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Not Pretty – Genmar Obtains Waiver
While it comes as no surprise given the state of the market, General Maritime announced on Monday, after the market closed, that it had reached agreement with its lenders to waive the $35 million minimum cash balance covenant under its $550 million revolving credit facility, its $372 million term loan facility and its $200 million Oaktree Capital Management facility through November 10, 2011 unless an event of default occurs under any of those facilities prior to that date.
In an interesting concession, the lenders agreed that the amortization payment made under the term loan facility on September 30, 2011 would be applied instead to pay down the revolver instead and such amount could be re-borrowed subject to the satisfaction of the borrowing conditions under the facility, the submission of a re-structuring plan satisfactory to the lenders under this facility and the permanent reduction on October 31st of the revolver commitments by this amortization amount.
Eagle Bulk Gets its’ Own Knowledgeable Investor
Oaktree Capital, the seasoned shipping industry player has reported last week that it had purchased 4,900,000 shares of Eagle Bulk through a number of its’ controlled funds. The purchase equates to 7.8% of Eagle shares. The investment is just one of several the group has made in shipping, the most notable perhaps being its close and profitable relationship with Peter Georgiopoulos and General Maritime.
Meeting Its Obligations
In order to satisfy its obligations under the registration rights agreement, General Maritime announced yesterday that it had commenced an exchange offer to exchange up to $300 million principal amount of newly issued 12% Senior Notes due 2017 (“Series B Notes”), registered under the Securities Act of 1933 for a like principal amount of its privately placed outstanding 12% Senior Notes due 2017 sold in November 2009 (“Series B Notes”). The notes are identical in all material respects except that the Series B notes have been registered with the SEC and will not contain terms that restrict transfer or registration rights. The offer will not affect debt levels nor will the company receive any proceeds from the exchange.
Busy Week in the Capital Markets
Congratulations to a Whole Host of Principals and Professionals!
If there is one clear trend that is emerging in the evolution of shipping in the capital markets these days, it is the increasing role of experienced, serial issuers who control multiple companies in different market sectors. This week alone we have Ms. Frangou’s Navios on the road with a high yield bond, Mr. Fredriksen’s Golar on the road with an IPO and Mr. Georgiopoulos’ General Maritime recapitalizing its balance sheet with offerings of both debt and equity. Danaos and DryShips rounded out the week’s activities.
Skillfully blending fresh equity and debt with a generous term out of its current debt facilities, the team at General Maritime announced two transactions this week that successfully achieved the desired result; raising ample liquidity to ensure the company’s financial health with minimal dilution to its existing common shareholders. A transaction of this sensitivity, scale and complexity requires the skill and cooperation of a broad team of people.
The same can be said for any one of this week’s deals, so we would like to extend our congratulations to the key players: Nordea, DnB, Jefferies, Dahlman Rose, Citi, BoA Merrill Lynch, Morgan Stanley, Deutsche, Evercore, S. Goldman, Credit Suisse and, of course, long time General Maritime supporter Oak Tree, who all worked hard to make this one week a week to remember.
Marine Money upcoming conferences, please visit www.marinemoney.com for more details:
Houston, May 4
Istanbul, May 11
Oslo, May 26
Marine Money Week, New York City, June 21-23
A Large Weight Lifted – Genmar Sale-leaseback
What began last quarter as an attempt by General Maritime (“Genmar”) to sell a VLCC to meet the terms of its $22.8 million bridge loan from DnB NOR and Nordea, ended this week with a sale of three unencumbered MR product tankers from the former Arlington fleet to affiliates of Northern Shipping Funds (“NSF”) with a concurrent charter-back. NSF is a leading alternative capital provider focusing on equity investments in the shipping and offshore oil service sectors.
Genmar Buys Time – Amends Loan Agreement and Enters Into Bridge Loan
On Tuesday, General Maritime announced it had amended its Credit Agreement dated July 16, 2010 with Nordea Bank and DnB NOR to allow the company an additional year, ending September 30, 2011, in order to raise a minimum of $52.4 million in new equity (the balance needed to achieve 40% of the purchase price), which will be used to partially finance a portion of the purchase price of the last two vessels to be delivered under the Metrostar agreement.
A Look at the Numbers – “You got to know when to hold ‘em, know when to fold ‘em”
By George Weltman
One does not often hear public companies these days speaking about going private. And why should they? In today’s world of limited bank lending, access to capital is paramount, with liquidity a close second. The world has changed immeasurably from the past when public shipping companies worried about the lack of recognition or respect that their shares received, what perhaps could be called the Rodney Dangerfield syndrome.
Years ago, shipping shares were on no one’s radar and China had yet been admitted to the WTO. Other than OSG, TK and NATS among others in the U.S., shipping shares were mainly traded on international exchanges, where shipping held some importance.
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J.P.Morgan Predicts Tanker Sector Recovery
J.P.Morgan forecasts a tanker market recovery that should begin in the 4th Quarter of 2010 and continue through 2011. The firm reports that current low tanker stock price levels will result in favorable risk/reward outcomes for investors as the market recovers. Thus, J.P.Morgan has shifted their ratings preference to Beta. According to the firm, the companies with the highest forecasted returns are those with the most earnings leverage to spot rates, notably General Maritime and Frontline, which have been upgraded to “Overweight” ratings. Their ratings were previously Neutral and Underweight, respectively.
J.P.Morgan predicts that an increase in demand for OPEC petroleum and an increase in fleet utilization will be the likely causes for increases in tanker stock prices. Further, an expected materially active hurricane season and recent incidents in the Gulf of Mexico and Port of Dalian could also result in increased prices, yet the impact of these types of events on market prices is difficult to predict.
Taking Care of Business
While we know the capital markets are abuzz with activity, there are still the mundane but important things that must be taken care of. On Tuesday, General Maritime amended its $750 million credit facility with Nordea, DnB NOR and HSH Nordbank, as joint lead arrangers and joint bookrunners (the “Credit Facility”) to permit the incurrence of indebtedness under the new $372 million credit facility being utilized for the acquisition of the Metrostar vessels.
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Meeting Its Obligations
In order to satisfy its obligations under the registration rights agreement, General Maritime announced yesterday that it had commenced an exchange offer to exchange up to $300 million principal amount of newly issued 12% Senior Notes due 2017 (“Series B Notes”), registered under the Securities Act of 1933 for a like principal amount of its privately placed outstanding 12% Senior Notes due 2017 sold in November 2009 (“Series B Notes”). The notes are identical in all material respects except that the Series B notes have been registered with the SEC and will not contain terms that restrict transfer or registration rights. The offer will not affect debt levels nor will the company receive any proceeds from the exchange.
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