Dismantling?

It is a sad moment, when a company is forced by circumstances to sell pieces of itself, particularly when that company has been involved in shipping for 127 years. In that vein, Camillo Eitzen & Co. (“CECO”) announced Tuesday the sale of its majority shareholding (74.43%) in dry bulk operator, Eitzen Bulk Shipping to Navieras Ultragas Ltda, a Chilean shipping company, for $92.9 million or $5.07 per share. Navieras will be required to submit a mandatory public offering for the remainder of the shares meaning Eitzen may hold the record for the shortest life as a public company having begun trading on the Copenhagen Exchange only last December.

DnB’s Glen Lodden found some good news amidst the bad suggesting that CECO received a good price for their shares. The shares had opened at DKK 25.10 with the offer made at DKK 31.00 per share. Based upon the sale, Mr. Lodden’s calculation of NAV increased from NOK 3.66 to NOK 6.51. He maintains his buy recommendation but will revise the target price downward due to the weakness in Eitzen Chemical’s shares.
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Plan B(LT)

Berlian Laju Tanker (“BLT”)’s acquisition of Camillo Eitzen & Co ASA (“CECO”) may have hit a speed bump when its initial transaction structure, which involved the issuance of mandatory exchangeable bonds (“MEBs”), was rejected by the Indonesian market regulator. But we understand that the company and its advisor RS Platou Markets remain resolute and are working hard on an alternative plan. Since then, a series of developments have occurred that added uncertainty to BLT’s quest for CECO and we hereby provide a summary of these developments in chronological order.

On 1 October 2009, Eitzen Chemical ASA (“ECHEM”) reached an agreement with most of its lenders (all syndicate loans and most bilateral loans) on the restructuring of its bank debt. However, this was conditional upon a new equity issue of a minimum USD 100 million by November. ECHEM was in dire need of capital injection. Continue Reading

Condition Met

Eitzen Chemical announced on Tuesday that the book building for the private placement to raise a minimum of $100 million in new equity was successfully concluded with ABG Sundal Collier Norge and Carnegie ASA, as joint lead managers, receiving orders in excess of the amount required. As you may recall this equity offering was a pre-condition for the waiver agreements with the banks.
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The Accountants Have Not Left the Building

Today, Camillo Eitzen & Co. issued a profit warning due to lower than expected earnings from the gas segment combined with increased provisions against postponement of cargos under COAs and potential but unrealized losses on FFAs.

As a result of the weak market, the company has impairment tested the book value of the gas fleet resulting in a write down of $40.9 million. The lower market values have also resulted in the breach of two of six covenants of the Eitzen Gas loan. The minimum value covenant was restored through the payment of the regularly scheduled installment while the minimum adjusted capital ratio, related to Camillo Eitzen, remains in default and discussions with the banks have begun in an effort to obtain a waiver. As a result of the breach, the entire outstanding $158 million gas facility will be posted as short-term until a waiver has been obtained.
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