Links
Dryships Seals Chinese Finance
When Chinese premier Wen Jiabao made his maiden state visit to Greece in 2010, there was rising optimism among the Greek shipping community that Chinese banks would loosen their purse strings and expand their loans in Greek ship finance. And indeed, there were promising signs that there could be more deals in the making. During the visit, a USD 5 billion Sino-Greek shipping finance fund was established to facilitate the sale of Chinese built ships to Greek shipping companies and shortly after, the Angelicoussis Group and Diana Shipping became the first two Greek shipping clients of China Exim Bank. Cardiff Marine also announced the signing of a USD 74 million loan from China Development Bank (“CDB”). This could be the first transaction entirely provided by a Chinese bank. But since then, the pace has been rather unhurried, with only a few shipowners – Costamare, Danaos and Toisa securing financing from the Chinese lenders, mainly the policy banks.
On February 13, George Economou-led Dryships sealed a USD 122.58 million export buyer credit syndication facility from CDB. The facility is part of the USD 5 billion shipping fund and proceeds will be used to finance three 206,000 dwt very large ore carriers (“VLOCs”) that will be built in Shanghai Jiangnan Changxing, a subsidiary state-owned shipbuilding conglomerate CSSC. CDB will provide Dryships the bulk of the facility, but Bank of China – Ningxia branch and Zhejiang branch will also participate as a minor lender for an undisclosed sum. OceanFreight, acquired by Dryships in November 2010, ordered three VLOCs at USD 68 million apiece due for delivery between 2012 and 2013. XRTC acted as Project Advisor while the law offices of Norton Rose and Papadimitriou & Partners were the legal advisors. This transaction also marks the successful closing of the
first syndicated loan facility between two Chinese banks, without the involvement of a Western bank. Continue Reading
The 3rd Quarter in Pictures
We continue our periodic look at quarterly results for a basket of shipping stocks we’ve been tracking. As in the past, we look at the percentage change in stock prices, comparing the beginning price versus the closing price for the quarter 3Q2011 and 3Q2010. We also look at the percentage change in EBITDA for 3Q2011 versus 3Q2010 and 3Q 2010 versus 3Q2009. This is our version of the proverbial crystal ball.
Survival – It’s All about Liquidity and Gearing
Continuing our recent trend of playing with numbers, we have decided this week to focus on survivability, which, for our purposes, we measure in terms of liquidity and leverage. For a selected group of companies which have reported 1st half results, we have calculated the debt to equity and net debt to equity ratios. We also show the cash position of these companies, which compared to just a couple of years ago is substantially lower, a reflection of this difficult market. While we show both the debt to equity and net debt to equity ratios, the latter in deference to the analysts, we prefer the former as we believe the cash will be long gone before it can be applied to the debt.
Busy Week in the Capital Markets
Congratulations to a Whole Host of Principals and Professionals!
If there is one clear trend that is emerging in the evolution of shipping in the capital markets these days, it is the increasing role of experienced, serial issuers who control multiple companies in different market sectors. This week alone we have Ms. Frangou’s Navios on the road with a high yield bond, Mr. Fredriksen’s Golar on the road with an IPO and Mr. Georgiopoulos’ General Maritime recapitalizing its balance sheet with offerings of both debt and equity. Danaos and DryShips rounded out the week’s activities.
Skillfully blending fresh equity and debt with a generous term out of its current debt facilities, the team at General Maritime announced two transactions this week that successfully achieved the desired result; raising ample liquidity to ensure the company’s financial health with minimal dilution to its existing common shareholders. A transaction of this sensitivity, scale and complexity requires the skill and cooperation of a broad team of people.
The same can be said for any one of this week’s deals, so we would like to extend our congratulations to the key players: Nordea, DnB, Jefferies, Dahlman Rose, Citi, BoA Merrill Lynch, Morgan Stanley, Deutsche, Evercore, S. Goldman, Credit Suisse and, of course, long time General Maritime supporter Oak Tree, who all worked hard to make this one week a week to remember.
