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Largest FPSO Project Loan Ever
BTMU and Fortis, as Coordinators, announced this week the successful closing of a $585 million project loan to finance the conversion and subsequent operation offshore Brazil of the FPSO Espirito Santo. The FPSO is owned by SBM Offshore (51%) and MISC Berhad (49%) and upon delivery will enter into a 15 year charter to Shell Brazil.
Despite the challenging market conditions, a total of 11 banks (BNP Paribas, BTMU, CIC, DnB Nor, Fortis, ING, Mizuho, Rabobank, RBS, Sociiete Generale and SMBC) participated in the financing. The loan was significantly oversubscribed which all owed for final take downscaling for all syndicate members.
Chris Weyers & Scott Burk – Bankers Move On
We also note the following friends who have found new positions:
Chris Weyers has left Fortis to join FBR Capital Markets as a Managing Director. He can be reached at (212) 457-3314 or cweyers@fbr.com.
Finding life after Bear Stearns, Scott Burk has accepted a position as Lead Ocean Shipping Analyst at Oppenheimer & Co. Scott can be reached at (212) 667-7402 or scott.burk@opco.com.
We wish them all good luck in their new positions.
DnB NOR Chief Bullish Expansion Set – Lending Grows
It is always a pleasure to hear from someone with a fresh and confident outlook, and such was the happy occasion when the Norwegian American Chamber of Commerce presented Rune Bjerke the Group Chief Executive of DnB NOR at an early evening, late summer event in New York. Mr. Bjerke joined the Bank leaving the successful Hafslund ASA where he was CEO. And as he noted the switch to banking left some of his friends perplexed it was the sort of challenge that appealed even though his start date approximately coincided with the start of the Sub Prime crisis.
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.
That Was The Week That Was
Marine Money’s flagship conference came to New York this week and if you were a kid you might refer to it as a three- ring circus. With the conference as the centerpiece, the week has become filled not only with the usual owner/banker meetings but formal presentations and the usual bevy of social events. The numbers are astounding with over 1,000 delegates registered this year, exceeding by far all previous years. In fact, as quickly as we printed a copy of the delegate list, we found it to be obsolete.
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.
Spring Awakening (with apologies to the Broadway show)
After being in hibernation or at least in the doldrums, the finance markets are showing signs of activity this week. First out of the blocks, Seaspan gave a double barrel blast. Last Friday, Seaspan announced it had entered into a new term loan facility in the amount of $235.3 million to finance the acquisition of two of its previously acquired 13,100 TEU vessels. The facility was fully underwritten by Sumitomo Mitsui Banking Corporation at a weighted average rate of 0.70% over LIBOR. It is important to emphasize the fact that it was fully underwritten and that the rate, albeit low, was above their historic average weighted cost of below 0.60%. Moreover, Seaspan notes that they now have sufficient credit agreements, with locked-in attractive rates, to fully fund the company’s debt requirements for the entire contracted fleet of 68 vessels while leaving an incremental $550 million in immediate liquidity to capitalize on acquisition opportunities.
CMA-CGM Finds Public Buyers in Marathon
Private equity funds have long had a glamorous reputation as the real movers and shakers in the financial world, buying and selling companies at will and making tremendous returns for their partners and investors. While they are under some pressure now as the easy access to capital they rely upon has been hampered, this was not so in 2006. And it is the 2006 crop of SPACs that is just now coming to maturity, driving the volume of acquisitions by SPACs to $3.9 billion so far this year, more than six times the comparable period in 2007, according to Dealogic.
It was in just this time period, in August 2006 to be precise, that Marathon Acquisition Corp came to the public markets, backed by Michael Gross, a founding partner of private equity powerhouse Apollo. Fast forward to February 2008, however, and Mr. Gross’s SPAC was quickly closing in on its deadline to announce an acquisition target or risk being liquidated. Continue Reading
Harris Antoniou Steps Up
Harris Antoniou last week became Fortis’ CEO of Energy, Commodities and Transportation and member of the Board of Merchant Banking, succeeding Frans van Lanschot, who has been appointed CEO of Specialised Finance. This represents another step up for Mr. Antoniou, who in 2005 left his managing Fortis’ Greek office to head up first the Global Shipping Group and later the Transportation Group in The Netherlands.
Shipping Loan Issuance Hits $94 billion in 2007
The numbers are in. Credit problems aside, syndicated shipping loan issuance in 2007 topped out at $93.9 billion, beating the previous year’s record $76.4 billion. While we did see a fall-off in volume of 17% in the third quarter, 4Q07 and 2H07 issuance were both up, by 23% and 10% respectively. This compares reasonably to global leveraged loan volume, which was up 38% in 2007 to $1.77 trillion. However that rise was almost entirely accounted for by the first half of the year, with global 2H07 issuance down by 38% over 2006.
So shipping, it would appear, has thus far been weathering tight credit markets better than the economy at large. No doubt it is helped out by the fact that the shipping markets themselves have by and large remained at healthy, profitable levels even after coming off the dry bulk boom in the autumn. If you said five years ago that investments were safer in a foreign ship than in a major international bank, people would likely have questioned your sanity. But it couldn’t have turned out to be more true.
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