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Waivers And More Waivers
Not unsurprisingly, the difficulties in the marketplace are becoming more evident as the number of waivers of covenants increases in the public sphere. However, we understand that it is on the private, or dark side if you will, where the heavy lifting, at least in terms of restructuring, is taking place. The appropriate analogy might be the bare-knuckle storm below the calm sea of the public genteel discussions. Nevertheless, these exercises may be nothing more than band-aids should the market not improve. We certainly understand the cautious approach taken with respect to the public companies given the ramifications. The question remains as to what impact the private discussions might have on the public. We watch and wait as the parties stake out their positions.
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Not to Be Missed
Despite the difficult environment, a veritable who’s who of the shipping community descended on the Jefferies 5th Annual Shipping, Logistics & Offshore Services Conference on Tuesday and Wednesday.
We must confess that walking in at the uncivilized hour of 8 AM to a sparse crowd and seeing Jefferies Magic Eight Balls gave us pause. Was Hamish making a market statement or was he merely giving investors a new forecasting tool? Our conclusion was probably both.
Oceanaut Takes Out Its Checkbook
With little time and no specificity in its investment guidelines, other than it be in shipping, Oceanaut Inc., Excel Maritime’s sponsored SPAC, announced, on Monday, that it had found its deal and will follow the footsteps of its sponsor and invest in drybulk but with a difference. It is the intention of the parties that Oceanaut will serve as Excel’s exclusive long-term charter dry bulk vehicle focusing on charters of 4 to 10 years.
The company has entered into definitive agreements to purchase four drybulk vessels from Irika Shipping S.A. for a total consideration of $352 million. The acquired vessels, which aggregate approximately 279,000 DWT, include three Panamax vessels and one Supramax vessel, which are described above together with their prospective employment.
Transaction Report
It was great news for the equity markets this week when Safe Bulkers got out its Merrill Lynch and Credit Suisse- led IPO. While the deal did price $1.00 below its $20-$22 target range, it’s been so long since we’ve seen any shipping IPOs that the very fact of a new deal getting done is a good sign. But the real interest this week was in the oil market, and Marine Money could not have asked for a better time to host its 10th annual Norway Ship & Offshore Finance Forum. The gathering was full of those hearty souls that will shape the next generation of oil production and discovery, financing and building machines to pull oil out of 12,000 feet of water, through thousands of miles of crusted salt, and anywhere else it can be found. The gathering formed the epicenter of the activity that is the focus of the better part of the world’s citizens.
Safe Bulkers Files for IPO
It’s been awhile since we have seen a Greek dry bulk company file for an IPO in the United States. To us the IPO filing by Safe Bulkers is a comment not only on the robust state of the dry bulk market, but also the perception that the US equity markets are returning to life as a meaningful source of capital for global business.
Very briefly, Safe Bulkers is a dry bulk shipping company owned by Vorini Holdings, which in turn is controlled by Polys and Nicolaos Hajioannou. The company currently owns a fleet of 11 Japanese-built bulk carriers with an aggregate carrying capacity of 887,900 dwt and average age of 2.6 years. The fleet comprises panamax, kamsarmax and post-panamax class vessels. Safe Bulkers has also contracted for eight newbuildings to be delivered between 2008 and 2010, which include four post-panamax vessels, two capesize vessels and two kamsarmax vessels. The vessels are operated on a mix of spot and time charters. Management services will be provided by related party Safety Management.
Merrill Lynch and Credit Suisse are working as bookrunners on the offering, while Jefferies, Dahlman Rose, DnB NOR and Poten Capital will join as underwriters. Safe Bulkers is looking to raise as much as $253 million through the sale of 10,000,000 shares with a 1,500,000 share over-allotment option at a price of $20-$22 per share. The 10,000,000 shares represent a stake of approximately 20% in the company and all proceeds will go to the selling shareholder, Vorini Holdings. Potential IPO buyers are being enticed with a dividend yield of 9-10%.
Safe Bulkers has a wide range of credit facilities in place, but most recently between January and April of 2008, the company took out loans from DnB NOR, HVB and RBS totaling $120 million. All were swapped to fix rates that range from 2.73% to 3.95%.
The Week in Review
Doubts about the global economy and gravity-defying oil prices were sidelined this week by extraordinarily robust shipping – and hence ship finance – markets. Polys and Nicolaos Hajionnaou’s Safe Bulkers came out with the first US IPO filing we have seen in some time while TBS and Genco both went to market with follow-on offerings. SPAC Seanergy announced a deal with Restis and 70% of Navibulgar at long last looks set to go to German-Indian consortium KG Maritime. In the private equity markets, Tufton Oceanic Middle East announced a new investment $50 million joint venture investment company with Kuwait Finance House. Reportedly the largest ever ship finance loan to a Turkish shipping company was closed for Kiran Holdings, and Ship Finance found $700 million in debt finance for the $850 million sale leaseback
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