Wedding Season or Offshore Consolidation Takes Two Giant Steps

Monday was a big day in the offshore sector with two major transactions announced. First BW Offshore (“BWO”) made a voluntary exchange offer for all of the shares of Prosafe Production Public Limited it does not currently own. The company is offering 1.2 BWO shares and NOK 5.25 in cash for each share, which consideration equates to NOK 16.21 based upon Friday’s closing price, valuing Prosafe at approximately NOK 4.1 billion or a 17% premium to Prosafe’s closing price on Friday. BWO currently owns directly or indirectly 23.88% of the total outstanding shares with a wholly owned subsidiary owning a further 6.1%. Presently BW Group owns 66.95% of the total number of shares in BWO and will be diluted to approximately 47% to 49% shareholding in the combined company based upon an acceptance level of between 90% and 100%. The combination will create an FPSO company with the diversification, presence, resources and competence to meet the increasing requirements from both clients and regulators.

BWO will finance the cash consideration from available credit facilities. In connection with the offer BWO has established a new bridging credit facility of $1.1 billion from BW Group on competitive terms with expiry in November 2011. The new facility together with the availability under the existing credit facility of $1.5 billion will be sufficient to finance the entire cash consideration and refinance Prosafe’s existing credit facilities, while providing capacity for growth.
Continue Reading

Written by: marinemoney | Categories: Freshly Minted, The Week in Review | June 24th, 2010 | Add a Comment

Aker Bonds

Norway continues to be the go to source for capital, particularly high yield bonds, for small energy companies. Highly leveraged already, the companies use the bonds, mostly short-term, to provide an equity bridge and a source of cash to meet an immediate cash need.

Last week, Aker Drilling ASA successfully completed a NOK 1.5 billion three year unsecured bond issue, which was guaranteed by its parent, Aker ASA. The bonds pay interest on a floating rate of NIBOR + 400 bps. Proceeds will be used to refinance NOK 800 million of an existing convertible bond maturing in October 2010 and for general corporate purposes. Details of the transaction are shown in the Guts of the Deal below.
Continue Reading

Written by: carisk | Categories: Freshly Minted, The Week in Review | April 22nd, 2010 | Add a Comment

A Tanker Saga

On Wednesday, Arne Blystad went to market to raise equity for a new pure play large tanker IPO, Saga Tankers ASA, which will acquire three VLCCs from companies controlled by Blystad with the fourth on subjects. The company is looking to raise $80 million or $120 million in a private placement, however it intends to list the shares on the Oslo Axess in mid-June. For investors, the main attraction will be the full dividend payout model.

Constructed at Daewoo Shipbuilding, two of the VLCCs were built in 2000 with the third in 1995. The two younger vessels were valued at $69 million each, even though one is spot and the other is on time charter through Q3 2012. The 1995 built vessel is valued at $49 million and is employed in the spot market as well. The en bloc price is $187 million, excluding the option vessel, which is financed with the proceeds of the offering, the existing bank debt and an in-kind payment from the seller. The sources and uses of funds, as well as the pro forma percentage ownership is shown in the chart above for both the three and four vessel deals.
Continue Reading

Written by: carisk | Categories: Freshly Minted, The Week in Review | April 22nd, 2010 | Add a Comment

Announce Deals; Get Check; and List on the NYSE

Only John Fredriksen can announce a deal a deal on Tuesday and have financing in place the same day. It has been a very busy week for the management of Seadrill who while in the midst of these transactions travelled to NY to open the New York Stock Exchange in honor of the listing of the shares here. The common theme here is growth capital.

It all began on Monday, when Seadrill acquired an additional 1.3 million shares in Scorpion Offshore at a price of NOK 36 per share. With this purchase, Seadrill now controlled ~36 million shares or 40.1% of the outstanding issued shares, triggering an obligation to make a mandatory cash offer for the remaining shares or reduce its holdings below that threshold within 4 weeks.
Continue Reading

Written by: carisk | Categories: Freshly Minted, The Week in Review | April 15th, 2010 | Add a Comment

Pareto Places $60 Million of Fresh Equity for B+H

Using the issuer-friendly Form Reg F, which allows a foreign issuer to sell securities to foreign investors through a very simple process, Pareto Securities raised $60 million of cash for tanker company B+H this week. As we understand it, the deal was scaled back from an initial size of about $120 million and pricing was $18.50, about 5% below the trading price at the time. Although we have not done the math, the valuation is somewhere in the vicinity of net asset value. As we understand it, the newly issued shares will trade over the counter in Norway (until BHO lists there officially), and the U.S. lock-up period is only 40 days for investors. As you can see from the accompanying stock price graph, the shares have experienced notable selling pressure since the deal was announced.

