Co n t e n t s

February/March 2007
n So Much to Choose
—page 2

n The Winners
—page 3

n 52 Weeks of Shipping Transactions

Publisher GEORGE WELTMAN
Managing Editor NORA HUVANE —page 6

n Bank Debt in 2006: Public Companies Take

Vice President / Asia Director PEDER BOGEN
Art Director / Production Manager CARI S. KOELLMER
Events Director LORRAINE PARSONS
on Dry Powder & Lenders Wander the World
—page 13

n “Junk” – The Public Debt Award

Greek Director KEVIN OATES
U.K. Director BORIS NACHAMKIN —page 26

Greek Marketing Representative
Marketing Sales / Director
Sales Director
n Restructuring Deals –
MIA JENSEN
MICHAEL MCCLEERY
BENJAMIN PADILLA
Breathing Life into Worthy Projects
—page 31

n Out-of-the-Box Thinking or
Subscription Director ELISA BYBEE
Technical Support MICHAEL HANSON
The Structured Finance Award
President MATT MCCLEERY —page 34

Chairman JAMES R. LAWRENCE n M&A: Financial Buyers, Niche Players &

BUSINESS AND SUBSCRIPTION OFFICES
Two Special Deals
—page 38

UNITED STATES n Convertibles: The Equity Linked Award

One Stamford Landing, Suite 214, 62 Southfield Avenue —page 52

n Shipping IPOs Forge into New Territory

Stamford, CT 06902 USA
Phone: +1 203 406 0106 • Fax: +1 203 406 0110
Email: info@marinemoney.com —page 54

ASIA n Follow-ons Find a Following

140 Cecil Street, #16-00, PIL Building —page 61

n Money, Money Everywhere –

Singapore, SG-069540
Phone: +65 6222 9456 • Fax: +65 6491 5563
Email: pbogen@marinemoney.com
The Award for Private Equity
—page 65
GREECE

n The Year of the Lease (Yes, Again)

F
15 Athinaeon Street
Palio Faliro, GR-175 61, Greece
e
Phone: +30 210 9858 809 • Fax: +30 210 9842 136
—page 68 b
n Award for Innovation
Email: mia.jensen@marine-marketing.gr r
—page 80
u
UNITED KINGDOM

n Editor’s Choice: Nakilat Brings

a
3 Berkeley Square
r
London, W1X5HG UK
Phone: +44 207 629 1160 • Fax: +44 207 629 1393 Back Project Finance y
Email: seanav047@aol.com —page 84 /

n Dealmaker of the Year

M
Annual Subscription is $995 U.S. plus postage a
Payment should be made to International Marketing Strategies, Inc. —page 85
r
n Deal of the Year –
at the subscription address above.
c
While Marine Money has taken great care in the production of this publication,
no liability can be accepted for any loss incurred in any way whatsoever by any h
person who may seek to rely on the information contained herein. DP World and P&O Ports
—page 87
2
Marine Money, Inc. (International Marketing Strategies) 0
ISSN No: 1051-5496 Cover Art: 0
Reproduction in any form is strictly prohibited “Strong Seas” (2006: 1.5m x 1m) Artist: Nikos Kypraios
without written consent of the publisher.
7

