Navios Comes Full Circle

Less than 10 days after making its first public F-1 filing, SPAC Navios Maritime Acquisition Corporation successfully priced its 22,000,000 unit IPO at $10.00/unit to raise gross proceeds of $220 million. The deal timetable was ultimately compressed and the deal well oversubscribed by a mix of SPAC investors, shipping fundamental investors, and those who have been following Navios. Units had traded up a half a percent at close today to $10.05 in pleasant contrast to the Dow’s 358 point fall.

The successful issue of the SPAC in itself is evidence of an improved market, and good news for First Class Navigation, which is understood to be currently in the market with a $125 million SPAC. However there is clearly more to it than that. More and more it’s been the “who” mattering as much as the “what” in shipping deals, and nowhere is this more important than a SPAC – where the “who” or the “jockey” is exactly the part of the deal investors bet on. Angeliki Frangou’s success with the International Shipping Enterprises SPAC and its subsequent Navios acquisition and her sharpened roadshow skills no doubt were major forces behind the deal’s success, particularly as both SPAC and shipping investors are familiar with her track record and her story.

As to the specifics of the deal, Navios Maritime Acquisition Corp (“NMAC”) is seeking to acquire one or more assets or operating businesses in the marine transportation and logistics industry, with a primary focus on businesses outside the dry bulk sector. Though some speculation has circulated regarding the use of NMAC as a way to spin out Navios’ logistics operations, the conflicts inherent between the two public companies are too deep to make such a deal attractive or likely, and it should be interesting to see what kind of target with which NMAC emerges.

JP Morgan and Deutsche Bank are acting as joint bookrunning managers on the offering, while S. Goldman Advisors is also participating. A 3,300,000-unit over-allotment option remains outstanding. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo and Fried, Frank, Harris, Shriver & Jacobson are acting as counsel to the underwriters while Reeder & Simpson is acting as counsel for the issuer.

Each unit in the offering consists of one common share and one warrant to purchase a common share at a price of $7.00. Sponsor Navios Maritime Holdings committed to purchase 7,600,000 warrants at $1.00 each simultaneous with the closing of the offering, amounting to a $7.6 million investment or about 3% of the company’s value. The sponsor is also making a $500,000 loan and will hold a 20% stake in NMAC. Backing up the deal’s credibility, NMH and NMAC CEO Angeliki Frangou entered into an agreement with JP Morgan and Deutsche Bank to place limit orders for up to $30 million of NMAC common stock to purchase any shares of our common stock offered for sale (and not purchased by another investor) at or below a price equal to the per-share amount held in our trust account as reported in our initial preliminary proxy statement filed with the SEC relating to the company’s initial business combination, until the earlier of (1) the expiration of the buyback period or (2) the date such purchases reach $30 million in total. She also agreed to vote all such shares in favor of NMAC’s initial business combination.

For a SPAC, of course, the IPO is just the beginning. Much like a private equity firm that has a new fund ready to invest, the real excitement should lie in the months (or year) ahead.

Written by: carisk | Categories: Freshly Minted, Transaction Report | June 26th, 2008 | Add a Comment

Wilson Completes Successful Roadshow and Starts Trading on OSE Today

Bergen-based Wilson Carriers is the latest dry bulk company to list on the OSE and has started trading today under the ticker code WILS. In Ship (owned by Mr. Kristian Eidesvik) sold 35% or 14.8 million shares at NOK 19.50 to selected Norwegian and UK investors raising NOK 288 million. Arrangers DnB NOR Markets and Pareto Securities reported a huge interest in the company, demonstrating investor attraction to their planned dividend stock. The offering was oversubscribed by 3.3 times and sold 20% to retail and 80% to institutional investors. Among other things, the success of the deal is a testament to its perfect timing in that asset prices on dry bulk ships are widely considered to be at the top.

Seeing the rush of capital towards dry bulk deals like DryShips and International Shipping Enterprises and watching the line for this capital begin to form among operators in the United States, Eidesvik-controlled European-focused minibulker Wilson ASA opted to take a different spin on what so far appears to be a successful model.

