Links
Transocean goes All-In Raising $1.08 billion in Equity and $2.5 billion in Debt
During the last days of November, Transocean Ltd re-jiggered its balance sheet through an equity follow-on offering and the issuance of serial bonds. First up was the follow-on offering for 26 million shares with a green shoe of a further 3.9 million shares. The offering was priced, through an accelerated bookbuilding process, at $40.50/share (based upon an exchange rate of CHF 0.9215/USD), a discount of 11.8% from the prior day’s closing price when the offering was announced. Proceeds of the share offering will be used to partially re-finance the company’s acquisition of Aker Drilling ASA, which was originally financed from cash and assumption of Aker’s outstanding debt. The replenished cash will be applied to the expected repurchase of approximately $1.7 billion of its 1.5% Series B Convertible Senior Notes due 2037 that holders may require it to re-purchase in December 2011. Barclays Capital and Credit Suisse acted as joint book-running managers of the offering.
Scorpio’s Opportunistic Equity Funding
Utilizing its earlier $500 million existing shelf registration, Scorpio Tankers, Inc. announced yesterday a follow-on offering of 7 million shares, with Morgan Stanley acting as sole book-running manager and Fearnley Fonds ASA as co-manager. The shares closed that night at $6.66 and were priced today at $5.50/share, a discount of 17.4%, raising gross proceeds of $38.5 million. A member of the insider Lolli-Ghetti family was allocated 700 thousand of the shares.
Proceeds of the offering will initially be used to partially repay outstanding indebtedness under the company’s 2010 revolving credit facility with Nordea and for general corporate purposes. The company then intends to re-draw all or a portion of the amount available under the revolver to fund the acquisition of two 52,000 DWT newbuildings that it is currently negotiating to have constructed at South Korea’s Hyundai Mipo Dockyard.
For Visibility & Liquidity, Pacific Drilling Comes to NY
On November 7th, Pacific Drilling S.A., a company controlled by the Ofer family through Quantum Pacific Group, announced an initial public offering of six million of its shares, which will be traded on the New York Stock Exchange. Previously in April 2011, the company completed an offering of 60 million shares to qualified international and U.S. investors In accordance with Regulations S and D under the Securities Act of 1933. These shares currently trade on the Norwegian OTC List. Following the completion of the IPO, 41.85 million of these shares sold pursuant to Regulation S may be re-sold immediately in the U.S. market creating a substantial overhang. Post-offering, Quantum Pacific will own 150 million shares representing 69.4% of the total outstanding shares.
Teekay LNG Taps Equity Market
In the first shipping follow-on since last July, Teekay LNG Partners L.P., utilizing its $750 million shelf registration, announced, priced and successfully sold 5.5 million shares yesterday in an overnight offering raising $183.7 million. The offering, which went primarily into retail hands, was priced at $33.40/share, a discount of 3.47% from yesterday’s closing price of $34.60. According to data compiled by Jefferies, the price discount was tighter than the year to date average of 7.5% and last month’s 5% suggesting strong demand. Sales proceeds will be used to pre-fund the company’s portion of the equity purchase price of the Maersk LNG acquisition, or $146 million, with the remaining funds used for the repayment of outstanding debt under one of its credit facilities, maturing in August 2018, which bears interest at LIBOR + 0.55%. In addition to a green shoe of 825 thousand shares, the offering is not contingent on the closing of the Maersk transaction nor is the Maersk transaction contingent on the closing of this offering. More details are provided in our Guts of the Deal below.
Scorpio on a Roll – Enters into a New Credit Facility, Files Shelf, Orders Ships and Executes Follow-on
Earlier this month, we reported on Scorpio Tankers Inc.’s new $150 million credit facility and filing of a shelf registration to issue up to $500 million of securities. Last week, they put these to good use. With sole bookrunner Morgan Stanley and co-managers, Dahlman Rose, Evercore and Fearnley Fonds, the company sold 6 million shares in a successful follow-on offering, which was upsized from the originally intended 5.5 million shares due to strong demand. The shares were priced at $10.50, a discount of 6.67% from the closing price prior to the announcement. The shares closed the next day at $10.75 with 1.065 million shares traded versus average volume of 88.8 thousand shares. Subsequently, the underwriters exercised their over-allotment option to purchase an additional 900 thousand shares, bringing total net proceeds to approximately $68.4 million. Details of the offering are shown below in the Guts of the Deal.
Pacific Drilling Success
Two weeks ago, Pacific Drilling announced the successful completion of the private placement of its shares. Due to demand, the offering was upsized by 10 million shares and priced at $10/share slightly above the midpoint of the indicated range. Gross proceeds were $600 million based upon the 60 million new shares. Procceds were used to partially finance the construction of the two drillships from Samsung which are expected to be delivered in Q2 and Q3 2013. Following the offering the company has 210 million shares outstanding, which trade over-the-counter in Oslo. The details of the final offering are shown below.
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.
Golar Partners Prices While Parent fills Warehouse?
Was it a vote for shipping, for the MLP structure, or Mr. Fredriksen? At the end of the day, it does not matter as the first shipping IPO of 2011 met with strong demand and priced above its range. Last week, Golar LNG Partners LP (“GMLP”) priced its initial public offering of 12 million shares at $22.50, above the stated range of $20 to $22 per share. Total gross proceed were $270 million, which could increase to $310.5 million if the green shoe is exercised in full. The limited partners own a 30.1% interest in the company with Golar LNG Limited owning the 2% GP interest as well as a 67.9% limited partner interest. The final details of the transaction are shown in the Guts of the Deal below.
Seeing the Light – Golar LNG Learns From a Competitor
The MLP model is best suited for assets such as FSRUs and LNG carriers that have stable cash flows due to long-term contracts. The common units of the limited partnerships trade on yield and expected growth. Given the low interest rate environment and high demand for yield paper, the MLPs are trading at high EBITDA multiples and premiums to underlying asset value. The valuation premium gives MLPs a lower cost of capital making it an efficient way to grow and access capital.
Pacific Drilling’s $500 Million Private Placement
Pacific Drilling S.A. announced last week its intention to offer 50,000,000 common shares in a private placement to qualified investors. The share price is expected to range between $9.20 and $10.50, raising proceeds of approximately $500 million. The proceeds of the offering will be used to finance the Pacific Khamsin and Pacific Sharav, two new advanced capability, ultra-deepwater drillships which were contracted this month at Samsung Heavy Industries (“SHI”) for delivery in the 2nd and 3rd quarter of 2013 respectively. Similar to the four drillships previously ordered at the yard, the latest new orders are capable of drilling in water depths of 12,000 feet to a depth of 40,000 feet. The aggregate contract price for the two rigs is $1 billion, with the total cost of each vessel, including commissioning and testing and other costs, to be approximately $600 million, excluding capitalized interest.
The Official Guide To Marine Finance Providers
Shipping Index
