When the purchase of GE SeaCo by the HNA Group was announced, details of the transaction were few and difficult to come by. We scoured our contacts and were able to glean some color. We reprise the salient points below with the new details interspersed.
As the fifth largest player in the global marine container leasing industry, GE SeaCo owns and manages over 870,000 20-foot equivalent units, the industry’s standard measure of fleet size. The company was put into play last year as part of GE’s plan to shed financial assets and emphasize its industrial businesses. From its original beginning as Genstar, the container leasing business has never been a great success for GE Capital.
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Dahlman Rose & Co Add Powerhouse Chairman
Well know financier Kim Fennebresque has joined Dahlman Rose as the firm’s Chairman. The move continues the investment bank’s enormously successful development built on commitment to client service, top shelf independent research and superior personnel recruitment over the past half dozen years. In fact the current move should accelerate the firm’s growth and strengthen it’s already considerable platform.
Mr. Fennebresque joins Dahlman Rose after a distinguished career, which started at The First Boston Corporation in 1977. His career path since then could be used as a business school model for just how to gain valuable experience, contacts and skills needed to lead a successful investment bank. Mr. Fennebresque left First Boston in 1991 to join Lazard Freres as a General partner where he remained until joining UBS to lead that bank’s Mergers & Acquisitions and Corporate Finance departments.
Then in 1998 he joined SG Cowen, the US subsidiary of Societe Generale. He served as President, CEO and Chairman for most of his tenure at Cowen. It was that sort of reputation which led the US Treasury to ask him to join the Board of GMAC.
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For years, while working at GE Capital, we were burdened by pricing parameters that required spreads of 300 to 400 bps over LIBOR. This reflected our view of the perceived risk as well as our costs based upon markedly lower leverage than the banks. We now understand that the banks have now caught up and spreads are approaching these levels. Of course the sad part is that GE has thrown in the towel on the transportation business ending an involvement that began over 30 years ago.
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carisk | Categories:
Freshly Minted,
The Week in Review | February 12th, 2009 |
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On Tuesday, just a week after Quintana‘s press release announcing the termination of the sale process, Excel and Quintana jointly announced that Excel had, over the weekend, agreed to acquire Quintana pursuant to a definitive merger agreement whereby Quintana would become a wholly owned subsidiary of Excel. The purchase price will be approximately $2.2 billion (based upon Excel’s closing price of $33.00), including net debt of Quintana and other costs.
Under the terms of the agreement, Quintana shareholders will receive a combination of cash and stock. Each Quintana share will receive $13.00 in cash and 0.4084 shares of Class A common stock in Excel. Based upon Monday’s closing price, the offer represents a total value of $26.48 per share, representing a 57% premium to Quintana’s closing price on that day of $16.89 and a 34% premium to Quintana’s 30-day average price. The agreement provides for a cap of $31.38 based upon an Excel share price of $45.00 as well as price adjustments for dividend payments. Continue Reading
FM understands that former GE Capital shipping banker Kevin Kennedy, who has been involved with Great Circle Capital in recent years, has joined Vancouver-based Seaspan as CFO. The combination seems like an absolutely perfect fit for both sides. While at GE, Kennedy was active in doing structured financing and leasing for marine assets – which is exactly what Seaspan does through its long-term charters of container vessels to China Shipping and CP Ships. Now everyone who knows us knows we hate to speculate, but when we see a company like Seaspan hire a CFO like Kevin Kennedy at a time like this, we cannot help but wonder if they aren’t considering a major corporate transaction such as an IPO or major acquisition.
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carisk | Categories:
Freshly Minted,
People & Places | May 26th, 2005 |
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After initiating bullish coverage on DryShips last week, Dahlman Rose & Company has issued a comprehensive report covering the entire dry bulk shipping sector. With dry bulk IPOs lined up at the SEC and owners believing, with conviction, that the boom will continue, a report predicting that the supply/demand balance will remain tight in the sector for the foreseeable future is a welcome one indeed. The Dahlman Rose analysts attribute the strength of the dry bulk market to the strength of the world economy, and they back up their belief in this with sections dedicated to macro economic drivers, the impact of China and an analysis of bulk commodity markets including steel, iron ore, coal and grain.
The analysts further consider the age profile of the global dry bulk fleet, current orderbooks, shipyard capacity and port congestion to come to a forecast for the supply side of the dry bulk shipping equation. The report concludes that commodity demand will continue to increase faster than supply, particularly as the 37% of the world dry bulk fleet over 20 years old is nearing retirement age. As a result, Dahlman Rose expects the supply/demand imbalance that has proven so fortuitous for ship owners and operators to continue at least another three years “barring a global recession or some exogenous system shock.”