Testing New Waters

With only indirect exposure to China, the company had a slightly different story to sell, and the current degree of dry bulk liquidity and demand in Oslo has been largely untested. Like its foreign comparables, however, Wilson ASA met with great success this week when it priced its 14.8 million secondary shares at NOK 19.5, above the anticipated range of NOK 16.5-19.

Both upside and downside risk in this deal were narrower than some of its U.S. comparables, as the company maintains a focus on long-term contracts. While part of the purpose of the offering, which raised approximately $47 million in USD terms, is to facilitate the paying down the debt of selling shareholder In Ship, other reasons cited in the prospectus include providing a regulated marketplace for share trading, making the company more transparent and facilitating satisfactory liquidity in the company’s shares by increasing the free float and broadening the shareholder structure.

Wilson owns or operates a fleet of approximately 90 vessels and 15 million tons, making the company the second largest player in the European short sea market. Core tenets of the company’s business strategy include long-term contract portfolios and extensive knowledge of its customers’ needs. The company believes that this structure allows it to ensure high productivity and stable long-term earnings, which makes it quite a different animal than many of the more spot-focused dry bulk deals we have seen.

A Complicated Past

The ownership history of the company is somewhat convoluted but worth reviewing. Wilson Group, consisting of Wilson EuroCarriers AS and Wilson Ship Management AS, was sold by Actinor ASA in 2000; half went to In Ship AS and half went to Caiano. These companies then established Wilson Holding AS, which has since become Wilson ASA. Caiano was already controlled at the time by Kristian Eidesvik, while In Ship AS was owned by Holter-Sørensen Invest (18%) and Ole Henrik Nesheim (82%). Since that time, Caiano acquired all of the voting share in In Ship AS, the selling shareholder in the offering.

Written by: carisk | Categories: Equity, Freshly Minted | March 17th, 2005 | Add a Comment

Marine Money’s 4th Annual German Ship Finance Forum

Marine Money’s 4th Annual German Ship

Finance Forum

Marine Money’s 4th Annual German Ship Finance Forum got off to a smooth start on Thursday with a very brief welcome from organizers Mr. Torsten Temp of HypoVereinsbank and Marine Money’s Peder Bogen. Chairman Dr. Henning Winter of Deutsche Schiffsbank’s board gave an overview of the topics to be addressed during the conference.

Dr. Martin Hüfner, also of HypoVereinsbank, then opened his macroeconomic discussion with an anecdote comparing the links between illness, diet and nationality. He concluded: “Eat what you like! It’s the English that kills you.” As for the global economy, Dr. Hüfner projects growth rates of 3% in 2005 and 2006, down from 4% in 2004, but he describes this change as “back to normality,” noting that 3% is, in fact, as healthy, sustainable growth rate. This idea of a fall back to normality would emerge as a theme throughout the conference, not only regarding the global economy, but more relevantly across the shipping markets.

Dr. Hüfner also noted that a soft landing in China is both important and likely, and that the EMU’s relative position in the global economy is improving. He anticipates a flattening of commodity price increases by 2006 and looks for oil prices to stay in the realm of $40-$45. Finally, Dr. Hüfner explained that the equilibrium interest rate dictated by economic models (in the 5.5-6% range for the US) is substantially higher than what currently exists. He thus expects interest rates to rise, advising shipowners “if you want to have long term money, you should take it today.”

Next up was a discussion moderated by Mr. Nigel Gardiner of Drewry Shipping Consultants, with Mr. Gardiner asking the question of how long this “unprecedented time” would last. Mr. Jarle Hammer of Fearnleys began his speech by noting that he remembered 1973, which was “even better for tankers.” He also remembered, somewhat less fondly, what happened in the shipping markets just after 1973. He discussed how 2001 vessels were going for 26% more than newbuildings while 10-year-old vessels were at times costing only 4% less due to “the value of being here and now.” Mr. Hammer did note that timecharter rates, like global economic growth, are expected to decrease, but to stay at healthy levels.

