Deal of the Year – 2002 M&A and Joint Ventures

In shipping charter parties, a good broker makes both parties feel that they have won the negotiation, while it is likely that both have yielded more than they would have at the start. In shipping M&A brokers and advisors too are involved, but, unless the deal is an obvious one between friendly parties, this “good broker” dynamic is often lost because the deals are done in a public forum.

2002 was a down year in shipping in general and while there were some notable successes this year, see below, just as notable was the abundance of big merger ideas that did not come to fruition. Think about what did not happen in 2002 (so far):

1. Royal Caribbean/P&O Princess/Carnival saga.

1. Torm/Norden
   

1. AET and MISC/General Maritime/Teekay?
   

1. SCI Privatization and ???

1. Bergesen/Worldwide
   

1. Golar’s rumoured sale

1. Rumoured merger of PSA and NOL
   

The list goes on…

Continue Reading

Editor: Dog Days Never Last

Returning to southern Connecticut from a holiday in coastal northern Maine is simply brutal. From kayaking with seals and porpoises at arms length in 3 foot sparkling swells to 100 plus Fahrenheit on the heat index, humidity so oppressive that it’s a challenge to breath and a real world market, both shipping and otherwise, in such a flux, it makes one contemplate the value of the professional pursuit. Of course there is value, and also because just like these, as we Yanks like to say, are the “Dog Days of Summer”, they don’t last forever and often, they are over as quickly as they came..

Case in point may be the brutality of the equity markets on tanker equities over the last few weeks. While the US markets have been brutal to everyone this year and for much of last, tanker shares remained valued for most of this year at levels above their traditional valuations. A number of factors caused this including newly listed companies improving interest in the sector but the overriding one was not that these companies had good stories to tell, but that they were small to mid-cap shares that participated in a deeply cyclical market and thereby, so the theory goes, have some predictable elements which made them attractive in the current market against larger companies with no earnings, convoluted structures and no clear path to profitability or simply companies which were overvalued as virtually the entire S&P 500 was, and indeed is today. Continue Reading

Jefferies Finds Equity in New York

We hear the irritation all the time: “Investment banks aren’t interested in the middle market – and they won’t even look at deals less than $100 million.” So, where does that leave an industry like shipping, which needs to have access to the capital markets especially when commercial bank capacity shrinks? We imagine the question would warm the cockles of the people at Jefferies in New York.

In an era when many investment banks would fire their employees before helping smaller companies in mature industries raise money, maritime business is so important to Jefferies that shipping deals appear by name in the firm’s corporate annual report. In a time when “shipping equity” is considered an oxymoron, Jefferies has been on the cover of every public equity deal in recent memory and is now offering shipowners private equity through the $600 million Jefferies Capital Partners, formerly called FS Private Equity. And in a moment when firms are letting people go, Jefferies have added such maritime names as Roy Furman, as Vice Chairman, Jim Dowling, in private equity and Stephen Gengaro, in equity research.

Continue Reading

TORM: “ON DAQ”

In Freshly Minted (FM), our weekly online executive summary, of March 7th, our team, lead b y Nicolai Heidenreich, took a look at the board approved listing by D/S Torm (the Danish product tanker and bulk liner owner/operator) of American Depository Receipts (ADRs) to be listed on the NASDAQ in New York at some point in late March or early April.

A road show to follow immediately post-listing in the US to trump-up interest in the shares is to be led by Jefferies. The US listing is designed to attract US and institutional investors, improve the volume trade of the shares and therefore their liquidity and, in doing so, improve the valuation of the company so that it is more on a par with other US listed public shipping equities, notably tanker shares, which, while still cheap by traditional valuation standards – even for “deep cyclicals” – re c e i ve a better valuation in the US than equivalent companies on foreign listings, especially a Copenhagen small-cap. The purpose of this article is to give our readers a reasonable valuation of the company and to discuss the relativ e merits and/or disadvantages of such an ADR listing. Continue Reading