The 2nd Annual Marine Money Istanbul Ship Finance Forum, was held on Thursday, 7th April 2005, at the Swissotel – The Bosphorus in Istanbul. The mood was buoyant as the Turkish shipping community continued to enjoy the high shipping market and the boom in shipbuilding activities in the country’s shipyards. Istanbul was also enjoying considerable focus from foreign financiers and shipping service providers as evidenced by over 70 non-Turkish participants in the total number of 250 speakers and delegates.
We would like to thank our anchor sponsor Geden Lines and our prime sponsor Turkon Line as well as our many corporate sponsors for the success of our event this year. Support as always was given by the Turkish Chamber of Shipping and its president Metin Kalkavan.
The day started with a previously unannounced presentation from Michael Drayton, Chairman-elect of the Baltic Exchange to Metin Kalkavan and Erol Yucel of the Turkish Chamber of Shipping, for the many years of close co-operation between the two.
Our presentations started with a review of the world economic outlook by Dr. Christina Stahn of HSH Nordbank. This was followed by a wet and dry market review from Galbraiths. Overall both the economic outlook and the wet market outlook were optimistic. But Dr. Philip Rogers stunned the audience by painting a rather gloomy picture of the dry market over the next 18 months. The supply of new ships will well outstrip the increased demand, he said. Today’s high freight rates will be a distant dream, and shipowners may well see historical lows again in dry bulk. Needless to say, this caused quite a stir, as well as some aggravated discussion in the coffee break that followed.
The international finance community, represented by DVB Bank, HSH Nordbank, GE Capital and Caterpillar Financial Services discussed lending at the top of the market. All cautioned against being too aggressive in this high market, but all also reiterated their commitment to the Turkish market in the year ahead.
After lunch we had three presentations on alternative financing opportunities for Turkish owners. These involved KG Finance, presented by Christian Salamon of Salamon AG, Islamic Finance presented by Bote de Vries of DVB and NFC Shipping Funds and U.S. capital markets by Stefanie Kasselakis of Jefferies & Co. Ms. Kasselakis also discussed market sentiment and, contrary to Galbraiths, painted a fairly rosy picture of the next few years in the dry market with China’s continued growth keeping freight rates healthily high.
After hearing about the importance of class from Gunay Surenkok of DNV, our final session discussed Turkish shipbuilding and its continuing performance riding the boom market. Turkish bank representatives, as well as panelists from a Turkish shipyard and a Greek owner building in Turkey, advised that Turkish shipbuilding is here to stay, with yard orderbooks full through 2007 and beyond. And the Turkish banks are increasingly willing to finance this construction boom; they are also initiating term loans for Turkish shipowners for vessels post-delivery, something which even last year was still consigned to the drawing board.
Metin Kalkavan of the Turkish Chamber of Shipping and Kevin Oates of Marine Money Greece brought the day to an end with reflective closing remarks.
There is no doubt that Turkish shipping is on the radar screen of the international finance community, and Marine Money is intent on continuing to bring that community to Istanbul.
Incidentally, the night before the conference there was also very enjoyable Speaker’s Dinner, which was attended by virtually all of the major players in the Turkish shipowning community. We were privileged also to have the Minister of Transport, Mr. Binali Yildirim, who gave a speech highlighting developments in Turkish shipping and the maritime sector. To note is that Mr. Yildirim is a naval architect by training and was previously a finance director in a major Turkish shipping sector. That alone shows the determination of Turkey to support its maritime industry!!
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carisk | Categories:
Freshly Minted,
The Week in Review | April 14th, 2005 |
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Just weeks after calling a default and arresting ships of bankrupt borrower Torch Offshore, GE Capital has arrested two tour boats owned by Honolulu-based Dream Cruises, which subsequently filed for bankruptcy. According to press reports, GE had U.S. Marshals seize the two vessels because the company was in default of a $1.4 million mortgage on the vessels. The company operates whale and dolphin tours, snorkel activities and sunset cruises on O’ahu and the Big Island. “This filing is intended to allow us to regain our boats so we can continue normal business operations,” said Mike Watson, president of Aquamarine Inc., which operates Dream Cruises. “Because GE Capital refuses to accept what we believe is a fair and reasonable repayment schedule, we unfortunately have no choice but to ask for the court’s intervention.”
