will blaze the trail for more to follow and strengthen Singapore’s position as a maritime and financial hub. Continue Reading
Nordea, DnB, ING Arrange $3 billion Facility for BW Group
Jumbo loans have officially returned with the announcement by BW Group that it has executed a 5-year $3 billion facility with a consortium of 11 banks, which committed a total sum of $5 billion against BW Group’s $3 billion requirement. Nordea, DnB and ING acted as bookrunners of the facility, and they were joined as mandated lead arrangers and underwriters by Svenska Handelsbanken, Swedbank, HSH Nordbank, Danske Bank, Fortis Singapore, OCBC, Deutsche Bank and HSBC.
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