Marine Money upcoming conferences, please visit www.marinemoney.com for more details:
Houston, May 4
Istanbul, May 11
Oslo, May 26
Marine Money Week, New York City, June 21-23
Beyond Advisory
Last week, Evercore Partners took a major step forward in evolving beyond its staple business of advisory work. Although Evercore did receive its broker dealer license last year, the only public transaction in which it participated was the Safe Bulkers follow-on offering. But that is understandable given their herculean efforts in restructuring Danaos and Trico Marine Services. The company’s New Year’s resolutions clearly called for an expanding involvement in the capital markets.
Chinese Banks, Greek Owners
In a press release from DVB Bank last week, CEO Wolfgang Driese has expressed great optimism on the future role of China, both in the global economy, and in global transport financing. Commenting on his recent trip to Beijing, he is convinced that Chinese banks will gain greater importance in the global syndication market, given that “a number of Western Hemisphere banks that were active before the crisis may well not return”. While we continue to harbour mixed feelings about the development of Chinese banks as emerging global ship financiers given recent concerns over their USD liquidity positions, they have clearly established themselves in the industry and this is evidenced by several new deals below.
At least two Greek shipping companies are said to have secured Chinese money in the past few weeks. Containership owner Danaos has secured approval for a USD 203.4 million Sinosure backed credit facility from Citi and China Exim Bank. The funds will be ultilised for the financing of three 8,530 teu boxships, currently under construction at Shanghai Jiangnan Changxing Heavy Industry. Continue Reading
Is New Better? – Costamare Prices
Last night, the shares of Costamare Inc. were priced at $12, or 25% below the midpoint of the expected range of $15 to $17. The company sold 13.3 million shares, the number expected, raising $159.6 million in proceeds, instead of the $260 million that was planned.
But before we take a closer look at this particular offering, a broader look at the IPO market provides an interesting perspective. From Jefferies Maritime Group’s Market Update dated November 1st, we gleaned the following facts about the current state of the equity market:
A Random Talk on Wall Street
This week we spoke with a few shipping investment bankers to get an assessment of what is happening on Wall Street during these hot summer days and what might be waiting in the wings when September arrives. While there are some differing opinions, mainly with respect to the banks, activity in the capital markets remains strong, in general, with strong undercurrents of potential activity in shipping. Some even suggest that we might not have to wait for September, as is typical. In the pipeline are IPOs, follow-ons and even M&A transactions. What follows is a compendium of views on the various opportunities as well as some thoughtful commentary.
No Hype. We Delivered!
Our Chairman’s promotions are sheer artistry and we constantly marvel at these masterful gems. Of course, there are issues with punctuation but why let that get in the way of a great pitch. The amazing thing is that despite his protests otherwise, he really does get it. Our problem is that he is rubbing off on us and we are moving from analytical and objective to the dark side where it’s all about the love as both Matt and he are fond of saying. In the case of this year’s Marine Money week, there is no doubt we got it right. The numbers speak for themselves. This year we went out on a limb denoting the theme as the Comeback or Confidence Returns to Ship Finance. Whether or not that was the case and we believe it is, 1,078 registered guest wanted to hear the answer. This was a new record surpassing 2008’s 1042 guests. Uncertainty + optimism trump a boom.
We relish the awards afternoon. We devote a great deal of energy, although far less than the dealmakers themselves, in choosing the transactions from the many submissions we receive and it is a pleasure to see the winners bask in the recognition they rightfully deserve. It is also educational as the latest structures and ideas are on display for all to see and take advantage of as appropriate. Nigel Thomas and Dan Rodgers of Watson, Farlay & Williams did a masterful job moderating the session which included presentations by Sheldon Goldman, Efthymios Bouloutas of Marfin, Ronny Bjornadal of Nordea, Sean Durkin of NSF, Gerrit Parker of Citi and Craig Fuehrer of Deutsche Bank.
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.
The Official Guide To Marine Finance Providers
Shipping Index
