Links
SFL Goes X-Border – Sale-leaseback with CMA-CGM
Cross-border leasing returned this week to shipping, with Ship Finance International Limited announcing that it had entered into an agreement to acquire two 2010 built 13,800 TEU container vessels, the Magellan and Corte Real, from CMA-CGM in combination with 15-year time charters back to the seller.
Transparency Rules
CMA CGM announced last month that it had come to terms with its banks, which have provided, as an intermediate step, a credit line of $500 million. This will allow the company to continue its restructuring efforts, which involves the restructuring of its debts, raising new equity and the cancellation or postponement of newbuildings currently on order in Korean shipyards.
Continue Reading
Notes from the Center of the Shipping Universe
The waters around Singapore are littered with parked tonnage, while the vibrant nation’s skyline grows and changes daily as construction on new office towers, casinos, amusement parks, mass transit projects continues 24 hours a day. There is a dull roar of cranes, jackhammers and steel against steel always in the background.
It is clear in Asia that demand is not likely to be shipping’s problem, as growth numbers indicate a steady rebound of trade, led by China and many of its vibrant Asian neighbors. But as HSH Nordbank’s Mattias Umlauf told a full Marine Money Singapore Week conference crowd the growth while positive only begins to bring us part way back to where we were.
And that is why everything revolves around supply. As a veteran of several slides, we note glumly, but without surprise, the business has returned to the industry’s norm – a supply driven business with generally modest returns.
The question is how long before a semblance of balance between the enormous supply and demand creates utilization rates capable of more than modest returns.
No Surprise
As a private company no one knew for sure, but given the performance of the publicly reporting container lines, CMA CGM’s announcement on Tuesday that it had reached an agreement on the formation of a “creditors” committee consisting of French, European and international banks, including major financial institutions from Asia and the Republic of Korea, was no surprise. The purpose of the committee is to propose suitable measures to address the group’s short-term and medium term financing requirements with a view to strengthening the company’s capital structure and in so doing ensuring CMA CGM’s future. Given the company’s size and strategic importance, the French state is aware of this initiative and will be kept regularly updated on the progress made.
Tightening the Screws
Last week, Global Ship Lease (“GSL”) announced that they had come to terms with their bankers, Fortis, Citi, HSH Nordbank, DnB NOR and SMBC, with respect to an amendment of their $800 million credit facility. The amendment incorporates the following main terms:
• The LTV covenant is maintained at 75% but is waived through November 30, 2010, meaning the first test will take place on April 30, 2011. Ongoing testing is conditioned upon the availability of valuations.
• Amounts borrowed under the facility will bear interest at LIBOR plus 3.50% through November 2010 and thereafter pricing will be on a grid of 2.50% to 3.50% depending on the LTV.
• The $82 million purchase of the CGM Berlioz will be funded by a $42 million drawdown on the facility, no less than $20 million from cash on hand with the balance of no more than $20 million funded from an over advance loan (“OAP Loan”) under the facility.
• The OAP Loan has repayments scheduled for November 2009 and January 2010 based upon free cash flow in excess of $20 million. In any event, the loan must be repaid in full by June 30, 2010.
• Concurrently, with the Berlioz funding, all undrawn commitments, approximately $200 million, will be cancelled and the facility will convert to a term loan.
• CMA CGM has agreed to defer redemption of its $48 million in preferred shares until after the final maturity of the credit facility in August 2016. Dividends on these shares will be permitted. In addition, CMA CGM will not reduce its holdings of common shares below the current level of 24.4 million until the conclusion of the waiver period, November 2010.
Continue Reading
Waivers And More Waivers
Not unsurprisingly, the difficulties in the marketplace are becoming more evident as the number of waivers of covenants increases in the public sphere. However, we understand that it is on the private, or dark side if you will, where the heavy lifting, at least in terms of restructuring, is taking place. The appropriate analogy might be the bare-knuckle storm below the calm sea of the public genteel discussions. Nevertheless, these exercises may be nothing more than band-aids should the market not improve. We certainly understand the cautious approach taken with respect to the public companies given the ramifications. The question remains as to what impact the private discussions might have on the public. We watch and wait as the parties stake out their positions.
Continue Reading
Seanergy – 3rd Time’s the Charm
In contrast to the Oceanut transaction, Seanergy Maritime Corp. can rightfully say, “been there done that” as shareholders finally approved its transaction to acquire 6 bulk carriers from the Restis family this week. It has not been an easy road for the company as we have previously documented. The shareholder vote was deferred three times necessitating the Restis family to increase its investment twice. Ultimately, Restis affiliates owned beneficially 10,114,761 shares, representing 35.4% of the company’s outstanding shares, which amount excludes 2,750,000 shares with respect to which affiliates of the Restis family have shared voting power but do not have dispositive power. Their position was solidified by George Koutsolioutsos, Seanergy’s Chairman, who increased his beneficial ownership to 8.4% of the outstanding shares exclusive of an additional 3,190,000 shares over which Mr. Koutsolioutsos has shared voting power.
“Don’t Give Up the Ship” – Marathon Acquisition Restructures Deal
This morning Marathon Acquisition Corp. (“MAQ”) announced amendments to its Agreement and Plan for Merger for its previously announced merger with Global Ship Lease Inc. (“GSL”), a subsidiary of CMA CGM. In order to allow enough time for the shareholders to consider these changes, the special meeting of the shareholders has been deferred to August 12th. As one might expect, the sponsor and GSL have taken haircuts in order to increase the returns to the prospective shareholders clearly reading the messages from the Street over the past couple of weeks. Or, as our esteemed President was explaining to me the other day they have picked up the tab for the dilution created by the carried interest.
Continue Reading
CMA-CGM Finds Public Buyers in Marathon
Private equity funds have long had a glamorous reputation as the real movers and shakers in the financial world, buying and selling companies at will and making tremendous returns for their partners and investors. While they are under some pressure now as the easy access to capital they rely upon has been hampered, this was not so in 2006. And it is the 2006 crop of SPACs that is just now coming to maturity, driving the volume of acquisitions by SPACs to $3.9 billion so far this year, more than six times the comparable period in 2007, according to Dealogic.
It was in just this time period, in August 2006 to be precise, that Marathon Acquisition Corp came to the public markets, backed by Michael Gross, a founding partner of private equity powerhouse Apollo. Fast forward to February 2008, however, and Mr. Gross’s SPAC was quickly closing in on its deadline to announce an acquisition target or risk being liquidated. Continue Reading
Success for CMA CGM
The Official Guide To Marine Finance Providers
Shipping Index
