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Distress Sale or a Steal – It’s All in One’s Perspective
After a protracted sale process, which began in early 2010, Affinity Equity Partners sold its 54.7% interest in Jaya Holdings for SGD 202.6 million ($158 million) with the intervention of Credit Suisse as sell side advisor. Purchased at the height of the credit boom in 2006, Affinity had acquired its stake in Jaya, which builds and operates offshore supply vessels, through a vehicle called Nautical Offshore Services, a private equity fund. As a result of the economic turndown in 2008 Jaya was unable to service the $233 million loan used to acquire the shares making the exit necessary.
“…Ask and you shall receive…”
The overriding theme of capital being available to existing companies continues. Both DHT Holdings Inc. (“DHT”) and Teekay Tankers Ltd successfully concluded overnight follow-on equity offerings last week and both were well received.
DHT initially announced plans to offer 8 million shares in an underwritten public offering, “subject to market conditions.” Market conditions were certainly good with the transaction approximately 3 times oversubscribed. The offer was upsized approximately 93% to 15.5 million shares, which included an exercised underwriter’s option to purchase up to 2.025 million shares to cover overallotments. The shares were offered at a discount range of 8-10% of the closing price on February 3rd of $5.08. The strong demand resulted in the transaction being priced at $4.65/share equal to a discount of 8.4%. Proceeds will be used for general corporate purposes, which may include, without limitation, vessel acquisitions, business acquisitions or other strategic alliances, reduction of outstanding borrowings, capital expenditures and working capital.
Stop Presses
Just as we were ready to publish, DHT Holdings and Teekay Tankers announced follow-on equity offerings. DHT intends to offer 8 million shares and will use the proceeds, approximately $40 million based upon today’s closing price, for general corporate purposes. The joint bookrunning managers are UBS, BofA Merrill Lynch and Citi. Dahlman Rose will act as Co-manager and Carnegie as sales agent in Scandinavia.
Equity without Dilution – Seaspan’s Mantra
Last week, we reported on the launching of Seaspan Corporation’s preferred stock issue, which priced last Friday. The company sold 10 million shares of its 9.50% Series C Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share. Net proceeds to the issuer were $241,250,000. Details of the transaction are shown below in the Guts of the Deal.
Preferred Shares from Seaspan
On Wednesday, Seaspan Corporation, utilizing its $1billion shelf registration, filed a preliminary prospectus supplement for a public offering of its Series C Cumulative Redeemable Perpetual Preferred Stock (“Preferred Shares”). The number of shares being offered was not disclosed; however, the liquidation preference is $25 per share. Proceeds will be used for general corporate purposes, which may include vessel acquisitions or investments. Pending the application of funds for these purposes, the company may prepay a portion of its outstanding debt under certain of its revolvers. Following the offering, Seaspan intends to file an application to list the shares on the New York Stock Exchange.
Ultrapetrol’s Stealth Convertible
Just before the Christmas break, Ultrapetrol (Bahamas) Limited announced the offering of $60 million of its 5-year convertible senior notes, with a green shoe of $10 million. The private placement priced the next day at a coupon of 7.25% and, due to investor interest, was upsized to $70 million. With the over-allotment option exercised, total gross proceeds equaled $80 million. The initial conversion rate will be 133.1691 shares of common stock per $1,000 principal amount of notes, which is equivalent to a conversion price of $7.51 per share, representing a 22.5% conversion premium over the closing pricing just prior to the announcement. Proceeds will be used to expand its PSV operations in Brazil, support the development of its river container trade, accelerate the construction of additional river barges in its Argentine shipyard and for general corporate purposes. For more details, see the Guts of the Deal below.
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TEN Sells
On Tuesday, Tsakos Energy Navigation, after the market closed, announced a share offering of 7,623,328, shares, of which 896,861 would be purchased by entities affiliated with the Tsakos family. The offering, which includes a green shoe of 1,008,968 shares, is being done by a prospectus supplement to its shelf registration dated July 14, 2009. Proceeds of the offering will be used for fleet expansion and for general corporate purposes.
Serial Convertible Issuer – Seadrill Again
When it comes to financing his offshore drilling company, Mr. Fredriksen likes convertible bonds. With two issues already in place, $1 billion due in 2012 and $500 million in 2014, Seadrill Limited last week sold $650 million of senior unsecured convertible bonds. The original offering size was $550 million with an increase option of $100 million, which was exercised. As a large and regular seller of this financial instrument, which is particularly attractive to hedge funds, the company’s offer attracted strong demand and was oversubscribed within hours. Market talk indicates that there was sufficient interest at the $950 million level. Buyers included the usual investors interested in the offshore industry as well as a number of large buyers not typically found in the sector.
SC to BOX – Seacube’s 2nd Attempt
Back in April, we wrote the following:
“Stripping off the baggage of its container ships and chassis, both unattractive businesses today, Seacastle Inc. has offered the public the opportunity to invest this time in its container leasing subsidiary through an initial public offering of that business, which they have named SeaCube Container Leasing Ltd. This is another example of a part that might be worth more than a whole as management recognized the recent outperformance of the publicly traded container leasing companies, Textainer and TAL International due to operating leverage. Trade has begun to resume which equates to more boxes coming on line, higher utilization and hence more revenue, with little incremental cost. In addition, given the financial constraints of the liner companies due to a very difficult 2009, it is likely that the lines will increase the portion of leased rather than owned containers in their fleet. From that standpoint, timing could not be better.”
Doesn’t Get Better – Hapag Lloyd Offering Upsized and Trades Up at the BreakImproving Leverage While Increasing Liquidity – Teekay Tanker Follow-On
Initially targeting $500 million in a two tranche offering of Euro and Dollar bonds, Hapag Lloyd benefited from strong investor appetite and upsized it’s offering by EUR 145 million ($200 million) an increase of 40%. In terms of final numbers, Hapag issued EUR 330 million of 9.5% 5-year Euro notes and $250 million of 9.75% 7-year Dollar notes.
The Euro notes and Dollar notes were issued at 99.5% and 99.37% respectively to yield 9.55% and 9.875%. At the break, both senior notes traded up at around 103.5%.
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