Despite the reduced size and valuation that resulted from recent weakness in both the equity and shipping markets, this is an important deal for B+H for a few reasons. First off, the company now has a meaningful amount of buying power and we would be very surprised if they don’t have some specific ideas about how to use it. We would speculate that if B+H has, or will identify, a deal with some charter coverage (as they recently did with the OBO on charter to Sempra), bank financing could add another $200 million in dry powder. B+H management has proven themselves to be very experienced dealmakers with the patience required to do sensible deals in today’s market. Moreover, the new issue will reduce Michael Hudner’s stake to about 50% of the outstanding shares and thereby increase the free float by about five times.

Pareto Places $60 Million of Fresh Equity for B+HUsing the issuer-friendly Form Reg F, which allows a foreign issuer to sell securities to foreign investors through a very simple process, Pareto Securities raised $60 million of cash for tanker company B+H this week. As we understand it, the deal was scaled back from an initial size of about $120 million and pricing was $18.50, about 5% below the trading price at the time. Although we have not done the math, the valuation is somewhere in the vicinity of net asset value. As we understand it, the newly issued shares will trade over the counter in Norway (until BHO lists there officially), and the U.S. lock-up period is only 40 days for investors. As you can see from the accompanying stock price graph, the shares have experienced notable selling pressure since the deal was announced.
Despite the reduced size and valuation that resulted from recent weakness in both the equity and shipping markets, this is an important deal for B+H for a few reasons. First off, the company now has a meaningful amount of buying power and we would be very surprised if they don’t have some specific ideas about how to use it. We would speculate that if B+H has, or will identify, a deal with some charter coverage (as they recently did with the OBO on charter to Sempra), bank financing could add another $200 million in dry powder. B+H management has proven themselves to be very experienced dealmakers with the patience required to do sensible deals in today’s market. Moreover, the new issue will reduce Michael Hudner’s stake to about 50% of the outstanding shares and thereby increase the free float by about five times.

Written by: carisk | Categories: Uncategorized | February 3rd, 2010 | Add a Comment

Norwegian Bonds Come & Go

Songa Offshore, Wilh. Wilhelmsen and Aker Solutions were a few of the companies, involved in the Norwegian bond market this week. Aker Solution’s NOK 2.1 billion 5 year FRN priced at NIBOR + 4.75% was the largest offering in the domestic market this year, although its parent, Aker ASA, has subscribed to NOK 1 billion of the total issuance. Pricing was highly favorable as the new issue is trading at a spread to swaps 100 bps below the existing 2013 maturity. The company maintained its BBB- rating from Fitch but the outlook was changed to negative.

Wilh. Wilhelmsen ASA successfully pushed out its redemption profile by completing a placement of its own bonds in WWI13 and by “tapping” the same loan, in aggregate, placed a total amount of NOK 560.5 million. The amount issued increased from NOK 800 million to NOK 1 billion and WW’s holdings decreased from NOK 489 million to NOK 129 million. This issue matures in November 2012. With the proceeds, Wilhelmsen bought back bonds amounting to NOK 65 million in WWI11 (July 2010), NOK 75 million in WWI16 (March 2011) and NOK 80 million in WWI06 (May 2011). Pareto Securities managed the transaction.
Continue Reading

Written by: carisk | Categories: Freshly Minted, The Week in Review | June 18th, 2009 | Add a Comment

DOF Bond

Despite increasing default rates, corporate issuance of bonds in the primary market has been increasing in Norway and this activity has been extended to high yield, which now represents about 5% of total corporate issuance. For perspective, total issuance of corporates year to date amounts to NOK 19.2 billion compared to NOK 14.6 billion for the full year 2008.

This week Nordea Markets and Pareto Securities brought to market a 2-year senior secured floating rate note for DOF ASA, a leading offshore company, which operates 70 vessels. The notes bear interest at NIBOR + 9% and are secured by a first priority pledge in the shares of Norskan AS, DOF’s Brazilian subsidiary. Norskan owns 12 vessels all of which operate in Brazil with top-rated blue chip counterparties. The pledge provides strong collateral coverage as the outstanding amount under the issuance represents less than 50% of the NAV of the pledged assets. More details on the structure are contained here in the Guts of the Deal table.
Continue Reading

Written by: carisk | Categories: Freshly Minted, The Week in Review | June 4th, 2009 | Add a Comment

5th Annual Marine Money Gulf Ship Finance Conference, Dubai, 4th March 2009

In a week when stock markets steeply declined and then recovered, when Sri Lankan cricketers were attacked in Pakistan and the world continued it’s crazy momentum, Marine Money with Anchor Sponsor Tufton Oceanic (Middle East) Limited hosted its 5th Annual Marine Money Gulf Ship Finance Conference in the luxury of the Grand Hyatt, Dubai.