Mr. Nick Hubbard of Howe Robinson Ship Brokers opened his discussion of the container market in an interesting way, noting that his colleague who normally would have spoken was instead working on a charitable project in Nepal, demonstrating that “there are more important things than ships and boxes.” As for box ships, Mr. Hubbard lauded double-digit growth across all segments of the market in the past year. However, going forward he drew a firm distinction between the North/South and feeder trades, which he expects to remain under supplied, and the East/West trades, which he expects to creep into over supply. He again asserted that freight rates would and should fall, but that they are still very profitable.

Ms. Eva-Maria Busch of Drewry Shipping Consultants then discussed port congestion in a very different light than shipping analysts tend to see. Instead of the decrease in effective supply, and thus improving fundamentals, she saw the long term problems that could be expected to stem from the constant frustration, delays, and extra costs borne by those hiring ships. She expects that costs will be passed more and more on to shippers, while also causing those in need of transportation to consider alternatives to shipping. Importantly, Ms. Busch wants governments to recognize the need for bigger ports and for ports themselves to invest in better technology and more skilled employees.

After a brief coffee break, Mr. Didier Chaleat of Bureau Veritas discussed technical risk. He argued that Class in many cases has to act on behalf of flag states and went through the gist of new classification rules introduced by Bureau Veritas. Mr. Chaleat also noted the need for more intervention and earlier involvement on behalf of classification societies, and stated that his organization’s primary goals are to reduce risk to a minimum and improve the efficiency and long term quality of assets.

Dr. Albrecht Gundermann of LISCR (Deutschland) GmBH then discussed the burdening cost to shipowners of regulatory compliance – or, more accurately, non-compliance. He noted that in 2004 only 0.5% of standard VLCC operating expenditures go to direct costs associated with a flag state, whatever the state. By contrast, the costs of delays caused if, for example, the flag state cannot provide certain documents immediately can be quite high. He ended with the query to shipowners “what has your flag state done lately for you?”

The morning closed with a briefing by Peder Bogen on the state of the banking markets, drawing the conclusion that spreads are just too low and a lively panel discussion featuring Mr. Ingmar Loges, Mr. Hans Petter Aas, Mr. Jean-Yves Gueritaud, Mr. Tjark Woydt and Mr. Han Verschoor. The panelists discussed the fact that during times of low spreads, they must choose loans to make based on quality in order to protect downside risk.

After a soothing lunch, the crowd was reinvigorated for a review of the equity markets by Craig Fuehrer, now of Deutsche Bank Securities. Mr. Fuehrer said that he felt his prediction from Marine Money Week in June still held true: “Big deals and consolidation will continue!”

Glen Oxton of Heally & Baillie LLP then discussed International Shipping Enterprises and the whole idea of a “blank check” company. While the format used by ISE for their offering is usually reserved for “penny stock” offerings of under $5 million – contrasted to ISE’s $180 million plus – Mr. Oxton was able to explain the protection mechanisms for shareholders in the company in a way that made the deal sound much more reasonable than it first appeared, though he did note that ISE “probably have a business plan, they just haven’t disclosed it yet.” He also attributed their success to the strong demand for shipping issues and the credibility of the company’s management.

Bote de Vries of Navigation Finance Corp. then gave a discussion on Islamic Finance, explaining rules like the prohibition of interest, as well as how these deals can still be worked in a way that can be very attractive to those involved. He noted that Sharia’h compliant deals can be very competitive as they have ROE requirements less than the 15-20% typically required of Anglo-Saxon funds while the fees are marginal compared to a German KG alternative.

The last briefing was by Mr. Stephen Hackett of Global Capital Finance who discussed the incredible array of leasing options available. Two final panels closed out the afternoon. The first, moderated by Dr. Winter and composed of Mr. Tobias König, Dr. Axel Schroeder, Mr. Chiristian Freiherr von Olderhausen, Dr. Torsten Teichert and Mr. Axel Steffen, discussed how to cope with high asset prices and a strong euro. A key theme was that asset prices had to be looked at in the context of the lifelong earning prospects of a vessel. In other words, a lucrative 5-year charter does not necessarily justify an overpriced vessel.

