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Golar Partners Prices While Parent fills Warehouse?
Was it a vote for shipping, for the MLP structure, or Mr. Fredriksen? At the end of the day, it does not matter as the first shipping IPO of 2011 met with strong demand and priced above its range. Last week, Golar LNG Partners LP (“GMLP”) priced its initial public offering of 12 million shares at $22.50, above the stated range of $20 to $22 per share. Total gross proceed were $270 million, which could increase to $310.5 million if the green shoe is exercised in full. The limited partners own a 30.1% interest in the company with Golar LNG Limited owning the 2% GP interest as well as a 67.9% limited partner interest. The final details of the transaction are shown in the Guts of the Deal below.
Market Timing – Sale of Primary and Secondary Shares by TAL and Insiders
The container leasing business is back on track, growing again at over a 10% CAGR after 2009, which witnessed the first decline in demand in 25 years. After a difficult 2008 to 2009, mirroring the financial crisis, when orders for new boxes were non-existent and manufacturers closed down, the container lessors are back on a spending spree. New containers are needed to meet growing demand, for fleet replacement and to meet the shortfall arising from a reduced spend by the container lines.
Don’t Fight the Tape – ACL I Done
We scratch our head in wonder and realize there is much for us to learn. Certainly this week we understand that logic may not prevail against the appetite for yield, or as Mr. Market reminded us, “don’t fight the tape”.
Last week we described in some detail why we thought ACL I’s unsecured Senior PIK Toggle Notes (“Notes”) were not a good idea and since the deal was oversubscribed and upsized it clearly is not worth repeating the litany here. Instead, we will focus on the deal itself, details of which are highlighted in the Guts of the Deal contained herein.
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.
Yes, There Was Equity Too
China’s inflation and Ireland’s banking crisis triggered this week’s market volatility. Nevertheless, Scorpio Tankers Inc. and Navios Maritime Acquisition Corporation (“NMA”) moved ahead with equity follow-on offerings. Scorpio’s registration was for a one-off transaction, whereas Navios’ was a supplement to its recently filed broad shelf registration.
Shipping IPOs Stage a Comeback – Costamare Files
With the IPO market for shipping shares quiescent since March, Costamare Inc. broke the ice last week and filed its F-1 to begin the process of an initial public offering of its shares. The company is offering 13.3 million shares, which will represent 22.1% of the shares outstanding immediately after the offering, without giving effect to the green shoe. The expected price range is $15 to $17. Assuming pricing at the midpoint, gross proceeds will approximate $213 million and the market value of the company will be $965 million. Proceeds will be used for general corporate purposes and potential future acquisitions. The company may also use a portion of the net proceeds, together with debt financing, to fund it’s already contracted containership acquisitions. Finally, pending any of the preceding, the proceeds may be applied to temporarily reduce outstanding indebtedness. The company intends to pay a quarterly dividend of $0.25/share, which is based upon a payout ratio of 60% to 70% of distributable cash flow. This equates to a yield of 6.25% on the midpoint price. More details on the transaction are included in our Guts of the Deal shown below.
SC to BOX – Seacube’s 2nd Attempt
Back in April, we wrote the following:
“Stripping off the baggage of its container ships and chassis, both unattractive businesses today, Seacastle Inc. has offered the public the opportunity to invest this time in its container leasing subsidiary through an initial public offering of that business, which they have named SeaCube Container Leasing Ltd. This is another example of a part that might be worth more than a whole as management recognized the recent outperformance of the publicly traded container leasing companies, Textainer and TAL International due to operating leverage. Trade has begun to resume which equates to more boxes coming on line, higher utilization and hence more revenue, with little incremental cost. In addition, given the financial constraints of the liner companies due to a very difficult 2009, it is likely that the lines will increase the portion of leased rather than owned containers in their fleet. From that standpoint, timing could not be better.”
World Fuel Taps the Equity Market for Growth
On Tuesday, World Fuel Services closed of its previously announced public offering of 8 million shares of its common stock. The shares were offered under its effective shelf registration, which provides solely for the issuance of common equity, filed just prior to the announced offering. Due to demand, the offering was upsized from 7.57 million shares, an increase of 5.7%, and the underwriters exercised in full the green shoe of 1.2 million shares. Net proceeds of the offering amounted to approximately $219 million. Proceeds of the offering will be used for general corporate purposes including potential acquisitions. More details are contained in the Guts of the Deal enclosed herein.
Getting Closer – Ridgebury Fine Tunes
Last week, the principals of Ridgebury Tankers filed the 2nd amendment to their equity offering. In the latest revision, the amount of the offering was increased to a maximum of $340.8 million up from $325 million in the prior filing. More importantly however was the indication of increased momentum as UBS and Wells Fargo joined Jefferies as joint lead bookrunners. We highlight the preliminary terms in the Guts of the Deal below.
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.
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