Teekay LNG Partners Invests In the Angola LNG Project

To facilitate the acquisition of Teekay’s interest in the Angola LNG Project, Teekay LNG Partners L.P. agreed to issue 3.7 million common units at a price of $38.88 per share, a discount of 4% from the closing price just prior to the announcement. Proceeds will be used to fund the equity purchase price of Teekay Corporation’s 33% interest in the Angola LNG Project as payment becomes due while using interim and remaining funds for the repayment of outstanding debt under one of its credit facilities, which matures in August 2018. Net of assumed debt, the total equity purchase price is approximately $73 million subject to adjustment based on actual costs incurred at the time of delivery. The company will acquire the ownership interests and pay a proportionate share of the purchase price as each vessel is delivered which is anticipated to be during the fall of 2011 and in the first quarter of 2012.

Continue Reading

TOO Follows-on Again

Once again utilizing its $750 million shelf registration, Teekay Offshore, on the heels of its August follow-on offering of 5.25 million shares, last week offered to the public a further 5.6 million common units. The units were priced at $28.74, a 4.4% discount to Thursday’s closing price of $29.11. A green shoe of 840 thousand shares has been offered to the underwriters. Proceeds will be used for general partnership purposes, including the acquisition of dropdowns from parent, Teekay. In the interim the partnership expects to use the proceeds to pay down a portion of its outstanding debt under various revolving credit facilities. More details are provided in out Guts of the Deal below.

Continue Reading

A Random Talk on Wall Street

This week we spoke with a few shipping investment bankers to get an assessment of what is happening on Wall Street during these hot summer days and what might be waiting in the wings when September arrives. While there are some differing opinions, mainly with respect to the banks, activity in the capital markets remains strong, in general, with strong undercurrents of potential activity in shipping. Some even suggest that we might not have to wait for September, as is typical. In the pipeline are IPOs, follow-ons and even M&A transactions. What follows is a compendium of views on the various opportunities as well as some thoughtful commentary.

Continue Reading

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.
Continue Reading

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

No Pressure Just a Must Deal

General Maritime pulled out all the stops retaining a litany of Wall Street’s bankers to assist in the sale of its common stock needed to complete the financing of five VLCCS and two newbuilding Suezmax tankers from Metrostar. Debt financing is in the process of being arranged, with Nordea and DnB NOR, in the amount of $372 million, representing 60% of the purchase price. The facility is conditioned upon a successful equity offering to make up the remaining balance of $248 million plus any working capital needed. In this period of volatility in the markets, this is no simple deal. Adding further complications was S&P’s recent downgrade of the company’s debt to a B rating. This rating however needs to be put in the context of S&P’s overall view of shipping, which considers Teekay and OSG as BB and BB- rated respectively a few notches above Genmar’s.
Continue Reading

Markets In Disarray

The equity markets can best be described as volatile, although that characterization may be kind, as they seem to be heading in one direction only. Two companies, Ridgebury Tankers and Navios Maritime Acquisition have braved the onslaught but we suspect would have preferred a better choice of timing. Unlike the preceding IPO offerings, Crude Carriers and Scorpio Tankers, that took place earlier this year, Ridgebury is not the master of its fate. Specifically, its vessels are on option from a third party seller, Teekay, as opposed to an affiliated party, which implies certain time limitations. Despite the switchover from the Gemini to Heidmar pool, they remain on the road for a second week. As a firm believer in no news is good news, we remain hopeful that Bob Burke and his team along with Jefferies will be successful.

Clearly, Ms. Angeliki Frangou leads a charmed life or is an extraordinary negotiator. Despite the uncertain markets and a preliminary vote that was largely against the acquisition of a tanker fleet of 11 product carriers and 2 chemical tankers, shareholders of Navios Maritime Acquisition approved the transaction on Tuesday thereby avoiding the necessity of Navios Maritime Holdings becoming the owner/operator of the tonnage. According to Chris Wetherbee of FBR Capital Markets, the company was able to secure a 60% plus one majority vote from shareholders, but expects Navios’ ownership stake will likely be higher than its 33% target, as it likely purchased shares from dissidents. With three public companies under her purview, Ms. Frangou is approaching Peter G’s record of four. We are in awe of the capacity of these two industry leaders to manage successfully these distinct companies in different sectors with distinctly different shareholders.
Continue Reading

Marine Money Capital Market League Tables

Deutsche, Morgan Stanley, DnB NOR, JP Morgan, Pareto and Citi Top League tables from Busy start of the year

By almost every measure, the start of 2010 has been a good one for those working in the capital markets for shipping. Over $2 billion has been raised in the US public equities markets, while in excess of $2 billion has been raised in the Western public debt markets.  What is more another $2 billion in shelf registrations have been filed, with many additional projects at various stages of development.

Part of the story for the first part of 2010 has to be shipping’s remarkable ability to have avoided the catastrophic meltdown so many predicted.  But, perhaps, an even more dramatic story has been the sure arrival of the influence of the public shipping company, with its nearly instant access to capital with which to take advantage of opportunity.

Marine Money’s recent survey of the bank and investment banking communities (see the May issue of Marine Money published shortly for more details) showed that by a wide majority public companies currently do and would continue to enjoy greater access to funding, and therefore a competitive advantage.
Continue Reading

Insatiable!

Investors cannot seem to be able to get enough of the shares and bonds of Teekay and its subsidiaries. In the latest iteration, Teekay Tankers announced Monday, after market close, its intention to offer 7 million shares of Class “A” common stock of the company in a public offering. But even before the market opened the next day, the company announced that the offering had been increased to 7.7 million shares, following the trend of Teekay’s previous offerings.

With the joint bookrunners, UBS, Citi, J.P. Morgan and Deutsche Bank opening up their retail systems, the bulk (75% to 80%) was covered by retail with the balance covered by institutions. In a world of low interest rates, a consistent dividend payer is a star.
Continue Reading

Capital Link

Following on the heels of CMA, today was the 4th Annual Capital Link Shipping Forum in New York. As always it was well attended with a full schedule of presentations and panels. The most intriguing for us was the bankers’ panel which was moderated by George Cambanis of Deloite Hadjipavlou Sofianos & Cambanis and included Robin Das of HSH Nordbank, Gust Biesbroeck of Fortis Bank Nederland and Brett Esber of Blank Rome. The good news was that panelists all agreed that bank lending has picked up this year. Mr. Biesbroeck talked of pockets of liquidity, noting in particular the increase in Asian lending to locals. The common characteristics of the loans were the involvement of strong credits with whom the bankers had long-standing relationships. Echoing the same idea, but humorously, Mr. Das affirmed there was a bifurcated market with the banks willing to lend to those who don’t need the money. The niche owner is being left behind.
Continue Reading