STX Pan Ocean Closes USD 510 million Syndication

South Korea’s STX Pan Ocean has secured a USD 510 million 12 year syndicated loan facility with a consortium of nine domestic and international lenders, comprising ABN AMRO, BNP Paribas, China Development Bank, Credit Industrial et Commercial, Deutsche Schiffsbank, DnB NOR Bank, Export-Import Bank of Korea, ING and Standard Chartered.

In October 2010, the company broke new ground and entered into the global pulp transportation market by securing the large consecutive voyage contract with the world’s largest pulp and paper company, Brazil’s Fibria Celulose. To fulfil this 25 year USD 5 billion contract that commences from 2012, STX Pan Ocean ordered 20 pulp carriers from another STX Group company, STX Offshore & Shipbuilding. Proceeds from the latest loan will be used to cover 70% of the total cost in the construction of 16 pulp carriers. Funding for the remaining
four vessels will be secured at a later date.

STX Pan Ocean has been actively raising funds since the start of this year to finance capex requirements through a combination of shipping banks, export credit agencies and domestic corporate bonds. We provide a list of recent transactions in the accompanying table.

A Frank Assessment

With the exception of the syndicated loan market, it is difficult to get a feel for the level of ship lending activity at any point in time no less any sense of trends. To the extent lending exists today, much of it has gone underground in the form of bilateral loans. So any intelligence we find on the subject is of great interest.

This week we received Deutsche Schiffsbank’s annual report for the past year and as the title of this article suggests the bank was extremely transparent in its disclosures. And, as one might expect, given their location in one of the hardest hit regions, it is going to be a tough year. Moreover, the bank itself is going through immense change as the merger with Commerzbank and Dresdner Bank continues.
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Danaos Re-jiggers

In its first quarter report, Danaos provided further clarification with respect to the re-arranged delivery schedule of its newbuildings. China Shipbuilding Trading Company agreed to delay by 200 days on average the delivery of five 8,530 TEU containerships currently under construction. In addition Hanjin Heavy Industries agreed to delay the deliveries of five 6,500 TEU and the five 3,400 TEU containerships under construction by approximately one quarter each. In terms of the schedule, as of today, Danaos is expecting to take delivery of six vessels this year, twelve in 2010, of which three can rollover to the following year as they are scheduled to be delivered in December 2010, and eleven in 2010. Presuming the three 2010 deliveries roll over into 2011, the remaining capital expenditure installments are approximately $465 million for the balance of the year, $875 million for 2010 and $785 million for 2011.

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Euronav & OSG Credit Facility

On Monday, OSG and Euronav jointly announced a $500 million senior secured loan to finance the acquisition of TI Asia and TI Africa, both built in 2002, by joint venture companies equally owned by Euronav and OSG and the conversion of the ships into FSO service vessels. The vessels are scheduled to deliver to Maersk Oil Qatar on the Al Shaheen field offshore Qatar and start operations respectively in July and September 2009.
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Energy Infrastructure Shareholders to Opine on Vanship

Following quickly on the heels of Seanergy’s proposed special meeting to vote on its acquisition, Energy Infrastructure Acquisition Corp. (“EII”), another blank check company, set July 17 for its special shareholder meeting. As was done last week in the case of Seanergy, we will take a close look at what the shareholders are being asked to approve.

In July 2006, EII consummated its initial public offering of 20.25 million units, each unit consisting of one share of common stock and one warrant, raising $209.25 million in net proceeds (including a portion of the green shoe). Prior to the offering, George Sagredos, the President and COO, purchased through Energy Corporation 825,398 units at the offering price resulting in gross proceeds of approximately $8.25 million.
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The Week in Review

While there are rumors of a number of IPOs in the works, volatility and uncertainty has all but brought the US equity markets to a stop, and we don’t expect to see much more done over the summer. Bank debt has not proved as much of a problem for shipping. Most recently this week Deutsche Bank and HSH Nordbank acted as MLAs on a $753.1 million loan for E. R. Schiffhart GmbH & Cie KG to finance ten capesize bulkers currently under construction in Korea by the Hyundai Group with delivery expected throughout 2010. BNP Paribas, Commerzbank and Dresdner Kleinwort joined DB and HSH as arrangers while Deutsche Schiffsbank came in as a co-arranger for the deal, which finances 71% of the $1,056 million project cost and covers both pre and post-delivery financing. Notably Ralph Bedranowsky of Deutsche Bank and Harald Kuznik of HSH both hailed the deal as an example of “the global shipping market…returning to reasonable, market-consistent valuations…”
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In Debt

While the equity markets appear to have returned to life, the debt markets continue to face harder times. Significant increases in bank funding costs are translating into significant spread increases for cus­tomers, though the drops in base interest rates mean that all this still does not necessarily mean higher all-in borrowing costs. More important than rate increases have been rising bank standards, which have forced less established companies without existing bank­ing relationships to look harder for capital.

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Surveying the Credit Markets

Marine Money has concluded the collection of data for its 2008 shipping banker survey and would like to sincerely thank all who have participated. We are currently concluding work on our annual shipping portfolio league table and would like to thank the following banks for their cooperation and contribution to the development of a transparent and well-informed ship finance industry: Bank of Ireland, Bank of Scotland, Bremer Landesbank, Calyon, Commerzbank, Danish Ship Finance, Danske Bank, Deutsche Bank, Deutsche Schiffsbank, DnB NOR, Dresdner Bank, DVB, Helaba, HSH Nordbank, HVB, JP Morgan, KfW, Lloyds TSB, Natixis, Nordea and RBS. If you don’t see your bank’s name on the list, think it belongs there, and haven’t been in touch with us this weekend, please send an email to nhuvane@marinemoney.com ASAP to ensure you are included. Both survey and portfolio data will be released in the upcoming May issue of Marine Money.

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The Week in Review

The money, apparently, is in oil as two of the industry’s biggest gurus, John Fredriksen and George Economou, both make aggressive plays into the rig space. Mr. Fredriksen, of course, has long been making investments into various facets of the offshore industry and has either spawned or acquired a bevy of offshore companies to that end. It was hardly earth shattering this week when Seadrill announced that it had acquired 200,000 shares and entered into forwards to acquire 16,300,000 shares in US-listed Pride International, an offshore company with a market capitalization of $7.2 billion. The shares amount to a 9.9% stake, worth around $708 million. The move prompted Pride International to take action to lower the threshold level of ownership to trigger its stockholder rights plan from 15% to 10%. Seadrill has also asked Pride for a meeting to discuss “potential strategic benefits for both parties of a transaction between the two companies.” A merger could be on the cards – or it could not be. Mr. Fredriksen has shown himself as skillful an investor as an acquirer, using each strategy as it suits him.

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OMI in $320m Facility with ING