Sitting with Seanergy

Having concluded our meeting with the institutional investor, Seanergy’s Investor Day presentation provided an interesting case in point.  Coming under the umbrella of one of these so called stubs, Seanergy’s management, Dale Ploughman and Christina Anagnostara, took the offensive and presented its case directly to the investors. Unfortunately, Seanergy’s plight is highlighted by the numbers. The number of shares outstanding, after the 1 for 15 share split, is 7.32 million giving the company a market capitalization of $30.2 million based upon the closing price Monday of $4.12. Of the shares outstanding, a substantial majority (75%) are owned by entities controlled by the Restis family. Average daily volume averages about 7,000 shares with a free float of 1.84 million shares. On the other hand, with the stock symbol, SHIP, the shares should sell themselves at some point.

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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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The Tough but Correct Call

What do you do when you have just spent two weeks raising equity to fund the acquisition of a capesize bulk carrier and then watch the world change? This was the challenge faced by Seanergy, which did the right thing, which in this case was to terminate the MOA for the acquisition of the vessel, which decision was made somewhat easier by the fact that the deposit had not been placed.

The risk was straightforward. The vessel was purchased at a high price reflecting its above market charter and is clearly destined to move ore to China. Unfortunately, China announced last week, as the deal concluded, that it intended to moderate its stimulus plan by restricting Chinese banks’ lending activities. This had implications for infrastructure spending and consequently for ore demand, leading to both market and credit risk. On that basis, the board determined that it would be in the best interests of the company and its shareholders to terminate the agreement.

In line with its stated goal of the use of funds for fleet expansion, the company is scouring the market to identify other vessels that meet its criteria.

Energy Infrastructure Shareholders to Opine on Vanship

Following quickly on the heels of Seanergy’s proposed special meeting to vote on its acquisition, Energy Infrastructure Acquisition Corp. (“EII”), another blank check company, set July 17 for its special shareholder meeting. As was done last week in the case of Seanergy, we will take a close look at what the shareholders are being asked to approve.

In July 2006, EII consummated its initial public offering of 20.25 million units, each unit consisting of one share of common stock and one warrant, raising $209.25 million in net proceeds (including a portion of the green shoe). Prior to the offering, George Sagredos, the President and COO, purchased through Energy Corporation 825,398 units at the offering price resulting in gross proceeds of approximately $8.25 million.
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The Week in Review

While there are rumors of a number of IPOs in the works, volatility and uncertainty has all but brought the US equity markets to a stop, and we don’t expect to see much more done over the summer. Bank debt has not proved as much of a problem for shipping. Most recently this week Deutsche Bank and HSH Nordbank acted as MLAs on a $753.1 million loan for E. R. Schiffhart GmbH & Cie KG to finance ten capesize bulkers currently under construction in Korea by the Hyundai Group with delivery expected throughout 2010. BNP Paribas, Commerzbank and Dresdner Kleinwort joined DB and HSH as arrangers while Deutsche Schiffsbank came in as a co-arranger for the deal, which finances 71% of the $1,056 million project cost and covers both pre and post-delivery financing. Notably Ralph Bedranowsky of Deutsche Bank and Harald Kuznik of HSH both hailed the deal as an example of “the global shipping market…returning to reasonable, market-consistent valuations…”
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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