www.marinemoney.com marine money 1

 So Much to Choose
t is a wonderful task to
I
celebrate the accomplish-
ments of so many and an
industry so creative that each
year brings yet another crop of
deals, projects and transactions
that stretch our views of how
business is best transacted. The
Marine Money team follows
the daily volume of the activity
with a keen interest. We admire
the tried and true, appreciate
the real meaning of relation-
ships, marvel at the cycles – not
just shipping’s but recently and
more obviously in finance –
and respect the enormous
amount of good new thinking
and structures. We also see a
wealth of options for
shipowners in financial markets
around the world, perhaps
driven by government stimuli
or more dramatically from
F fundamental shifts in the flow
e of funds.
b some wonderfully complex
r There are three absolute truths
u
about this issue. One, it is true
a
r what they say about us, at least
y sometimes – that we never saw
/ a deal we did not like. The
M simple fact is we appreciate the
a creativity, thought, risk and
r
hard work involved in
c
h concluding a transaction. That
doesn’t mean we would put our
2 money in every deal, but we do
0 admire the men, women and
0 businesses that try to build
7
2 Marine Money
With apologies to all Trekkies:
“Awards the final frontier. These are the voyages of the Starship Marine Money. Its continuing mission: to explore
strange new deals, to seek out the winning capital providers, to go boldly where no sane person has gone before.”
things. This issue is a celebra-
tion and we make no bones
about recognizing achievement
with Awards.
Two, it is an important compi-
lation of a year’s worth of trans-
actions and as such a snapshot
of a moment in time that
captures an industry and its
financiers in a way that is illus-
trative and when taken together
with all our previous years can
provide a road map useful to
lenders, investors and CFO’s
the world over. If it is true that
one can learn from history then
in a capital-intensive business,
where the best financing may
be found across an ocean, then
this collection and review of last
year’s deals will hopefully bring
value to you in your year ahead.
And finally, part of what we do
in this issue is de-construct
deals. Hopefully this stimulates
other new ideas in pursuit of
ever more competitive and
empowering structures.
Each year in December we
request and receive countless
recommendations for recogni-
tion in these pages. Competi-
tors actually recommend each
other’s deals! While we like to
think we do a great job week in
and week out chronicling trans-
actions, we are constantly
amazed at the number of deals
done that we just didn’t have
time to cover or missed entirely.
And, this despite the fact that
our Marine Money database
followed some 2,000 transac-
tions, some as small as a few
million dollars and some as
much as six billion. There were
deals that refinanced compa-
nies, helped expand a business
or just strengthened a balance
sheet. Others carved out new
ground. They, in fact, all
deserve mention. For instance,
so many transactions competed
for coverage, we missed Citi-
group’s Stena Drillmax transac-
tions the dollar amounts of
which were enormous. Other
times there are new entrants
like Efibanca, which advised on
the acquisition of Navgas by
Synergas. Likewise, the service
businesses slipped below the
radar. There was the merger of
Atlantic Marine with Dorch-
ester Maritime and who knows
what will happen to V.Ships.
Then there was the develop-
ment of a secondary market for
KG shares in Germany done by
DSM to provide liquidity as the
project lives were extended. So
much to cover, so little time.
The process we go through to
select the winners is actually
very detailed and takes several
www.marinemoney.com
weeks of internal debate. Invari-
ably there are deals that in other
years would be hands down
winners but this year are in
competitive categories. Former
Secretary of the US Navy John
Lehman’s acquisition of the US
shipyard Atlantic Marine faced
competition like DP World,
OOIL, Tallink and Petro-
jarl…heady stuff that not even
Paul Slater, the transaction’s
advisor, could overcome with
silver tongued lobbying.
We want to thank all of you
who either prepared careful and
illustrative explanations of deals
or who recommended transac-
tions for consideration. The
shipping industry benefits from
the creative thinking and fierce
competition within the finance
markets. But it also benefits
from the camaraderie, commu-
nity and commitment of all
those individuals who work in
this fantastic business.
Finally, congratulations to all
our friends and colleagues for
their accomplishments. May
your bonuses be huge and your
clients perpetually profitable.
And thank you for all your
support throughout the year.
 2006 Deal of the Year Awards
CATEGORY WINNER
Bank Debt: Nordea for Songa Shipholding
Public Debt: Jefferies, ABN Amro for Britannia Bulk
Pareto, Nordea, DnB for "Norway Inc."
Restructuring: DVB Bank, NFC Funds for TMM
Structured Finance: BNP Paribas for Vega Containervessel 2006-1 plc
M&A: Fortis, Dahlman Rose for Quintana's acquisition of Metrobulk
DnB NOR, ABG Sundal Collier for Teekay's acquisition of Petrojarl
Equity Linked: Jefferies, Bear Stearns for Hornbeck Offshore
Public Equity - IPO: Merrill Lynch, Citigroup, Dahlman Rose, Jefferies, Fortis, Nomura International for Danaos Corporation
Public Equity - Follow-on: JP Morgan, Deutsche Bank, Goldman Sachs for Horizon Lines
Private Equity: Cantor Fitzgerald, CRT Capital Group, Oppenheimer for Paragon Shipping
Leasing: Ship Finance International, AMA Capital, Argent Group, Fortis for Horizon Lines
Innovation: Lloyd Fonds, Oppenheim Pramerica for Open Waters
Editor's Choice SMBC, CSFB, Lehman Brothers, Barclays Capital, BNP Paribas, DnB NOR, Gulf International Bank,
KEIC, KEXIM for Nakilat Inc.
Dealmaker of the Year: Axel Eitzen
Deal of the Year: Deutsche Bank, Citigroup for DP World deals

