Into these Volatile Markets Goes Star Bulk

In its first follow-on offering since it began operations in December 2007, Star Bulk Carriers Corp. announced on Monday an underwritten overnight offering of 16.5 million shares based upon its previously filed $250 million shelf registration. The next day the offering was upsized to 16.7 million shares and priced at $1.80 per share, a discount of 10.4% from Monday’s closing price. While the file to offer discount is somewhat higher than the average year to date of 7.2% indicated by Jefferies, recall this is shipping and the markets remain volatile. Net proceeds were approximately $28 million. In addition, the company is allocating the usual 15% of the offering or 2.51 million shares to cover over-allotments.

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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.

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Seawell Goes Global – Seadrill Subsidiary Acquires Allis-Chalmers Energy

Last Friday, Seawell Limited, a majority (73.8%) owned subsidiary of Seadrill, announced that it had entered into a definitive merger agreement providing for the acquisition of Allis-Chalmers Energy by Seawell in a transaction valued at approximately $890 million, including assumed debt. The new company will rank in the top ten of the leading oil service companies.

With highly complimentary services, the combined oil service company will operate its Drilling and Well Services offerings with a global footprint covering more than 30 of the world’s key oil and gas regions. The combined Drilling Services offering will include platform drilling, land contract drilling, modular rigs, maintenance of drilling systems, directional drilling technology, underbalanced drilling, facility engineering services, rig and riser inspections, and oilfield rentals.  The company will be able to provide its customers with fully integrated drilling services, both onshore and offshore, with more than 4,000 experienced drilling crew members and senior directional drillers.  The Well Services offering will include electric and mechanical wireline services, production logging services, coil tubing services, ultrasonic investigation logging services, down-hole cameras, and advanced well fishing services.  Analyst estimates project that the new company would generate $1.3 billion in revenues and $195 million in EBITDA in 2010.
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K-Sea Too

What is a week without another follow-on offering? As last week ended, K-Sea Transportation Partners (“K-Sea”) announced a public follow-on offering of 2.9 million of its common units and a green shoe of 435 thousand shares utilizing its existing shelf registration.

The shares were priced at $19.15, a 6.6% discount to the prior day’s close at $20.51.

Of the net proceeds of $52.9 million, exclusive of the green shoe, approximately $47 million will be used to repay indebtedness under the company’s revolver, which currently has $139.9 million outstanding and the remainder will be used to make construction progress payments under shipbuilding contracts. LaSalle Bank, Wachovia Bank and KeyBank are lenders under the facility as well as affiliates of the underwriters and will receive more than 10% of the net proceeds of the offering.

The joint book running managers for this offering are BofA Merrill Lynch and Wells Fargo. RBC Capital Markets and UBS are co-lead managers, with DnB NOR, KeyBanc and Stifel Nicolaus serving as co-managers.

We provide further details in the Guts of the Deal below.

K-Sea Follows-On

K-Sea Transportation Partners L.P. (“K-Sea”) announced last week the pricing of its public offering of 2 million units representing limited partner interests. With Lehman Brothers acting as the sole book-running manager, and RBC Capital Markets, as co-lead manager, the units were priced at $25.80 with expected net proceeds after expenses of $49.8 million. Proceeds will be used to re-pay existing indebtedness and make construction progress payments on newbuildings. Details of the transaction are shown in the Guts of the Deal below.

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