The Action Continues at China Exim!

Even as many are trickling back from their summer holidays, the Export-Import Bank of China (“China Exim Bank”) has no time to rest on its laurels as the bank continues to work hard in providing financing to both foreign shipowners and domestic shipbuilders. Last week, the policy bank signed a massive RMB 50 billion (USD 7.35 billion) long-term strategic agreement with Jiangsu Rongsheng Heavy Industries. This is the largest agreement that the policy bank has ever signed with a non-state owned shipbuilder. The cooperation will entail the provision of the different types of bank guarantees required in Jiangsu Rongsheng’s business which include refund guarantees, tender bonds, performance bonds, payment guarantees and seller’s credit. Over RMB 10 billion (USD 1.47 billion) will be set aside for seller’s credit. The latest strategic alliance will greatly enhance Jiangsu Rongsheng’s competitiveness in attracting new shipbuilding orders. Jiangsu Rongsheng is also rumoured to have appointed Morgan Stanley and JP Morgan to revive its IPO plans to raise at least USD 700 million in Hong Kong in the fourth quarter of this year. Continue Reading

Marine Money Capital Market League Tables

Deutsche, Morgan Stanley, DnB NOR, JP Morgan, Pareto and Citi Top League tables from Busy start of the year

By almost every measure, the start of 2010 has been a good one for those working in the capital markets for shipping. Over $2 billion has been raised in the US public equities markets, while in excess of $2 billion has been raised in the Western public debt markets.  What is more another $2 billion in shelf registrations have been filed, with many additional projects at various stages of development.

Part of the story for the first part of 2010 has to be shipping’s remarkable ability to have avoided the catastrophic meltdown so many predicted.  But, perhaps, an even more dramatic story has been the sure arrival of the influence of the public shipping company, with its nearly instant access to capital with which to take advantage of opportunity.

Marine Money’s recent survey of the bank and investment banking communities (see the May issue of Marine Money published shortly for more details) showed that by a wide majority public companies currently do and would continue to enjoy greater access to funding, and therefore a competitive advantage.
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The Importance of Self Preservation

In 2009, the equity markets had a roller coaster run, but some shipping companies found windows of opportunity for share placements, often tied to debt reduction. Self help through raising equity capital for balance sheet recapitalization is one way to ride through the difficult times. There had been varying degrees of success and among the most notable would be Neptune Oriental Lines’ (“NOL”) USD 972 million rights issue in June and NYK’s recently concluded JPY 116.4 billion (USD 1.3 billion) global equity offering. Continue Reading

A Good Citizen

For the benefit of our readers in Asia, we reproduce some excerpts on First Ship Lease (“FSL”)’s suspended USD 200 million notes offering from our sister publication Freshly Minted before we take a little closer look at the motivations behind the shipping trust’s offering. 

“Philip Clausius is a committed man. He moved FSL to Singapore and has become a fixture in the shipping community. But even this was not enough. To further demonstrate his commitment and cement his presence locally, he has become a Singaporean citizen. So it came as no surprise that when the idea of a bond issue was broached, Mr. Clausius wanted a deal done that would tap both the Asian and U.S. investor bases, not just a straight 144A issue marketed to U.S institutional investors, which may have well been easier. Mr. Clausius understood that once established as a “local” issuer in Asia the rates would become highly competitive. Continue Reading

NOL Rights Issue

With the strong support from state-owned Temasek Holdings, Neptune Oriental Lines (“NOL”) announced on Monday that its USD 985 million rights issue has been fully taken up. Looking closer at the numbers, over 97% of the total rights shares were subscribed by the existing shareholders (including Temasek), and the remaining will be allocated to shareholders who had applied for additional rights shares. The excess applications of 81 million shares represent 7.3% of the total rights issue or 2.58 times of the rights shares that were previously not taken up. NOL says preference will be given to the rounding of odd lots, and the Directors and substantial shareholders (including Temasek) will rank last in priority. The success of this massive offering will not be possible if not for Temasek’s commitment in underwriting the entire rights issue. DBS, HSBC, JP Morgan and Morgan Stanley were the lead managers of this issue.

In the latest report on NOL, J.P. Morgan says there is “limited downside to NOL” due less concerns about its balance sheet risks following its recent rights issue but there is better value in OOIL given the former’s cheaper valuations and longer term upside from its property development business in China.

Bottoming Out?

Over the past week, we have experienced the first market rally from a recession trough. Asian stock markets rallied to some of their highest since mid October as investors take confidence in China’s economic recovery. The manufacturing purchasing managers’ index in China rose from 44.8 in March to 51.1 in April, passing the 50-point mark that separates contraction and expansion for the first time in 9 months.

In a market report published last Friday, JP Morgan presented an optimistic view, suggesting that “we are indeed very close to the bottom in global economic activity, and may already be there, with the world economy set to start expanding again in coming months” but acknowledged that there are still many inherent risks since banks and households are still in balance sheet repair mode and a swine flu pandemic cannot be ruled out. Continue Reading

Hapag-Lloyd Ponders Its Future

As questions about Hapag-Lloyd’s future continue to circulate, we thought it worth a refreshed look at how the deal came about and where it might be going. Hapag-Lloyd parent TUI’s interests have long been split between its core tourism business and a fairly substantial container shipping business, representing EUR 449 million and EUR 197 million respectively in 2007 underlying EBITDA. TUI bolstered the shipping side of its business with the $2.3 billion acquisition of CP Ships in late 2005 that was also the catalyst for a $1.8 billion bank refinancing, handled by HVB, Deutsche Bank and Citi, and a EUR $1.75 billion bond issue handled by HVB, HSH, Citi and RBS.
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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.

Surveying the Credit Markets

Marine Money has concluded the collection of data for its 2008 shipping banker survey and would like to sincerely thank all who have participated. We are currently concluding work on our annual shipping portfolio league table and would like to thank the following banks for their cooperation and contribution to the development of a transparent and well-informed ship finance industry: Bank of Ireland, Bank of Scotland, Bremer Landesbank, Calyon, Commerzbank, Danish Ship Finance, Danske Bank, Deutsche Bank, Deutsche Schiffsbank, DnB NOR, Dresdner Bank, DVB, Helaba, HSH Nordbank, HVB, JP Morgan, KfW, Lloyds TSB, Natixis, Nordea and RBS. If you don’t see your bank’s name on the list, think it belongs there, and haven’t been in touch with us this weekend, please send an email to nhuvane@marinemoney.com ASAP to ensure you are included. Both survey and portfolio data will be released in the upcoming May issue of Marine Money.

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Sparks Fly Between NOL and TUI

The Wall Street Journal this week reported that NOL and Hapag-Lloyd parent TUI have retained JP Morgan and Deutsche Bank, respectively, to advise on a possible tie-up that would create one of the world’s largest container shipping enterprises. Such a venture would inevitably involve Singapore state investment company Temasek, which owns 69% of NOL.

Sources in the maritime industry declined comment on the possibility, but reports suggest that potential scenarios include a share swap or a merger between NOL and Hapag-Lloyd directly, with neither Temasek or TUI directly involved in the deal. Analysts pin NOL’s price tag at about $4 billion, a 20% premium to the company’s current market capitalization. They also note that NOL’s trade at a multiple about 20% lower than TUI’s.