2005 Deal of the Year Awards

CATEGORY WINNER
Bank Debt: Nordea and DnB NOR for Euronav
Public Debt: Deutsche Bank for Berlian Laju Tankers
Public Equity: Citigroup and Merrill Lynch & Co. for Seaspan in New York F
HSBC, UBS Investment Bank, and JPMorgan for China COSCO Holdings Company Limited in Hong Kong e
Carnegie and UBS Investment Bank for Bergesen Worldwide Gas in Oslo b
r
Private Equity: Jefferies Capital Partners for Pacific Basin u
Fortis Securities LLC for representing Maas Capital Investments in Diana Shipping a
M&A: Citigroup, Goldman Sachs and JP Morgan for AP Moller-Maersk's acquisition of Royal P&O Nedlloyd r
y
DVB for National Shipping Company of Saudia Arabia for Acquisition of 30% of Petredec /
Leasing: KGAL and V. Ships for IMC M
Dealmaker of the Year: Morten Arntzen a
r
Editor's Choice: DnB NOR Markets and Enskilda for Aker American Shipping ASA c
Greatest Contribution to Jeremy Kramer at Neuberger Berman h
Ship Finance: John Sinders at Jefferies & Company
2
0
0
7

www.marinemoney.com Marine Money 3

 2004 Deal of the Year Awards
CATEGORY WINNER
Bank Debt: Citigroup / KEXIM for Maran Gas
DnB NOR for Nordic American Tankers
Nordea Bank for General Maritime
Public Debt: Jefferies & Co. / Fortis Securities for Trailer Bridge
Restructuring: Miller Buckfire Ying & Co. for Stolt Nielsen S.A.
Public Equity: JP Morgan / ABN Amro for P&O Nedlloyd
Cantor Fitzgerald / DZ Financial Markets / HARRISdirect / Hibernia Southcoast for Top Tankers
Private Equity: Goldman Sachs & Co. for Carlyle Group
M&A: American Marine Advisors for Attransco
Leasing: DVB / Pareto for Stelmar K/S
Equity Linked: Jefferies & Co. for OMI Corp. convertible
Dealmaker of the Year: Stelios Haji-Ioannou
Editor's Choice: Jefferies & Co. / Citigroup for Ship Finance International

2003 Deal of the Year Awards

CATEGORY WINNER
Bank Debt: Nordea / JP Morgan for General Maritime
Fortis / Export-Import Bank of Korea for Seaspan Container Lines
Public Debt: Jefferies / Citigroup for Frontline
Restructuring: American Marine Advisors for Cruiseinvest
Public Equity: JP Morgan for Star Cruise Lines
Private Equity: DnB Markets for Aequitas Holdings
M&A: JP Morgan / Citigroup for Neptune Orient Lines / MISC
Leasing: Citigroup for Golar LNG
New Entrant of the Year: Export-Import Bank of Korea
F Dealmaker of the Year: Tor Olav Trøim
e Editor's Choice: BTM Financial Services, Inc., Vereins-und Westbank AG and HSH Nordbank AG for First Ship Lease Mezzanine
b
r
u
a 2002 Deal of the Year Awards
r
y
CATEGORY WINNER
/
M Bank Debt: Citigroup / KDB / KEB for Wallenius / HMM
a Public Debt: Citigroup for CP Ships
r
Restructuring: American Marine Advisors for Enterprises & American Classic Voyages
c
h Public Equity: JP Morgan / Jefferies / Sunrise / Alpha for Tsakos Energy Navigation
Private Equity: Fortis / Royal Bank of Canada for Seabulk
2
M&A: DnB Markets / JP Morgan for Teekay / Navion
0
0 Leasing: Royal Bank of Scotland for BP
7 Editor's Choice: NIB for Latitutde Synthetic Securitization

4 Marine Money www.marinemoney.com

 "SSY Capital advertised here in the hard copy this month and

reached the most influential readers of our industry, why don't you? Interested?

Please contact info@marinemoney.com, for more information!"

