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Banking Crisis? Not an Issue for BW Group or NOL
2012 is broadly expected to be challenging for both shipping lenders and borrowers. As long as the Euro debt crisis persists and continues to worsen, capital will become increasing scarce. Even shipping companies at the top of the pyramid are busy strengthening their balance sheets and making sure that they have adequate funds to meet capital expenditure requirements in the coming years.
One of the world’s leading maritime companies BW Group has successfully completed a USD 1.5 billion seven-year revolver in mid-November. According to market sources, the proceeds will be used for refinancing and the participants are largely from the previous revolving facility. Pricing is said to be “slightly higher” than the previous revolving facility, although it remains highly competitive in today’s tight market conditions. Continue Reading
Scorpio’s Opportunistic Equity Funding
Utilizing its earlier $500 million existing shelf registration, Scorpio Tankers, Inc. announced yesterday a follow-on offering of 7 million shares, with Morgan Stanley acting as sole book-running manager and Fearnley Fonds ASA as co-manager. The shares closed that night at $6.66 and were priced today at $5.50/share, a discount of 17.4%, raising gross proceeds of $38.5 million. A member of the insider Lolli-Ghetti family was allocated 700 thousand of the shares.
Proceeds of the offering will initially be used to partially repay outstanding indebtedness under the company’s 2010 revolving credit facility with Nordea and for general corporate purposes. The company then intends to re-draw all or a portion of the amount available under the revolver to fund the acquisition of two 52,000 DWT newbuildings that it is currently negotiating to have constructed at South Korea’s Hyundai Mipo Dockyard.
Star Bulk Shifts Lenders
Last week, Star Bulk Carriers Corp. announced the re-financing of its two existing loan facilities with Piraeus Bank utilizing the proceeds of a new $64.5 million secured term loan from HSH Nordbank and $5.3 million in cash. The loan has a five year term and bears interest at LIBOR plus a spread. Although little changes in the amount of outstanding debt, the terms of the new loan extend the average life while reducing interest costs. We also suspect that the Greek banks are not having an easy time of it, as well, making the change even more sensible.
Robin Das Exits
After years of service, Robin Das, Global Head of Shipping at HSH Nordbank will be leaving the bank. Always thoughtful, this superb banker successfully stepped in for Harald Kuznik and continued to manage the difficult re-positioning of the bank during the recent financial and shipping crises. Moreover, for us he was always a great source of insights into the banking world. He will be missed but we take comfort in the certainty that he will be successful in his future undertakings. Christian Nieswandt will assume the position of Acting Head of the Shipping Business Unit. Good luck Robin and Christian!
Banking Outlook – An Insider’s View
As part of the Jefferies Conference, last week, Robin Das of HSH Nordbank shared his thoughts on ship lending during the keynote address. While none of it was surprising, it was an excellent précis on the state of the industry and for that reason we chose to de-couple it from last week’s conference review.
With a portfolio of $42 billion, of which approximately $28 billion is in the core bank, HSH Nordbank remains a player, being one of the 20-25 mainstream active lenders to the industry. The good news is that there is more liquidity than in 2010, which he terms the low point of liquidity from the banks. It remains a market of haves and have-nots with the haves benefiting from the competitive nature of the banks and enjoying improving terms including lower pricing and higher advances. Robin characterizes the market as being “all over the place.” Transaction terms vary dramatically and are specific to a combination of bank, borrower, market/asset type as well as a host of other subjective factors. The relationship over the years, the strength of the balance sheet and track record are also key factors in the credit decision.
Chinese Ship Finance – On Hold?
By Nigel Ward, Partner, Norton Rose LLP
In 2008/9 the Chinese banks were looked to as the only remaining hope for international ship finance – the last pool of bank debt that could be harnessed to replace the withdrawing European banks and to satisfy the capital requirements of owners with existing new building orders in the shipyards of the world. Just as many other countries, but on a larger scale, China responded to the global financial crisis by injecting significant liquidity into its domestic market.
