CECO Too Undertakes Balance Sheet Repair

In its agenda for its EGM scheduled for December 9^th, Camillo Eitzen & Co. ASA, has outlined the steps the shareholders have to approve in order for the company to move forward with a rights issue or the conversion of debt into equity. While the company has sufficient liquidity, if the market value of the company’s remaining shareholding in Eitzen Chemcial, Eitzen Maritime Services and Solvang are included, the equity is lost. In order to position the company for the equity infusion, share capital will have to be reduced to reflect the actual equity of the company through a reduction of the shares nominal value. In addition, to meet the minimum requirements of listing on the Oslo Stock Exchange, management is proposing a 10 for one reverse split of the shares. And, lastly, the company’s shareholders will be asked to approve the change of the company’s name to Jason Shipping ASA. Once approved, the company can take the next steps to improve its equity position.

The Other Side of the Capital Markets

Last week we discussed how Paragon and Hellenic Carriers were fine-tuning their respective strategies, the former through diversification while the latter through fleet renewal. This week’s transactions, a merger, a divestiture and a joint venture, evidence shipping’s evolution from simple asset trader to corporate strategist.

Fulfilling the theory that two is bigger and better than one, Eidsiva Rederi ASA and Dyvi Shipping AS agreed last month to enter into a business combination in which Eidsiva would acquire Dyvi to form Norwegian Car Carriers ASA (“NCC”).

The combined company will be the 4th largest car carrier tonnage provider with a total of 16 ships (13 car carriers and 3 Ro-Ro vessels) and the world’s only listed pure-play car carrier tonnage provider. The car carrier market is currently dominated by a few large operators, including NYK, Wilh. Wilhelmsen, Eukor, MOL, K-Line Hoegh and Grimaldi. These companies provide complete logistics services incorporating terminals, inland transport and IT services to meet their customers needs.   These operators control 80-90% of the deep-sea fleet in capacity terms and depend on the tonnage providers for capacity. Intending to gradually exit all of its pure Ro-Ro investments, the new company will focus on the most standardized and liquid PCTCs, the mid-size 4,000-5,500 CEU and the large size 6,000 to 7,000 CEU vessels, which are the backbone of the fleets of all the major operators.
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Plan B(LT)

Berlian Laju Tanker (“BLT”)’s acquisition of Camillo Eitzen & Co ASA (“CECO”) may have hit a speed bump when its initial transaction structure, which involved the issuance of mandatory exchangeable bonds (“MEBs”), was rejected by the Indonesian market regulator. But we understand that the company and its advisor RS Platou Markets remain resolute and are working hard on an alternative plan. Since then, a series of developments have occurred that added uncertainty to BLT’s quest for CECO and we hereby provide a summary of these developments in chronological order.

On 1 October 2009, Eitzen Chemical ASA (“ECHEM”) reached an agreement with most of its lenders (all syndicate loans and most bilateral loans) on the restructuring of its bank debt. However, this was conditional upon a new equity issue of a minimum USD 100 million by November. ECHEM was in dire need of capital injection. Continue Reading

The Consolidator Strikes Again

Growth is at the core of every corporate strategy and essentially, companies have the options to grow by either through organic expansion and ramping up their own business activities or collaborating with other industry players. PT Berlian Laju Tanker (“BLT”) is a firm believer of the latter. This week, in another landmark acquisition to expand its footprint in all regions worldwide, BLT announced its plans to launch a voluntary all-share offer for Camillo Eitzen & Co ASA (“CECO”).

BLT is certainly no stranger to consolidation. During the Asian Financial Crisis in 1998, BLT acquired Asean Maritime Corporation which indirectly owned 7 chemical tankers ranging from 3,200 to 7,500 DWT. At that time, the rationale for the acquisition was to accelerate its growth in North Asia. Fast forward nine years later to December 2007, Asean Maritime, which is now BLT’s wholly owned subsidiary, acquired the entire issued share capital of Chembulk Tankers (“Chembulk”) including its 11 chemical tankers ranging from 16,400 to 33,000 DWT. With the acquisition of the world’s 7th largest chemical tanker fleet, BLT had not only strengthened its position as the top intra-Asia chemical tanker operator but also fast-tracked its growth internationally particularly in the western markets where it had a limited presence.

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Eitzen Maritime Services Grows Market Share with Seven Seas Acquisition

Eitzen Maritime Services (EMS) this week moved forward with its goal to become the leading global ship supply and ship management companies with the $115 million acquisition of leading Middle East ship supplier Seven Seas Shipchandlers. Seven Seas saw a turnover of $193 million in 2007 and EBITDA of $14.9 million, implying a 7.1x EV to trailing EBITDA sales price. The acquisition included no interest bearing debt as and a large, modern warehouse with a prime location in Dubai.

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