This was followed by a lively discussion among Dr. Klaus Meves, Mr. Günther Casjens, Mr. Bertram Rickmers, Mr. Claus-Peter Offen, and Dr. Bernd Kortüm. The three looked at the current high market, and were in relative agreement about some things, like the idea that “just-in-time” service by liners is no longer really feasible. However, they disagreed heartily about the near term future of the container market. Several of the panelists were optimistic that rates would fall softly to profitable levels, while Mr. Rickmers in particular was adamant that prospects for containerships over the next few years are not very good.

Dr. Winter and Mr. Bogen then closed a fascinating day for ship finance. Afterwards, attendees moved into the next room with great windows overlooking the port in Hamburg to enjoy some well-deserved cocktails and some good German beer.

Marine Money’s 4th Annual German Ship Finance Forum got off to a smooth start on Thursday with a very brief welcome from organizers Mr. Torsten Temp of HypoVereinsbank and Marine Money’s Peder Bogen. Chairman Dr. Henning Winter of Deutsche Schiffsbank’s board gave an overview of the topics to be addressed during the conference.

Dr. Martin Hüfner, also of HypoVereinsbank, then opened his macroeconomic discussion with an anecdote comparing the links between illness, diet and nationality. He concluded: “Eat what you like! It’s the English that kills you.” As for the global economy, Dr. Hüfner projects growth rates of 3% in 2005 and 2006, down from 4% in 2004, but he describes this change as “back to normality,” noting that 3% is, in fact, as healthy, sustainable growth rate. This idea of a fall back to normality would emerge as a theme throughout the conference, not only regarding the global economy, but more relevantly across the shipping markets.

Next up was a discussion moderated by Mr. Nigel Gardiner of Drewry Shipping Consultants, with Mr. Gardiner asking the question of how long this “unprecedented time” would last. Mr. Jarle Hammer of Fearnleys began his speech by noting that he remembered 1973, which was “even better for tankers.” He also remembered, somewhat less fondly, what happened in the shipping markets just after 1973. He discussed how 2001 vessels were going for 26% more than newbuildings while 10-year-old vessels were at times costing only 4% less due to “the value of being here and now.” Mr. Hammer did note that timecharter rates, like global economic growth, are expected to decrease, but to stay at healthy levels.

Mr. Nick Hubbard of Howe Robinson Ship Brokers opened his discussion of the container market in an interesting way, noting that his colleague who normally would have spoken was instead working on a charitable project in Nepal, demonstrating that “there are more important things than ships and boxes.” As for box ships, Mr. Hubbard lauded double-digit growth across all segments of the market in the past year. However, going forward he drew a firm distinction between the North/South and feeder trades, which he expects to remain under supplied, and the East/West trades, which he expects to creep into over supply. He again asserted that freight rates would and should fall, but that they are still very profitable.

Ms. Eva-Maria Busch of Drewry Shipping Consultants then discussed port congestion in a very different light than shipping analysts tend to see. Instead of the decrease in effective supply, and thus improving fundamentals, she saw the long term problems that could be expected to stem from the constant frustration, delays, and extra costs borne by those hiring ships. She expects that costs will be passed more and more on to shippers, while also causing those in need of transportation to consider alternatives to shipping. Importantly, Ms. Busch wants governments to recognize the need for bigger ports and for ports themselves to invest in better technology and more skilled employees.

After a brief coffee break, Mr. Didier Chaleat of Bureau Veritas discussed technical risk. He argued that Class in many cases has to act on behalf of flag states and went through the gist of new classification rules introduced by Bureau Veritas. Mr. Chaleat also noted the need for more intervention and earlier involvement on behalf of classification societies, and stated that his organization’s primary goals are to reduce risk to a minimum and improve the efficiency and long term quality of assets.

