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K-Sea Financing in Place – Kirby Taps Banks
On the last day of May, Kirby Corporation entered into a $540 million five-year unsecured floating rate term loan facility led by Wells Fargo, BofA Merrill Lynch and J.P. Morgan. Lenders include BTMU, Branch Banking & Trust Company, Compass Bank, RBS, U.S. Bank, Amegy Bank, Bank of Texas, Comerica, Keybank, Mizuho, Northern Trust and Royal Bank of Canada. Proceeds of the loan will be to provide financing for Kirby’s acquisition of K-Sea Transportation Partners L.P., with the amount drawn dependent on the final breakdown of the merger consideration between stock and cash.
Don’t Fight the Tape – ACL I Done
We scratch our head in wonder and realize there is much for us to learn. Certainly this week we understand that logic may not prevail against the appetite for yield, or as Mr. Market reminded us, “don’t fight the tape”.
Last week we described in some detail why we thought ACL I’s unsecured Senior PIK Toggle Notes (“Notes”) were not a good idea and since the deal was oversubscribed and upsized it clearly is not worth repeating the litany here. Instead, we will focus on the deal itself, details of which are highlighted in the Guts of the Deal contained herein.
APM Goes Back to the Bond Market
Having had its first taste last year, A.P. Moller-Maersk (“APM”) returned to the public bond market a couple of weeks ago, issuing EUR 500 million of 7-year bonds with a coupon of 4.375%. The net proceeds will be used for general corporate purposes. Unsurprisingly, investor interest was strong with the bonds being more than three times oversubscribed. As a point of comparison, last year’s issue of EUR 750 million 5-year bonds carried a coupon of 4.875%. Placed by Barclays Capital, BNP Paribas, Danske Bank, HSBC and RBS, the bonds will be listed on the Luxembourg Stock Exchange.
Shipping IPOs Stage a Comeback – Costamare Files
With the IPO market for shipping shares quiescent since March, Costamare Inc. broke the ice last week and filed its F-1 to begin the process of an initial public offering of its shares. The company is offering 13.3 million shares, which will represent 22.1% of the shares outstanding immediately after the offering, without giving effect to the green shoe. The expected price range is $15 to $17. Assuming pricing at the midpoint, gross proceeds will approximate $213 million and the market value of the company will be $965 million. Proceeds will be used for general corporate purposes and potential future acquisitions. The company may also use a portion of the net proceeds, together with debt financing, to fund it’s already contracted containership acquisitions. Finally, pending any of the preceding, the proceeds may be applied to temporarily reduce outstanding indebtedness. The company intends to pay a quarterly dividend of $0.25/share, which is based upon a payout ratio of 60% to 70% of distributable cash flow. This equates to a yield of 6.25% on the midpoint price. More details on the transaction are included in our Guts of the Deal shown below.
World Fuel Taps the Equity Market for Growth
On Tuesday, World Fuel Services closed of its previously announced public offering of 8 million shares of its common stock. The shares were offered under its effective shelf registration, which provides solely for the issuance of common equity, filed just prior to the announced offering. Due to demand, the offering was upsized from 7.57 million shares, an increase of 5.7%, and the underwriters exercised in full the green shoe of 1.2 million shares. Net proceeds of the offering amounted to approximately $219 million. Proceeds of the offering will be used for general corporate purposes including potential acquisitions. More details are contained in the Guts of the Deal enclosed herein.
A Wisp of Spring
While sitting home in the midst of a blizzard and with the knowledge that the omniscient Punxatawny Phil announced on Ground Hog Day that we still have 6 more weeks of winter, we know, nonetheless, that spring will inevitably come. Yesterday we attended the morning session of the Hellenic/Norwegian-American Chambers of Commerce 16th Annual Joint Shipping Conference and we felt similarly that the winter of ship finance may also break. While the tone wasn’t exactly upbeat, there certainly were no dirges being sung and it, in fact, appears by their comments that the bankers may be ready and able to return from their year plus long sabbatical. But as Nikolai Nachamkin of DnB and the conference co-chairman would remind me, I am getting off topic.
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London calling. London calling.
…. more education about shipping is key to attract investor appetite in London.
Marine Money returned to London after a long absence to host a wonderful 1st annual conference on 21st January 2010. This was the first of 14 Marine Money conferences for 2010 and we got off to a cracking start. Over 180 delegates and speakers attended with about one third coming from overseas.
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A Noble Breed
Last week, our sister publication Freshly Minted reported on Maersk’s successful EUR 750 million (USD 1.3 billion) five-year bond. This was the shipping conglomerate’s first bond issuance, following a recent equity offering of USD 1.7 billion. In Asia, commodity trading house Noble Group has likewise found tremendous success in raising funds, suggesting that investors and bankers are getting warmed up to investing cash again. Continue Reading
TOPS Turvy
In its 4th quarter and year-end report, Top Ships (“Top”) disclosed the uncertain state of its debt obligations due to a breach of certain loan covenants. It is currently in discussions with all its lenders to obtain waivers extending to March 2010. Without waivers, the company must classify its debt as short-term, since it is due and payable within the year. As a consequence of cross-default provisions, it requires agreement from all of its banks, a tough position to bargain oneself out of as the last holdout effectively cuts the deal. The company’s lenders include: RBS, HSH Nordbank, DVB, Alpha Bank, and Emporiki Bank.
Hellenic Norwegian Confab
For the fifteenth year, the Hellenic-American and Norwegian-American Chambers of Commerce presented their Annual Joint Shipping Conference posing the question of “How Will Shipping Survive the Perfect Storm?” Whether the question was answered or not, attendees were able to garner lots of insights into what happened and what may happen in the future. Once again, the following will highlight what we found of particular interest.
Arlie Sterling of Marsoft provided insights into “what happened” and “what might happen.” The industry did well based upon an explosion in trade and demand and yard capacity limits. The chart below lays out the extraordinary growth.
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The Official Guide To Marine Finance Providers
Shipping Index
