Success But at a Price – Box Ships’ IPO

Following quickly on the heels of the Golar LNG Partners LP offering, Box Ships Inc., a wholly owned subsidiary of Paragon Shipping Inc. became the second IPO of the year.  Approximately three weeks ago, the company filed a registration statement to sell 10 million shares of the common stock of the company, leaving Paragon with a 22.7% stake. The sale would include a green shoe of a further 1.5 million shares. Pricing was expected to be between $15 and $17 per share and assuming midpoint pricing, gross proceeds would be $160 million. The net proceeds of the offering would be used to partially fund the acquisition of an initial fleet of six containerships, including three being acquired from Paragon, with an aggregate capacity of 28,177 TEU.

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In Management We Trust

Last week, two Greek owners, true to their heritage, acted upon perceived opportunities and re-positioned their fleets. In a diversification move, Michael Bodouroglou of Paragon Shipping took advantage of the sale and purchase market and sold a contract for one of its three Kamsarmax newbuilding contracts for a profit while agreeing to purchase two 3,400 TEU container ships built at HDW for delivery during July and August. The containerships were purchased for EUR 40 million each. The timing for both was propitious. Values of dry bulk vessels have held up despite a plummeting BDI and despite a recent rise in containership values are near recent lows, while prospects are improving.

Less drastic but still profound was Hellenic Carriers decision to enter into newbuilding contracts for two 82,000 DWT Kamsarmax vessels with Zhejiang Ouhua Shipbuilding Company of China at a price of $34.2 million each. This was an interesting move by Fotini Karamanlis, who has built the company in the Greek style of older second hand tonnage based upon her personal preference for mainly Japanese and Korean construction. A good Chinese yard, favorable pricing (sold a 1993 Panamax for $23.5 million) and tail-heavy payment terms (60% at delivery) were likely convincing. The newbuildings as well as the disposal of older tonnage will reduce the fleet age and increase the focus on the Kamsarmax/Panamax class. Both principals have excellent track records and we expect these moves will benefit shareholders in the long run.

No Hype. We Delivered!

Our Chairman’s promotions are sheer artistry and we constantly marvel at these masterful gems. Of course, there are issues with punctuation but why let that get in the way of a great pitch. The amazing thing is that despite his protests otherwise, he really does get it. Our problem is that he is rubbing off on us and we are moving from analytical and objective to the dark side where it’s all about the love as both Matt and he are fond of saying. In the case of this year’s Marine Money week, there is no doubt we got it right. The numbers speak for themselves. This year we went out on a limb denoting the theme as the Comeback or Confidence Returns to Ship Finance. Whether or not that was the case and we believe it is, 1,078 registered guest wanted to hear the answer. This was a new record surpassing 2008’s 1042 guests. Uncertainty + optimism trump a boom.

We relish the awards afternoon. We devote a great deal of energy, although far less than the dealmakers themselves, in choosing the transactions from the many submissions we receive and it is a pleasure to see the winners bask in the recognition they rightfully deserve. It is also educational as the latest structures and ideas are on display for all to see and take advantage of as appropriate. Nigel Thomas and Dan Rodgers of Watson, Farlay & Williams did a masterful job moderating the session which included presentations by Sheldon Goldman, Efthymios Bouloutas of Marfin, Ronny Bjornadal of Nordea, Sean Durkin of NSF, Gerrit Parker of Citi and Craig Fuehrer of Deutsche Bank.
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Not To Be Left Behind

Last week, Paragon Shipping Inc. filed a shelf registration to sell up to $500 million of various equity and debt securities. In addition, the company registered 9,214,206 shares to be sold in a secondary offering. These shares are controlled by affiliates of Mr. Michael Bodouroglou, the company’s chairman and chief executive officer. Proceeds, excluding the secondary shares, may be used to make vessel acquisitions and capital expenditures, debt repayment, working capital and general corporate purposes.

Not to Be Missed

Despite the difficult environment, a veritable who’s who of the shipping community descended on the Jefferies 5th Annual Shipping, Logistics & Offshore Services Conference on Tuesday and Wednesday.

We must confess that walking in at the uncivilized hour of 8 AM to a sparse crowd and seeing Jefferies Magic Eight Balls gave us pause. Was Hamish making a market statement or was he merely giving investors a new forecasting tool? Our conclusion was probably both.

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Paragon Shelf Offering

Last week, Paragon Shipping Inc. filed a shelf offering to issue various securities of up to $250 million to position themselves with the proverbial “dry powder.” In addition, the company, through this registration statement, provided for a secondary offering of up to 5,283,288 shares, acquired in a private placement prior to the initial public offering, by a company beneficially owned by its Chairman and CEO, Mr. Michael Bodouroglou, and Loeb Partners. Details of the offering are shown in the Guts of the Deal below.

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