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carisk | Categories:
Bank Debt,
Freshly Minted | March 24th, 2005 |
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There have reports in the financial press this week that acquisition-hungry GE Capital may soon offer to buy NIB Capital, which has a strong presence in the marine financing business. NIB Capital has engaged Goldman Sachs to run the sale of the company either through an IPO or to a strategic buyer, and GE Capital, which in recent years has used major portfolio acquisitions as a method of achieving meaningful growth, has emerged as a likely buyer. The transaction comes at a time of great success at NIB, which had $228 million in net income in 2004, up from just $96.8 million in 2003. As demonstrated by its purchase of the structured finance unit of ABB for $2.3 billion, GE has clearly sets its sites on the $3 trillion European financing market as an opportunity for growth.
Torch Offshore – Up in Flames
It’s been a bad start to the year for Torch Offshore, Inc. (NASDAQ: TORC), the company established in 1978 to work on shallow water offshore pipeline installation and subsea construction for the oil and natural gas industry. In late December 2004, Torch announced that three of its vessels, the Midnight Express, Midnight Wrangler and Midnight Eagle, had been arrested by U.S. Marshals on behalf of creditors GE Capital, which declared an event of default and invoked a default interest rate of 18%.
Unable to cure the default, Torch filed for bankruptcy protection on January 12th and was de-listed from the NASDAQ a week later. Concurrent with the filing, Torch secured a new debtor in possession (DIP) financing of $6.9 million from Regions Bank and EDC, its two other lenders, that matures on April 1, 2005. In addition, the banks have agreed to provide a discretionary facility of up to $2.0 million for bonding and letters of credit. The interest rate on the DIP Facility is the prime rate plus 4.00% per annum.
At the time of the filing, Torch’s CEO Lyle Stockstill said, “The Company has been operating with a highly leveraged balance sheet for some time now, mostly due to the conversion efforts associated with the Midnight Express.” The Midnight Express was a conversion of a Smit vessel that was done in Quebec, which is why EDC was involved. In addition to the poor market, Torch’s conversion of the former 8,638-dwt Smit Express (built 1984) reportedly jumped to about $115 million from original budget estimates of about $90 million.
Torch’s filings with the SEC are a reminder to how unpleasant it can be working under bankruptcy. According to the documents, “the DIP Facility requires the Company to meet certain obligations, including the delivery of a weekly written report with respect to the cash flow forecast compared to actual results, quarterly and annual financial statements, and certificates of compliance on a quarterly and annual basis. The Company is also subject to limitations on paying indebtedness, creating liens against their property, and the weekly actual borrowing base test (as defined) cannot vary by more than 5% (in the negative) from the Company’s forecasted borrowing base test.
It’s been a bad start to the year for Torch Offshore, Inc. (NASDAQ: TORC), the company established in 1978 to work on shallow water offshore pipeline installation and subsea construction for the oil and natural gas industry. In late December 2004, Torch announced that three of its vessels, the Midnight Express, Midnight Wrangler and Midnight Eagle, had been arrested by U.S. Marshals on behalf of creditors GE Capital, which declared an event of default and invoked a default interest rate of 18%.
Unable to cure the default, Torch filed for bankruptcy protection on January 12th and was de-listed from the NASDAQ a week later. Concurrent with the filing, Torch secured a new debtor in possession (DIP) financing of $6.9 million from Regions Bank and EDC, its two other lenders, that matures on April 1, 2005. In addition, the banks have agreed to provide a discretionary facility of up to $2.0 million for bonding and letters of credit. The interest rate on the DIP Facility is the prime rate plus 4.00% per annum.
At the time of the filing, Torch’s CEO Lyle Stockstill said, “The Company has been operating with a highly leveraged balance sheet for some time now, mostly due to the conversion efforts associated with the Midnight Express.” The Midnight Express was a conversion of a Smit vessel that was done in Quebec, which is why EDC was involved. In addition to the poor market, Torch’s conversion of the former 8,638-dwt Smit Express (built 1984) reportedly jumped to about $115 million from original budget estimates of about $90 million.
Torch’s filings with the SEC are a reminder to how unpleasant it can be working under bankruptcy. According to the documents, “the DIP Facility requires the Company to meet certain obligations, including the delivery of a weekly written report with respect to the cash flow forecast compared to actual results, quarterly and annual financial statements, and certificates of compliance on a quarterly and annual basis. The Company is also subject to limitations on paying indebtedness, creating liens against their property, and the weekly actual borrowing base test (as defined) cannot vary by more than 5% (in the negative) from the Company’s forecasted borrowing base test.
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carisk | Categories:
Equity,
Freshly Minted | February 23rd, 2005 |
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