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CECO Too Undertakes Balance Sheet Repair
In its agenda for its EGM scheduled for December 9th, Camillo Eitzen & Co. ASA, has outlined the steps the shareholders have to approve in order for the company to move forward with a rights issue or the conversion of debt into equity. While the company has sufficient liquidity, if the market value of the company’s remaining shareholding in Eitzen Chemcial, Eitzen Maritime Services and Solvang are included, the equity is lost. In order to position the company for the equity infusion, share capital will have to be reduced to reflect the actual equity of the company through a reduction of the shares nominal value. In addition, to meet the minimum requirements of listing on the Oslo Stock Exchange, management is proposing a 10 for one reverse split of the shares. And, lastly, the company’s shareholders will be asked to approve the change of the company’s name to Jason Shipping ASA. Once approved, the company can take the next steps to improve its equity position.
C-Gas or B-Gas, it still gets an A – The Acquisition of Eitzen Gas
Last Friday, Camillo Eitzen & Co. ASA (“CECO”) announced that the sale of Eitzen’s owned semi-re fleet, its 100% interest in Eitzen Gas A/S and the back to back lease of five pressurized LPG vessels to B-Gas Limited, an investment company established by Pareto Project Finance AS, had been concluded on terms materially similar to those announced in July. It is the nearly the end of CECO’s adventure in gas, which will leave them with a book profit on this transaction of $12 million and a 20% interest in Eitzen Ethylene Carriers, which will be acquired by Jaccar Holdings by the end of this month.
The transaction, structured as a Norwegian IS Partnership, was carefully crafted and placed as a club deal with Bergshav and two Norwegian shipping investors. Under the terms of the transaction, B-Gas, acquired 9 x 100% owned semi-ref LPG vessels ranging in size from 1,760 to 3,125 cbm with an average age of 17.8 years. The owned fleet is traded under a mix of time charters and COAs in the northern European premium market.
CECO Housecleaning – Eitzen Gas and Ethylene Carriers Disposed Of
Last week, Camillo Eitzen & Co. ASA (“CECO”) announced that it had agreed to sell its nine 100% owned semi-ref vessels along with its 100% shareholding in Eitzen Gas to C-Gas AS, an investment company established by Pareto Project Finance with Bergshav Group of Grimstad as the disponent owner acquiring a 51% interest along with two others who took the rest of the deal. The purchase price is $53 million, subject to adjustments for working capital, which will yield an estimated profit on the sale of the Semi-ref vessels of approximately $4 million.
BLT Loses CECO Exclusivity
Berlian Laju Tanker (“BLT”) and Camillo Eitzen & Co ASA (“CECO”) provided an update on the acquisition progress. BLT is proposing a new transaction structure that involves the issuance of new shares to CECO shareholders, after its initial plans of a mandatory exchangeable bonds issue hit a roadblock with the Indonesian regulator. CECO re-affirmed that BLT’s offer is still attractive but no extension of the exclusivity agreement was granted to BLT. Immediate hurdles for BLT would be to raise USD 200 million in new equity and secure the green lights from all the lending banks of BLT and CECO.
A Merger of Sorts or Eitzen Bulk Builds a Better Platform
Earlier this month, Camillo Eitzen & Co ASA (“CECO”) announced that the respective boards of two of its controlled companies, D/S Orion A/S (“Orion”) and Shipholding Holding A/S (“Eitzen Bulk’), had approved their merger, with Orion as the surviving company. The fact that Orion, a dormant company, is publicly listed on the Nasdaq OMX gave impetus to the transaction by providing a platform for future expansion. Upon approval by the shareholders, it is intended that Orion will change its name to Eitzen Bulk Shipping A/S and will contain all of the bulk activities of CECO, which consists of the ownership of a newbuilding to be delivered but is mainly a trading platform in which it takes vessels on for up to 3 years against cargo commitments.
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The Invisible Hand
Adam Smith, in his classic work, The Wealth of Nations, posited the economic principal that the greatest benefit to society is brought about by individuals acting freely in a competitive marketplace in the pursuit of their own self-interest.
“It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own self-interest… [Every individual] intends only his own security, only his own gain. And he is in this led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest, he frequently promotes that of society more effectually than when he really intends to promote it.”
While we are not sure whether Mr. Smith experienced a simultaneous economic and credit crisis in his time, we do know that today, as a result of these crises, it is not only individuals acting in their own self-interest. Banks, corporations and even governments are acting in the same manner. This should prove to be an interesting test of his thesis.
The Consolidator Strikes Again
Growth is at the core of every corporate strategy and essentially, companies have the options to grow by either through organic expansion and ramping up their own business activities or collaborating with other industry players. PT Berlian Laju Tanker (“BLT”) is a firm believer of the latter. This week, in another landmark acquisition to expand its footprint in all regions worldwide, BLT announced its plans to launch a voluntary all-share offer for Camillo Eitzen & Co ASA (“CECO”).
BLT is certainly no stranger to consolidation. During the Asian Financial Crisis in 1998, BLT acquired Asean Maritime Corporation which indirectly owned 7 chemical tankers ranging from 3,200 to 7,500 DWT. At that time, the rationale for the acquisition was to accelerate its growth in North Asia. Fast forward nine years later to December 2007, Asean Maritime, which is now BLT’s wholly owned subsidiary, acquired the entire issued share capital of Chembulk Tankers (“Chembulk”) including its 11 chemical tankers ranging from 16,400 to 33,000 DWT. With the acquisition of the world’s 7th largest chemical tanker fleet, BLT had not only strengthened its position as the top intra-Asia chemical tanker operator but also fast-tracked its growth internationally particularly in the western markets where it had a limited presence.
Career Path
What do Morten Arntzen, Peter Evensen, Jeff Pribor and John Wobensmith have in common? They all began their careers as bankers and have moved over to the ownership side. Clearly, the owners are recognizing the value of banking experience or, perhaps, they are less expensive once brought in house?
Add to that list, Peter Knudsen, formerly head of Project Finance and Asset Lending and now the General Manager of Nordea’s Singapore Branch, who has accepted the position of CEO of Camillo Eitzen & Co. ASA.
Umm! Peder’s been there two weeks already, is this an opportunity for him?
Using Public Equity for Consolidation: Camillo Eitzen & Co. ASA
A good example of a company who has been using their shares for consolidation is Norwegian based Camillo Eitzen & Co. ASA, who went public last summer. After Tschudi & Eitzen split up the company, Mr. Axel Eitzen and his team have been extremely busy growing the company through M&A. The fast past of the development puts the company in the league of Frontline, Teekay and others when it comes to consolidation, and it is today one of the few Norwegian shipping companies with this aggressive entrepreneurial spirit. Looking at the table below you can see the impressive list of transactions that have taken place since their listing in Oslo.
The Official Guide To Marine Finance Providers
Shipping Index
