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The 3rd Quarter in Pictures
We continue our periodic look at quarterly results for a basket of shipping stocks we’ve been tracking. As in the past, we look at the percentage change in stock prices, comparing the beginning price versus the closing price for the quarter 3Q2011 and 3Q2010. We also look at the percentage change in EBITDA for 3Q2011 versus 3Q2010 and 3Q 2010 versus 3Q2009. This is our version of the proverbial crystal ball.
Just Another Blockbuster
Marry opportunism with an ability to perform and the world is your oyster. Even in these uncertain times Peter G. and his team have a proven capability to perform and hence deals continue to find them. This has been the theme of the past few weeks as Genmar and Genco have made major acquisitions. Last Friday, it was Genco’s turn again and they found a willing seller in Setaf SA, a wholly owned subsidiary of Bourbon, a company, which is mainly focused on the offshore industry, although it had a dry bulk business for diversification.
Sound Bites
The Hellenic/Norwegian-American Chambers of Commerce 17th Annual Joint Shipping Conference was held on Tuesday. It began with Morgan Stanley’s Fotis Giannakoulis telling us everything we need to know about everything to make a decision in these uncertain markets. But for us it is all about finance, so we provide below some sound bites from the conference:
Talk of the Town – A Market View
While in Oslo the week before last, the deal on everyone’s lips was the Golden Close Maritime Corp.’s $460 million senior secured bond offering to finance the Deepsea Metro I, a drillship capable of drilling in water depths of 10,000 feet. Scheduled for delivery on May 2011, the vessel is being constructed in Hyundai Heavy Industries at a contract price of $668.39 million with an all-in delivered cost of approximately $800 million.
Execution in the Face of a Fed Fire Storm
Genco prices and upsizes despite Bernanke comments which sent market tumbling
Credit due Genco team and Deutsche led Bookrunners
Genco Shipping and Trading priced their concurrent Convertible Senior Notes and Common Stock during a day which at first saw the US equity markets trading up until Fed Chairman Bernanke threw cold water on the prospects of economic growth midday, following which the NYSE and NASDAQ suffered dramatic and swift losses. That the Convertible Senior Note transaction was upsized during this maelstrom by 10% and the issuance of 3.125 million shares of common stock was completed just a fraction below the day’s closing price is clear indication of the markets appreciation for Genco and its acquisition of both the Bourbon and Metrostar drybulk vessels.
It is also testament to the transaction execution accomplished by Deutsche Bank Securities, as left lead, BNP Paribas Securities and Credit Suisse Securities who acted as Joint Book Running managers for the offerings. Credit Agricole Securities, DVB Capital Markets, and Knight Capital Markets acted as co-managers for the offerings.
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Just Another Blockbuster
Marry opportunism with an ability to perform and the world is your oyster. Even in these uncertain times Peter G. and his team have a proven capability to perform and hence deals continue to find them. This has been the theme of the past few weeks as Genmar and Genco have made major acquisitions. Last Friday, it was Genco’s turn again and they found a willing seller in Setaf SA, a wholly owned subsidiary of Bourbon, a company, which is mainly focused on the offshore industry, although it had a dry bulk business for diversification.
Although for many it has become passé, perhaps because the world and information move so quickly, Bourbon utilizes a rolling five-year plan. In the latest iteration, “Bourbon 2015 Leadership Strategy,” the company has turned its focus to its offshore activity, which it intends to grow by further investing in innovative and cost effective vessels. By adding 80 supply vessels and 64 crewboats through a $2 billion investment plan in newbuildings, Bourbon will become a major force in the offshore sector operating a fleet of 600 vessels for deepwater and shallow water logistics services by 2015. Financing will come from the sale of its non-core fleet of 16 Supramaxes to Genco, deferred installments on the newbuildings, with 75% due upon completion, and a $400 million 12- year China EXIM Bank loan.
Sister Act
Last but not least, Peter G’s spot trader, Baltic Trading Limited, announced this week that it had agreed to acquire also from Metrostar, three 35,000 DWT Handysize bulkcarriers, including one newbuilding, for an aggregate purchase price of $99.8 million. The three vessels are expected to be delivered in a similar time frame as the Genco vessels.
All three vessels are employed on straight four-year spot market related charters also to Cargill at a rate of 115% of the average daily rates of the BHSI with no structural enhancements. Here, too, Metrostar will retain technical management.
The 2nd Act
When you find a willing seller don’t let him go. Last week, Genco also agreed to purchase five 35,000 DWT Handysize bulkcarriers, including three newbuildings, from Metrostar for an aggregate purchase price of approximately $166.3 million. The five vessels are expected to be delivered between July 2010 and September 2011. The acquisition will increase the fleet to 40 vessels, with a total carrying capacity of ~3.1 million DWT and an average age of 7.1 years.
The vessels are on spot market related charters with Cargill, which are based upon a rate equal to 115% of the Baltic Handysize Index (“BHSI”). Four of the charters are structured with a floor of $8,500 and a ceiling of $13,500 and a profit sharing equal to 50% of the amounts earned above the ceiling. These charters are for 3 years. The fifth vessel is chartered for four years with a rate also equal to 115% of BHSI but is freely floating with no caps or ceilings and no profit sharing.
Here Come the IPOs
This week two IPOs, one dry and one wet, hit the road with well-known sponsors. First was the Genco inspired BDI play, Baltic Trading Limited, which was followed by Mr. Marinakis’, of Capital Products Partners fame, large tanker vehicle, Crude Carriers Corp. These followed quickly on the heels of the recent Scorpio offering.
BDI Proxy
This was one of the first opportunities we had to watch a road show presentation on the great equalizer, “RetailRoadshow” (http://www.retailroadshow.com/index.asp), a website designed to put retail investors on a level playing field with the institutions. The presentation of Baltic Trading Limited was expertly handled, as one would expect, by Peter G. and John Wobensmith, who will respectively fill the positions of Chairman and President of the new company.
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NYMAR Live from the NYSE.
The new year’s first serious shipping gathering in NY took place under the aegis of the NY Maritime Association at the New York Stock Exchange. It was an animated audience that filled the Stock Exchange’s stately hall, though we noted the Exchange’s head of events was relieved that unlike Marine Money Week in 2008 he did not have to contend with 150 more guests than NY City fire codes allowed.
Peter Shaerf, AMA Capital partner and President of NYMAR welcomed the crowd and Bob Gruendel, Partner at DLA Piper brought us to the point of Gazing into the Future through the Crystal Ball and wisely at that point turned to Peter Georgiopoulos, Chairman of Genmar, Genco and Aegean, Duncan Neiderauer, NYSE, CEO and Harvey Pitt currently CEO of Kalorama Partners, but former Head of the US Securities and Exchange Commission.
The following is a short summary paraphrasing the comments, note paraphrasing:
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