A large part of that liquidity was funnelled through the public sector banks and much of it was deployed in support of infrastructure projects sponsored by regional and municipal authorities, to pump up domestic consumption and to fund state owned enterprises in support of export manufacturing, business investments and the acquisition of strategic resources abroad. Continue Reading
Marrying the Bankers’ Greatest Nightmare with the Advisors’ Dream – Omega Navigation Files Chapter 11
Last Friday, after the markets closed, Omega Navigation Enterprises Inc. announced that it along with certain subsidiaries had filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The filing seeks protection for the publicly listed company and all of its 100% owned vessel owning companies. Excluded from the filing is the company’s technical vessel manager, Omega Management, Inc. as well as two subsidiaries which hold part interests in five on the water vessels and two newbuildings under construction.
Plop-plop, Fizz-fizz, Oh What a Relief It Is” – TORM Extends
On Wednesday, TORM was able to announce an actual, as opposed to rumored, refinancing of its $900 million revolving credit facility with Danske Bank, BNP Paribas, HSH Nordbank, and SEB which was scheduled to mature in 2013 with a bullet payment of $630 million. Conditioned upon a cash equity raise of $100 million, likely a rights issue, to be completed by December 15th, the banks have agreed to extend the maturity to 2015, when it matures with a bullet payment of $480 million. The difference in the balloon payments of $150 million will be amortized during that two year period. The facility will retain the current covenant package and will include a market value test applicable from 2013 as well as dividend restrictions.
An Ode to Magicians
At showtime, it all looks easy, but the weeks preceding Marine Money Week are a whirlwind. It’s interesting being an insider and a somewhat dispassionate observer. You hear the plans beginning in March. The phone calls and emails begin soon after as the agenda takes form and speaker requests are sent. Worry and frustration sets in. Is the agenda good? Will we get the speakers we need? Has anyone signed up? What can we do that will make this better than last year’s? Conference calls between Guilford and Stamford are many. Then the artist of promotion sits down at his computer and starts to whip out one promotion after another, each one better than the preceding. The trickle of registrations begins. Companies plan their events around the week. First Morgan Stanley announces its investor conference, and then a newcomer, Ship Finance follows suit with an investor/analyst meeting. As if a party planner was involved, the social events begin to fall into place as DnB Citi/Watson Farley, Jefferies, BNP, Dahlman Rose and HSH Nordbank all do their thing. Still we worry. It’s hard to get the moderators and speaker’s attention. As envelopes are stuffed and badges made, the numbers creep up and begin to approach last year’s. Jim still worries and runs into the city to help some moderators and calm their nerves. Then there’s MOMA, something new and therefore worrisome, but not to worry Lorraine’s taken charge. And then suddenly its Tuesday and as always is the case it all falls into place. Jim will remain nervous till the end but it is all under control and no one knows differently. The Marine Money magicians have pulled it off again. Kudos to Jim, Matt, Mike, the irrepressible Lorraine, Julia, Elisa, Cari, Margareta, Mike, Andrea Sarah, Adam and this year’s summer interns, Maren and Florian for a job well done.
HSH Nordbank Shows Commitment in Asia
What do DnB NOR, Nordea and HSH Nordbank have in common? A similarity that easily comes to mind would be that all three banks are major ship financiers with a large presence in Singapore. But do you know that not only are their shipping team based in Singapore, they are headed by Singaporean bankers too. Nordea appointed Mr. Kwek Chih Keong as its Head of Shipping and Oil Services – Asia in June last year and Mr. Andrew Chiang, Regional Head Asia Shipping, Offshore & Logistics took over as DnB NOR’s Regional Head Asia Shipping, Offshore & Logistics in 2008. Last month, in a move that comes as an eyebrow-raising surprise to many in the industry, Mr. Lee Keng Mun joined HSH Nordbank as the new Head of Shipping Asia. Marine Money spoke to the veteran last Friday for some quips on his latest appointment.
Having spent seven years in DBS Bank as its Managing Director and Head of Shipping & Aviation, Institutional Banking Group, Mr. Lee has been widely credited for spearheading the growth in the bank’s transportation business. Prior to DBS Bank, he spent many years as a senior relationship manager at DnB NOR covering clients in the Asia Pacific region. “I had a fantastic time at DBS especially during the initial years, when I had to roll up sleeves and work hard on building the bank’s transportation team and growing the franchise. And when the opportunity to do the same at HSH Nordbank came along, it is hard for me to refuse. Now that market sentiments have recovered significantly, it is about time for me to leave DBS on that positive note and take up the new challenge,” he said. Continue Reading
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