Dr. Albrecht Gundermann of LISCR (Deutschland) GmBH then discussed the burdening cost to shipowners of regulatory compliance – or, more accurately, non-compliance. He noted that in 2004 only 0.5% of standard VLCC operating expenditures go to direct costs associated with a flag state, whatever the state. By contrast, the costs of delays caused if, for example, the flag state cannot provide certain documents immediately can be quite high. He ended with the query to shipowners “what has your flag state done lately for you?”

The morning closed with a briefing by Peder Bogen on the state of the banking markets, drawing the conclusion that spreads are just too low and a lively panel discussion featuring Mr. Ingmar Loges, Mr. Hans Petter Aas, Mr. Jean-Yves Gueritaud, Mr. Tjark Woydt and Mr. Han Verschoor. The panelists discussed the fact that during times of low spreads, they must choose loans to make based on quality in order to protect downside risk.

After a soothing lunch, the crowd was reinvigorated for a review of the equity markets by Craig Fuehrer, now of Deutsche Bank Securities. Mr. Fuehrer said that he felt his prediction from Marine Money Week in June still held true: “Big deals and consolidation will continue!”

Glen Oxton of Heally & Baillie LLP then discussed International Shipping Enterprises and the whole idea of a “blank check” company. While the format used by ISE for their offering is usually reserved for “penny stock” offerings of under $5 million – contrasted to ISE’s $180 million plus – Mr. Oxton was able to explain the protection mechanisms for shareholders in the company in a way that made the deal sound much more reasonable than it first appeared, though he did note that ISE “probably have a business plan, they just haven’t disclosed it yet.” He also attributed their success to the strong demand for shipping issues and the credibility of the company’s management.

Bote de Vries of Navigation Finance Corp. then gave a discussion on Islamic Finance, explaining rules like the prohibition of interest, as well as how these deals can still be worked in a way that can be very attractive to those involved. He noted that Sharia’h compliant deals can be very competitive as they have ROE requirements less than the 15-20% typically required of Anglo-Saxon funds while the fees are marginal compared to a German KG alternative.

The last briefing was by Mr. Stephen Hackett of Global Capital Finance who discussed the incredible array of leasing options available. Two final panels closed out the afternoon. The first, moderated by Dr. Winter and composed of Mr. Tobias König, Dr. Axel Schroeder, Mr. Christian Freiherr von Olderhausen, Dr. Torsten Teichert and Mr. Axel Steffen, discussed how to cope with high asset prices and a strong euro. A key theme was that asset prices had to be looked at in the context of the lifelong earning prospects of a vessel. In other words, a lucrative 5-year charter does not necessarily justify an overpriced vessel.

This was followed by a lively discussion among Dr. Klaus Meves, Mr. Günther Casjens, Mr. Bertram Rickmers, Mr. Claus-Peter Offen, and Dr. Bernd Kortüm. The three looked at the current high market, and were in relative agreement about some things, like the idea that “just-in-time” service by liners is no longer really feasible. However, they disagreed heartily about the near term future of the container market. Several of the panelists were optimistic that rates would fall softly to profitable levels, while Mr. Rickmers in particular was adamant that prospects for containerships over the next few years are not very good.

Written by: carisk | Categories: Forums, Freshly Minted, German Focus | February 24th, 2005 | Add a Comment

With Trøim at Carnivale in Rio, Shipping Deals Slow Down

Navios Selling, Selling Navios

There’s been a lot of buzz in the ship finance world this week about Lazard’s auction of Connecticut-based Navios Corporation. For those that missed it, Navios major shareholders, which are comprised of the company’s management, the Leventis Group of Greece and Saltchuk of Seattle, together hired investment bank Lazard Freres to sell the asset-light dry bulk owner operator a few months ago, and as bids came in late last week the market was aflutter with speculation and excitement.

