Last week we were delighted to see that TBS International Limited filed an S-1 with the U.S. SEC for an initial public offering on the NYSE under the ticker symbol TSI. The company seeks to raise up to $125 million through underwriters Merrill Lynch & Co. (who recently financed some of their ships and brought ex-Goldman Banker Mark Friedman on board in February to build a shipping practice) and Jefferies & Company. For those of you who aren’t familiar with the company, TBS is based in Yonkers, New York and provides liner, parcel, bulk and vessel chartering services on a select group of international routes, particularly between Latin America and China and Japan and South Korea. The company currently operates a fleet of 30 vessels, 13 of which are owned, nine of which are under charters with purchase options, and eight of which are under charters without such options.

TBS International’s strategy is and has been to stay away from the vagaries of the tramp market and instead target niche markets, where the necessity of local knowledge and strong customer relationships creates high barriers to entry. The company considers it important to tailor its scheduling to customers like Honeywell in hard-to-reach ports and with unusual carrying needs. Smaller vessels with flexible capabilities allow the vessels access to a variety of smaller ports that the more popular and economical larger vessels cannot reach. Proceeds from the offering are to allow the company to focus on increasing its market share in key routes while developing new trade routes through selected fleet expansion. As far as make-up, TBS intends to maintain its combination dry bulk and multipurpose tweendeckers focus. If suitable vessels are not available to purchase, then proceeds in the meantime will be used to repay debt and for working capital. Memoranda of agreement have, however, been completed for the purchase of three additional dry bulk vessels, as can be seen in the fleet list.

In the “Risk Factors” section, TBS International cites the extent to which its fate is linked with both the Chinese and global economies. The company notes that it has a history of losses – namely five loss-making years since 1997 – and that it filed for bankruptcy in 2000. A large part of this misfortune can be attributed, the company attests, to the sharp decline in the South American and Asian economies from which TBS derives much of its business. Unlike U.S.-flag Horizon Lines, TBS is fully subject to the volatility associated with international shipping; the hope, of course, is that this will also allow investors greater access to upside potential.