3rd Quarter Report Card

Last week, Dealogic published its 3rd quarter scorecard measuring the performance of the syndicated loan market for shipping transactions. Below we have reproduced their tables showing the Top 20 Mandated Lead Arrangers and Bookrunners for the nine-month period. As far as first and second place are concerned there is no surprise as Nordea and DnB Nor continue to battle it out with Nordea taking top honors as bookrunner and DnB Nor in first place, by the closest of margins, as mandated arranger.

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Paying Their Due

Second only to the eternal question of where the freight markets will head these days is the question of whether the existing orderbook will be built and financed. Therefore we thought it worth a look at some recent newbuilding finance deals and some recent order cancellations to allow readers a chance to observe emerging trends firsthand – we welcome your feedback and input as well, so please feel free to drop us an email or give us a call if you have other views or deals you would like to discuss.

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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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Reederei Claus-Peter Offen in $73 million Loan with Dresdner

Reederei Claus-Peter Offen raised $73 million in debt this week for the two year pre-delivery- and 15 year post-delivery-financing of two 52,000 dwt product tankers (to be delivered in 2010). Dresdner Kleinwort acted as bookrunner and MLA for the deal while Bayern LB acted as senior lead arranger.

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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