Many of the shipping investment banks were representing bidders on the deal, which saw valuations range from $450 million to over $550 million. The deal also piqued the interest of many of the dominant consolidators and traders like OMI, Restis and Fredriksen, along with Goldman Sachs and George Economou‘s recent, oversubscribed and cash-laden DryShips. As we go to press tonight, blank check company International Shipping Enterprises announced that, “following a competitive bidding process, it executed an agreement providing for an exclusive period to negotiate definitive documentation to acquire all of the shares of Navios.”

For those who don’t know the company, Navios was founded 50 years ago as the shipping subsidiary of United States Steel Corporation, and today the fleet is comprised of 28 panamax and handymax vessels. We don’t have the offering memo on this deal, so we won’t even play around with a valuation because it’s impossible to do with any accuracy. Here’s why: of the company’s 28 vessels, the 6 ultra handymaxes are owned, and of the 22 long-term time chartered vessels, 15 are currently in operation and the remaining seven are scheduled for delivery at various times over the next two years. Moreover, Navios has options to acquire 13 of the time-chartered vessels. Further, we suspect that the owned vessels have a substantial net asset value and historically the vessels controlled under the largely Japanese charters-in have low daily rates and cheap purchase options. If that weren’t enough of a rat’s nest for valuation, Navios generates loads of money trading ships and FFAs and owns and operates a bulk terminal in Uruguay to boot. That’s why we won’t touch it.

We will say, however, that we always find it fascinating when asset-light shipping companies, whether they are traders or non-owning pools, solicit a valuation for their businesses. We say fascinating because historically shipping companies have had a hard time proving worth beyond steel irrespective of the talents of their management or sophistication of their software. That said, there have been some success stories, the best of which is Noble Group, which has a $3 billion market capitalization on the Singapore Stock Exchange. PacBasin also got some credit for its management. Noble, like Navios, owns few ships but instead make their money trading commodities.

Until we have more information, all we will say is this: if any asset-light shipping company could break ground in gaining a high valuation, it is Navios and it is now. The company has an incredibly good reputation and has developed what we understand to be highly efficient freight forecasting models – which begs another question: why are they selling?

Navios Selling, Selling Navios

There’s been a lot of buzz in the ship finance world this week about Lazard’s auction of Connecticut-based Navios Corporation. For those that missed it, Navios major shareholders, which are comprised of the company’s management, the Leventis Group of Greece and Saltchuk of Seattle, together hired investment bank Lazard Freres to sell the asset-light dry bulk owner operator a few months ago, and as bids came in late last week the market was aflutter with speculation and excitement.

Many of the shipping investment banks were representing bidders on the deal, which saw valuations range from $450 million to over $550 million. The deal also piqued the interest of many of the dominant consolidators and traders like OMI, Restis and Fredriksen, along with Goldman Sachs and George Economou‘s recent, oversubscribed and cash-laden DryShips. As we go to press tonight, blank check company International Shipping Enterprises announced that, “following a competitive bidding process, it executed an agreement providing for an exclusive period to negotiate definitive documentation to acquire all of the shares of Navios.”

For those who don’t know the company, Navios was founded 50 years ago as the shipping subsidiary of United States Steel Corporation, and today the fleet is comprised of 28 panamax and handymax vessels. We don’t have the offering memo on this deal, so we won’t even play around with a valuation because it’s impossible to do with any accuracy. Here’s why: of the company’s 28 vessels, the 6 ultra handymaxes are owned, and of the 22 long-term time chartered vessels, 15 are currently in operation and the remaining seven are scheduled for delivery at various times over the next two years. Moreover, Navios has options to acquire 13 of the time-chartered vessels. Further, we suspect that the owned vessels have a substantial net asset value and historically the vessels controlled under the largely Japanese charters-in have low daily rates and cheap purchase options. If that weren’t enough of a rat’s nest for valuation, Navios generates loads of money trading ships and FFAs and owns and operates a bulk terminal in Uruguay to boot. That’s why we won’t touch it.

Written by: carisk | Categories: Freshly Minted, Mergers & Acquisitions | February 10th, 2005 | Add a Comment