Forewarned that things were pretty bad in Dubai and that it would be a struggle to get people to attend, we proudly welcomed 152 speakers and delegates. And it is also significant that half of today’s participants attended our conference in Dubai for the first time. That is a lot of new networking opportunities and it demonstrates that shipping continue to develop in Dubai and the Gulf region.

Written by: carisk | Categories: Freshly Minted, The Week in Review | March 5th, 2009 | Add a Comment

Songa’s Misguided Misadventure

In a presentation on Monday, Songa Offshore sought to explain its unexpected private placement of shares the previous week, at a discount of approximately 34% to the prior day’s close. The share placement alleviated a short-term liquidity shortfall as well as a breach of covenants.

The main culprit was its historic financial strategy. Over the last few years, Songa intentionally kept cash at tight levels of around $30 to $70 million, which level was increased as rigs were added. In addition, the company entered into TRS agreements during the 12-month period until January 2008. Both worked as planned until worlds collided. In a matter of five weeks, the company’s TRSs went from $16.7 million in the money to $26.8 million out of the money a swing of $43.5 million. In addition, during the week of September 15th, Songa expected to rollover $50 million in commercial paper and was able only to roll only $22 million leaving a $28 million shortfall.

Written by: carisk | Categories: Freshly Minted, The Week in Review | October 23rd, 2008 | Add a Comment

Wilson Completes Successful Roadshow and Starts Trading on OSE Today

Bergen-based Wilson Carriers is the latest dry bulk company to list on the OSE and has started trading today under the ticker code WILS. In Ship (owned by Mr. Kristian Eidesvik) sold 35% or 14.8 million shares at NOK 19.50 to selected Norwegian and UK investors raising NOK 288 million. Arrangers DnB NOR Markets and Pareto Securities reported a huge interest in the company, demonstrating investor attraction to their planned dividend stock. The offering was oversubscribed by 3.3 times and sold 20% to retail and 80% to institutional investors. Among other things, the success of the deal is a testament to its perfect timing in that asset prices on dry bulk ships are widely considered to be at the top.

Seeing the rush of capital towards dry bulk deals like DryShips and International Shipping Enterprises and watching the line for this capital begin to form among operators in the United States, Eidesvik-controlled European-focused minibulker Wilson ASA opted to take a different spin on what so far appears to be a successful model.

Testing New Waters

With only indirect exposure to China, the company had a slightly different story to sell, and the current degree of dry bulk liquidity and demand in Oslo has been largely untested. Like its foreign comparables, however, Wilson ASA met with great success this week when it priced its 14.8 million secondary shares at NOK 19.5, above the anticipated range of NOK 16.5-19.

Both upside and downside risk in this deal were narrower than some of its U.S. comparables, as the company maintains a focus on long-term contracts. While part of the purpose of the offering, which raised approximately $47 million in USD terms, is to facilitate the paying down the debt of selling shareholder In Ship, other reasons cited in the prospectus include providing a regulated marketplace for share trading, making the company more transparent and facilitating satisfactory liquidity in the company’s shares by increasing the free float and broadening the shareholder structure.

Wilson owns or operates a fleet of approximately 90 vessels and 15 million tons, making the company the second largest player in the European short sea market. Core tenets of the company’s business strategy include long-term contract portfolios and extensive knowledge of its customers’ needs. The company believes that this structure allows it to ensure high productivity and stable long-term earnings, which makes it quite a different animal than many of the more spot-focused dry bulk deals we have seen.

A Complicated Past

The ownership history of the company is somewhat convoluted but worth reviewing. Wilson Group, consisting of Wilson EuroCarriers AS and Wilson Ship Management AS, was sold by Actinor ASA in 2000; half went to In Ship AS and half went to Caiano. These companies then established Wilson Holding AS, which has since become Wilson ASA. Caiano was already controlled at the time by Kristian Eidesvik, while In Ship AS was owned by Holter-Sørensen Invest (18%) and Ole Henrik Nesheim (82%). Since that time, Caiano acquired all of the voting share in In Ship AS, the selling shareholder in the offering.