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.
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Mr. Molaris Returns with Alma – A Mixed Fleet and Fixed Dividend Option

Last week, Stamatis Molaris staged his return to the public markets by joining forces with Hans Mende, the President of American Metals & Coal International, and Mass Capital Investments, a private equity firm affiliated with Fortis Bank Nederland, with the filing for an IPO of their new venture, Alma Maritime Limited. Avoiding the historic trend of a pure play in order to provide diversification, Alma will be a mixed fleet with mixed employment including spot, short-term, medium term and long-term charters. The strategy is to take advantage of attractive opportunities presented by current low vessel prices in both the wet and dry sectors with the goal of maximizing shareholder returns through the shipping cycle.
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Here Come the IPOs

This week two IPOs, one dry and one wet, hit the road with well-known sponsors. First was the Genco inspired BDI play, Baltic Trading Limited, which was followed by Mr. Marinakis’, of Capital Products Partners fame, large tanker vehicle, Crude Carriers Corp. These followed quickly on the heels of the recent Scorpio offering.

BDI Proxy
This was one of the first opportunities we had to watch a road show presentation on the great equalizer, “RetailRoadshow” (http://www.retailroadshow.com/index.asp), a website designed to put retail investors on a level playing field with the institutions. The presentation of Baltic Trading Limited was expertly handled, as one would expect, by Peter G. and John Wobensmith, who will respectively fill the positions of Chairman and President of the new company.
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Equity Appetite Remains Strong

On Monday, Capital Product Partners announced that it planned to offer 5.8 million common units in a public offering. The transaction was priced the next day at $8.85 per common unit ,a discount of 6.25% from the prior day’s closing price. Proceeds will be used to acquire the M/T Atrotos, a 48,000 DWT product carrier built in 2007 from its sponsor, Capital Maritime & Trading, for $43 million and for general corporate purposes. Chartered  to Arrendadora Ocean Mexicana for $19,900 net per day, the vessel is sub-chartered to Petroleos Mexicana for five years. Operating costs for the period are fixed at $3,575 per day, which is a very competitive cost even for a modern ship.
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Teekay LNG goes to the Shelf

Having filed its F-3 shelf registration on October 20th (effective on the 29th), Teekay LNG Partners wasted no time and announced on Monday the offering of 3.5 million common units with a green shoe of a further 525,000 shares. On Tuesday the company announced that the shares were priced at $24.40, which is a discount of about 5% to Monday’s close at $25.67 just before the announcement.
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All Eyes Are On Genmar

We know that General Maritime’s dynamic duo, Messrs Georgiopoulos and Pribor are on the road marketing their $300 million senior unsecured notes offering due in 2017 and so, while they are busy selling we thought we would take a read of the high yield market.

Earlier this week, Navios Maritime Holdings closed its successful $400 million private offering of first priority ship mortgage notes due in 2017. Rated BB-/Ba3, the coupon on the notes was 8.875% and was priced to yield 9.125%. The company escrowed $105 million of the proceeds to provide additional financing to complete the purchase of two new vessels with the balance used to repay existing credit facilities.
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DnB NOR Markets Hires New Analyst

Kelvin Li has just joined the Corporate Finance team at DnB NOR markets as an analyst. He had a year’s working experience at UBS Investment Bank in New York as an analyst with the investment banking team. Kelvin holds a Bachelor of Business Administration (Higher Distinction) from the Ross School of Business at the University of Michigan, Ann Arbor.

K-Sea Too

What is a week without another follow-on offering? As last week ended, K-Sea Transportation Partners (“K-Sea”) announced a public follow-on offering of 2.9 million of its common units and a green shoe of 435 thousand shares utilizing its existing shelf registration.

The shares were priced at $19.15, a 6.6% discount to the prior day’s close at $20.51.

Of the net proceeds of $52.9 million, exclusive of the green shoe, approximately $47 million will be used to repay indebtedness under the company’s revolver, which currently has $139.9 million outstanding and the remainder will be used to make construction progress payments under shipbuilding contracts. LaSalle Bank, Wachovia Bank and KeyBank are lenders under the facility as well as affiliates of the underwriters and will receive more than 10% of the net proceeds of the offering.

The joint book running managers for this offering are BofA Merrill Lynch and Wells Fargo. RBC Capital Markets and UBS are co-lead managers, with DnB NOR, KeyBanc and Stifel Nicolaus serving as co-managers.

We provide further details in the Guts of the Deal below.

More Equity On the Way?

Speaking of the markets, one, in particular, has done well lately, which has certainly cheered both investors and investment bankers. Yes, the stock market, as measured by the DJIA, has increased about 40% from its low of 6627 on March 6th to its close on Thursday of 9256. While we do not pretend to be market seers, the rise is as mysterious to us as how quickly the stimulus appears to have worked in China. Rather than try and understand it, we intend to sit back and enjoy it.

With the stock market at these levels, there should continue to be more follow-on offerings as soon as everyone returns from vacation. With the bank market somnolent, the equity markets appear to have a monopoly on capital raising. While we remain unflagging in our belief in the return of high yield, raising equity to de-lever and repair balance sheets seems like a useful exercise in the interim.

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Fixing Debt

Also, last week, Commercial Barge Line Company (“CBL”), a direct wholly owned subsidiary of American Commercial Lines Inc. (“ACL”) announced the private placement and pricing of its $200 million 12 1/2% senior secured second lien notes due July 15, 2017. The notes were issued at a price of 95.181% yielding 13.13%. Concurrent with this offering, CBL and ACL will close on a new four-year $350 million senior secured first lien asset-based revolving credit facility.

The proceeds of the notes and the credit facility will be used to repay ACL’s existing credit facility, to pay certain related transaction costs and expenses and for general corporate purposes.

The book-running managers for the notes were Bank of America, UBS, SunTrust and Wachovia.