OSG Goes the High Yield Route

Following its recent equity offering, OSG announced on Monday its plans to issue $300 million of unsecured senior notes due in 2018. Proceeds will be used to pay down the balance on the company’s $1.8 billion senior revolver due in February 2013 that bears interest at LIBOR + 70 bps. As of year-end, the revolver balance was $654 million and under its terms the facility steps down $150 million annually in 2011 and 2012 before the final maturity in 2013.
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Me TOO

On Tuesday, Teekay Offshore Partners L.P. announced that it too intended to raise equity by selling 4.4 million common units, while giving the underwriters an option to purchase a further 0.66 million shares to cover over-allotments. The deal priced the next day at $19.48/ unit, a discount of 4.98% from the prior day’s close. Gross proceeds of the offering will be $85.7 million.
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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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Swap to Extend

On Tuesday, Teekay Corporation announced a cash tender offer for all of its outstanding 8.875% Senior Notes due 2011. As of December 31, 2009, $176.6 million aggregate principal amount of these notes were outstanding. The total consideration for the tender offer will be $1,078 per $1,000 principal amount, consisting of a tender offer premium of $60 and a consent payment of $18 for early tenders. The offer, managed by J.P. Morgan, is scheduled to expire February 9th.
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A Great Catch

It is official! Hugh Baker, formerly of HSH-Nordbank and ING, will join Evercore Partners as a Managing Director reporting to Mark Friedman. According to Mr. Friedman, “ We feel very fortunate to bring Hugh to Evercore.  He is an extraordinarily talented banker with deep industry knowledge and strong relationships globally.   His skills and relationships make him a perfect fit for Evercore’s shipping restructuring and advisory practice.” Welcome aboard.

A First

These are difficult times and, as the expression goes, there is a first time for everything. Last week, A.P. Moeller – Maersk A/S (“Maersk”) successfully placed a EUR 750 million ($1.3 billion) five-year bond with a coupon of 4.875%, which equates to 237bps over German government debt, according to Pareto.  This is the company’s first bond issuance and was 6.5 times oversubscribed.

Proceeds from the offering will be used for general corporate purposes and for repayment of drawings under longer-term bank revolving facilities that will be retained as liquidity buffers.

This transaction follows a recent equity offering of $1.7billion evidencing that even for the best there is never enough liquidity.

Danske Bank, HSBC, ING, J.P. Morgan and Nordea placed the bonds, which will be listed in Copenhagen and Luxembourg.

No Surprises This Quarter Either

On Wednesday, Dealogic released its Bookrunner and MLA Tables for Syndicated Shipping Loans for the 9 months 2009. As expected, total volume and transactions were well down from the prior year. Total deal volume was $25.6 billion in 85 transactions compared to $72.2 billion in 263 transactions over the same period in 2008, confirming what we hear anecdotally. In percentage terms, the nine-month decline was 64.5%, which was less than the quarter over quarter reduction of 73.9% suggesting relief is not yet in sight.

Looking at the changes in the tables from the first half of the year, there was movement in the bookrunner table (figure 1) as Mitsubishi UFJ jumped from 8th place to 1st on the strength of two NYK deals booked at the end of September. This pushed SMBC into 2nd place. In a similar fashion, ING moved from 9th to 3rd on the back of the Bluewater transaction, while BofA Merrill Lynch, which was not even in the top 20 came out of nowhere to finish in 9th place based upon the Tidewater transaction. DnB NOR and Mizuho rounded out the top five finishers. The data is particularly striking in that 9 banks made the top 20 having done only a single transaction.

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The Economy and the Markets

STAY HOPEFUL
Investor sentiment is very often unpredictable and moody, especially today when economic data continues to come in mixed and casts doubts on whether the economic stabilization will be able to materialise into a recovery. And against this uncertain backdrop, it was refreshing to listen to an optimistic voice among the crowd on where the global economy is heading. François Trahan, Senior Managing Director and Chief Investment Strategist, ISI Group started off the Wednesday’s session of Marine Money Week on a positive note by reminding the audience that even though consumer deleveraging has already begun and may well continue for the next decade, equities can rally even during such times if the government is able to offset the consumer contraction. He pointed out that the US stimulus package is still very much in its infancy stage considering the fact that the government has only spent 5% or USD 42 billion out of the USD 787 billion.

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Euronav & OSG Credit Facility

On Monday, OSG and Euronav jointly announced a $500 million senior secured loan to finance the acquisition of TI Asia and TI Africa, both built in 2002, by joint venture companies equally owned by Euronav and OSG and the conversion of the ships into FSO service vessels. The vessels are scheduled to deliver to Maersk Oil Qatar on the Al Shaheen field offshore Qatar and start operations respectively in July and September 2009.
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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.