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“That Was Easy” – Prosafe Issues NOK 500 million Bond
As a regular issuer, Prosafe SE knows the ropes, which was evident with the elapsed time between the announced offering and the closing of the books a mere hour and a half. Then too it’s a niche business in oilfield services making it an easy sell these days. In a substantially oversubscribed offering, Prosafe sold NOK 500 million of 5-year senior unsecured bonds. The bonds, sold at par, were priced at NIBOR +3.75%. In connection with the offering, the company bought back NOK 121 million of PRS06 PRO, which bonds mature on October 14, 2013, at 102.87%. At the end of December, those bonds were trading at 101.47%. The remaining proceeds will be used for general corporate purposes. More details on the transaction are included in the Guts of the Deal below.
Syndicated Market Continues on Track
Last Friday, Dealogic released its Bookrunner and MLA Tables for Syndicated Marine Finance Loans for 2011 showing total syndicated loan volume at $68.4 billion up from last year’s $50.1 billion. From the macro perspective the trend remains upward as deal volume and number of transactions grew respectively 26.2% and 19.6% compared to the year earlier. This continues the growth which commenced in 2009. Ignoring the boom in volume in 2007 and 2008, the current volume is on par with the years prior. A further measure of the health of the syndication market is also reflected in the nominal reduction of club deal volume as well as the declining proportion of these deals versus total syndicated volume. This is best seen pictorially in the graphs below.
Risk Off? – Frontline Closes within its Self-Imposed Deadline
While not a joyous conclusion to the year, the announcement of the successful completion of the restructuring of Frontline does at the very least bring a sigh of relief to all the parties involved. While we have covered the details of the transaction in prior issues, we would highlight the following key elements.
The newly formed “risk” tanker company, Frontline 2012 acquired five VLCC newbuilding contracts, six modern VLCCs, including one time charter and four modern Suezmax tankers from Frontline for $1.121 billion based upon fair market values. In addition, the new company assumed $666 million in debt associated with the vessels and newbuilding contracts as well as $325.5 million in remaining newbuilding commitments. Based upon a year-end book value of $1.428 billion, Frontline will incur a book loss of $307 million.
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.
C-Gas or B-Gas, it still gets an A – The Acquisition of Eitzen Gas
Last Friday, Camillo Eitzen & Co. ASA (“CECO”) announced that the sale of Eitzen’s owned semi-re fleet, its 100% interest in Eitzen Gas A/S and the back to back lease of five pressurized LPG vessels to B-Gas Limited, an investment company established by Pareto Project Finance AS, had been concluded on terms materially similar to those announced in July. It is the nearly the end of CECO’s adventure in gas, which will leave them with a book profit on this transaction of $12 million and a 20% interest in Eitzen Ethylene Carriers, which will be acquired by Jaccar Holdings by the end of this month.
The transaction, structured as a Norwegian IS Partnership, was carefully crafted and placed as a club deal with Bergshav and two Norwegian shipping investors. Under the terms of the transaction, B-Gas, acquired 9 x 100% owned semi-ref LPG vessels ranging in size from 1,760 to 3,125 cbm with an average age of 17.8 years. The owned fleet is traded under a mix of time charters and COAs in the northern European premium market.
FPSO Cidade de Paratay Contracted and Financing Arranged
Last week, a joint venture comprised of SBM Offshore N.V., Queiroz Galvao Oleo e Gas S.A. (“QGOG”), Nippon Yusen Kabushiki Kaisha (“NYK”) and ITOCHU Corporation announced that it, together with QGOG, had entered into 20-year charter and operating agreements with BM-S-11 Consortium, owned 65% by Petrobras SA (Operator), 25% by BG Group, and 10% by Petrogal Brasil Ltda, for the operation of the FPSO Cidade de Paratay on the Lula Nordeste field. This field is located in block BM-S-11 in the Santos basin in the pre-salt area offshore Brazil in water depths of 2,100 meters.
Marrying the Bankers’ Greatest Nightmare with the Advisors’ Dream – Omega Navigation Files Chapter 11
Last Friday, after the markets closed, Omega Navigation Enterprises Inc. announced that it along with certain subsidiaries had filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The filing seeks protection for the publicly listed company and all of its 100% owned vessel owning companies. Excluded from the filing is the company’s technical vessel manager, Omega Management, Inc. as well as two subsidiaries which hold part interests in five on the water vessels and two newbuildings under construction.
Straightforward Solution – The Banks Express Confidence in Genmar
On Wednesday, General Maritime Corporation announced that it had amended its $550 million revolving credit facility and its $372 million senior secured credit facility, each led by Nordea and DnB NOR as well as its $200 million facility with Oaktree Capital to reduce the minimum cash covenant. Under the agreed terms, the minimum cash and cash equivalent balance and revolver availability is reduced from $50 million to $35 million through December 31, 2011, which amount steps up to $40 million through March 31, 2012. Subsequent to the latter date, the original terms apply. In the case of the Oaktree facility only a 10% cushion in Genmar’s favor applies.
Reverting to the Mean?
Last week, Dealogic published its Bookrunner and MLA Tables for Syndicated Marine Finance Loans for the first half of 2011 and while growth is clearly evident, there is a noticeable defining trend. The offshore services sector, given its strength and capital requirements, is taking on a far more meaningful role.
Batten Down the Hatches – Hoegh LNG Finds It Isn’t that Easy
Despite being the hottest sector in shipping, Hoegh LNG Holdings Limited encountered headwinds in its initial public offering. The company hoped initially to sell 15-25 million shares at a price range of NOK 38 to 54 in order to raise gross proceeds of approximately NOK 810 million to NOK 945 million ($198-282 million). As part of the offering, which consisted of an institutional tranche, a retail piece in Norway and an employee offering in Norway, Leif Hoegh & Co. Ltd, the parent agreed to subscribe for up to $20 million worth of shares to maintain a minimum 55% interest post-IPO and over-allotment option. For further details, see the Guts of the Deal below.
The Official Guide To Marine Finance Providers
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