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Equity Overdone?
Regularly, we hear that the markets are open for well-known serial issuers of equity and debt securities. This week one regular issuer, Seaspan, quickly and successfully accessed the preferred market, issuing more of its Series C preferred. There were also two filings for equity follow-ons from a recent transplant from London and one of the original public companies. It will be interesting to gauge investor appetite in the case of the latter given the overall weak market conditions.
Tough Sell – The 144A Equity Market
Touted for speed and ease of execution, the 144A equity market, when it works, is a wonderful tool. It is particularly suited for smaller deals, which are less attractive to the investment banks and are not large enough to do an IPO while still allowing the sellers to retain a 50% interest.
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Another Dropdown Coming?
Last Thursday as we reported Navios Maritime Partners announced the follow-on offering of a further 4.5 million common units with a green shoe of 675 thousand units. On the following day the transaction was priced at $17.84 per unit a 5.26% discount from Thursday’s closing price of $18.83. Proceeds from the offering will be used to fund its fleet expansion and for general partnership purposes. Greater detail is shown in our Guts of the Deal below.
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Price Sensitive
While not close followers of the cruise business, we followed the Regent Seven Seas Cruise $200 million senior secured note offering due in 2017, because of our interest in high yield. The notes were to be issued Seven Seas Cruises S. DE R.L. in a 144A offering. The notes would be guaranteed by the subsidiaries that own the company’s three cruise ships and the notes and the guarantees would be secured by a second priority lien on the same collateral securing the existing senior secured credit facilities, including 2nd priority mortgages on the ships.
Why is Navios Moving from Norwalk to New York City?
The simple answer is that they were spending too much time in New York raising capital and the commutation costs were becoming excessive. In the latest iteration, Navios Maritime Partners announced on Tuesday a follow-on offering of 3.5 million common units. This is its first offering of this year and follows three such offerings done last year that raised approximately $135 million.
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Back to the Well
Utilizing its $500 million shelf registration from February, Navios Maritime Partners (“NMP”) went back into the market last week for its second follow-on offer of this year. In May, NMP issued 3.5 million shares at a price of $10.32. Last week’s offering of 2.8 million shares was priced $12.21 per share a discount of 6.5% from the prior day’s closing price. Proceeds will be used to fund its fleet expansion and/or for general corporate purposes.
De-leveraging
In its 1Q earnings release last week, Navios Maritime Partners (“Navios Partners”) announced that it had amended the terms of its existing $235 million credit facility with Commerzbank in January. The company prepaid $40 million during the first quarter resulting in an approximate $1.5 million in interest expense savings for 2009 and a commensurate reduction in leverage. Throughout 2009, the partnership will additionally have to fund into a pledged account a further $37.5 million. The interest rate on the remaining facility of $195 million now bears a spread of 2.25%, giving an estimated interest rate of 3.98% for 2009 including the margin (versus 4.17% the effective rate in 2008), and no further installments are due until the 1Q 2010.
Poor Uncle Needs Cash. What’s a Good Nephew to Do?
Our thanks to Oppenheimer’s Scott Burk for highlighting OceanFreight’s plan to issue up to $147.9 million of common shares as part of an Standby Equity Purchase Agreement with YA Global Master SPV (“YA Global”) arranged by DVB Capital Markets.
The transaction would be extremely dilutive to shareholders. If all $147.9 million of shares were sold at $3.83, the last reported price prior to the announcement, the company would have approximately 57.2 million shares outstanding which represents an increase of 208% in issued and outstanding shares.
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