Asian Shipping Bond Volume Falls 46% in 2010

In 2009, bonds came back in financing vogue for the shipping industry, with total volume in Asia reaching a record USD 7.6 billion. But a few questions have since been lingering at the back of our minds: “Will this trend continue in 2010? And have the investors gotten too far ahead of themselves and forgotten about the painful corporate bond defaults in 2000/2001?”

As we compile our list of shipping bonds concluded in 2010, some interesting findings are revealed. Total shipping bond volume in Asia has surprisingly declined at a larger pace than expected, down by close to 46% to USD 4.1 billion last year from USD 7.6 billion the year before. But before we hastily conclude that the access to bond money is fast disappearing, the sharp decline can partly be attributed to a number of market specific reasons. Continue Reading

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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Following a Successful Strategy

Earlier this week, Seanergy Maritime Holdings announced that it had entered into a letter of intent with Maritime Capital Shipping (Holdings) Ltd (‘Holdings”) to acquire a 51% interest in Maritime Capital Shipping Limited (“MCS”), a company founded by Mark Harris formerly of Pacific Basin in 2006. The company operates a fleet of 9 handysize bulkcarriers, with an average age of ~10.7 years, that it employs on time and bareboat charterers with well-established operators. Holdings, a company controlled by the Restis family, will retain a 49% interest in MCS.
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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

Food for Thought

We are very grateful to Viktor Berglind for extending us an invitation to attend RS Platou Conference last week, held in celebration of its 20^th Anniversary in Singapore.

Among the many insightful market presentations, we enjoyed the panel discussion on the market outlook moderated by Mr. Erik Helberg (RS Platou Shipping Research Team), featuring Mr. Richard Hext (CEO Pacific Basin), Mr. Andreas Sohmen-Pao (CEO BW Shipping), Mr. Thomas Preben Hansen (CEO Rickmers Maritime), Mr. Kent Paulli (Director ST Shipping/Glencore) the most and here are some extracts from the very interesting panel discussion involving some of the most established names in the shipping business. Continue Reading

Not Just a Warm-up

Prior to the start of the festivities, Teekay Corporation held its successful shareholders meeting. The room was filled with over 100 spectators with another 200 viewing through the webcast. What was extremely interesting to hear from the Teekay delegation was the acknowledgement that they did not recognize many of the people in the room. Fresh blood!

The first session began under cloudy but dry skies an unusual event in New York these days. The room was packed with the audience hoping to glean insights from last year’s deal of the year winners as the architects of the transactions discussed their deals and how they fit in today’s marketplace. The discussion was led by Stephen Peepels of DLA Piper.
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Food for Thought

Sea-Asia 2009 kicks off in Singapore this week and Marine Money Asia had the pleasure to participate in the series of conferences to hear from industry leaders on where they think the markets may be heading. We present some notes from the event.

Li Zhen, Assistant President of Sinotrans Group is in the opinion that it will be difficult for many private shipyards particularly in Jiangsu, Zhejiang and Fujian provinces to secure special support from the central government. State-owned shipyards are the main beneficiaries from the government’s assistance programme.  Continue Reading

Smart Buying AND Astute Selling

In late December of 2007 when the financial debacle had begun to unfold from a housing crisis to a credit crunch, Pacific Basin took the challenge and launched its convertible offering – the largest by an Asian shipping company ever and the second largest convertible offering by a Hong Kong issuer since the beginning of 2006. Raising USD 390 million with the overallotment exercised for 5 years at a fixed 3.3% on an unconditional and unsecured basis was truly remarkable especially in such tough market conditions.

Fast forward to a year later and the deteriorating global market conditions have created opportunities for Pacific Basin to retire the convertible bonds early at a very attractive price. Over a 4 day execution period between 14 October and 17 October 2008, the company was able to buy back convertible bonds worth USD 60 million at face value for USD 39.35 million or an average price of only 65.6%. This off-market buyback exercise immediately created USD 22 million of net present value for the company. At the time of publication, we noticed that Pacific Basin has bought back and cancelled USD 76.05 million convertible bonds, at around 20-35% discount, and we expect the management to continue to do so given its current strong balance sheet. All these transactions will save the company around USD 23.6 million at the time of redemption on the amount repurchased. Continue Reading

Pacific Basin Sells Three

Pacific Basin this month publicly disclosed the sale of three handysize vessels built in 2000-2001 for between US$18-19 million per vessel. The aggregate consideration of US$55.6 million was paid entirely in cash. The company notes in a release that the amount was determined with reference to intelligence gathered from shipbrokers in addition to its own analysis of recently concluded sale and purchase transactions of vessels of comparable size and year of build in the market. Continue Reading

Conflict Resolution – The Right Way

On Monday, Pacific Basin announced that over the last month it’s subsidiary (“Company”) which was engaged in chartering-in vessels had reached a compromise with the group of shipowners from whom it had chartered-in those vessels. The owners and the Company mutually agreed to the early termination of the charters and simultaneously entered into new charters at market rates in respect of those vessels. Currently, the existing charters have remaining charter periods ranging from 6 months to 3.5 years.
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