 52 Weeks of Shipping Transactions
WEEK ENDING DEALS
Week 1 January 6 • General Maritime buys out Oaktree’s stake at $37 per share, amounting to $154 million
• Fredriksen’s SeaDrill bids for Smedvig shares, continues consolidation in rig market
• Electra sells Inchcape Shipping Services to Istithmar for 7x earnings at $285 million
Week 2 January 12 • Nordea and DnB NOR top Dealogic league tables as syndicated shipping lend tops $60 billion
• PSA, DP World bid for P&O’s prized terminal properties
• TEN takes two four vessels from Tsakos family interests for $219 million
• DryShips announces standard $0.20 dividend following rumors the company would fall short
• Dahlman Rose downgrades the tanker sector
• Citigroup downgrades Eagle Bulk, shares plummet 10%
• AP Moller-Maersk, COSCO Pacific and Hutchison take stakes in new Shanghai Port Yangshan Phase II
Week 3 January 19 • Berlian Laju Tankers announces intent to seek a dual listing in either New York or Singapore
• Bank of Scotland raises $405 million in debt for Prime Marine, $166.5 million for Viken LR2
• Markets quiet, analysts cast lots on the year to come
Week 4 January 26 • BNP Paribas develops securitized structure for CMA-CGM with XL Capital Assurance
• Hanjin Shipping announces $206 million loan raised through various South Korean domestic financial institutions
• China Shipping Development signs $52 million loan with Citibank, HSH Nordbank and DnB
• Richard Hext to take helm at Pacific Basin as Mark Harris announces intention to step down
• SeaDrill places $750 million in an issue managed by Carnegie and Pareto
• Arlington Tankers declares $0.53 dividend
• Dahlman Rose downgrades dry sector, Bank of America sees value in the tanker sector
Week 5 February 2 • Fredriksen picks up GenMar OBOs, GenMar picks up $256.5 million
• ABG Sundal Collier initiates coverage of Golden Ocean with a Buy saying “The World is Not Going to Hell Just
Yet…”
Week 6 February 9 • Rand shareholders prepare to vote on $57.3 million acquisition of Lower Lakes Towing and Grand River Navigation
• 2nd Odfjell Invest company acquires high spec rig for $628 million with funding from DnB NOR and 10x over-
subscribed equity issue
• Odfjell Chemical Tankers prepares NOK600 million 5-yr bond issue to be priced at 3-mo NIBOR + 80
• SMBC closes first Japanese and club deal for Cido Shipping Group
• DP World moves closer to P&O as PSA fails to challenge its 520p/share bid
Week 7 February 16 • CMA-CGM closes $800 million securitization with BNP
• Natexis leads E500 million 5-year syndication with SG and Barclays for CMA-CGM priced at L+90
F
• Industrial Shipping Enterprises formed
e
b • Citigroup and Nordea agree to provide $1.5 billion 7-yr unsecured facility to OSG
r • Bank of Scotland and Nordea commit to new $360 million 5-yr facility for Aries Maritime
u • Mitsui & Co signs $33.5 million deal with West Asia Marine
a • Navantia SL completes 6.5-yr E259 million bonding facility with Lloyds TSB Bank
r • 19.8% stake in FESCO finally sold to Sergei Generalov’s Industrial Investors for $139 million
y • Seacor commences consent solicitation for Seabulk bonds
/
Week 8 February 23 • Nordea and Bank of Scotland launch syndication of Aries loan, with anticipated pricing of L+100-150
M
a • Fortis Securities closes $150 million 3-yr Bronco deal at L+200-300
r • Marine Money opens its Singapore office
c Week 9 March 2 • TEN acquires 9 product tankers from Western Petroleum for $530 million
h • Seaspan contracts for 4 newbuildings, puts them on 12-yr charters to CSCL
• Quintana initiates dividend policy, setting yield at 9.5%
2
• Stolt-Nielsen announces the purchase of 100,000 of its common shares in ongoing share repurchase program
0
• Nordic American Tanker Shipping acquires suezmax tanker, new share issue with Bear Stearns, UBS, DnB NOR
0
7 • Jefferies, Bank of America bullish on tanker sector

6 Marine Money www.marinemoney.com

 "Bourbon advertised here in the hard copy this month and

reached the most influential readers of our industry, why don't you? Interested?

Please contact info@marinemoney.com, for more information!"

 52 Weeks of Shipping Transactions, continued
WEEK ENDING DEALS
Week 10 March 9 • NFC, BTM bank $57 million TMM buy-out of Seacor interest in Marmex
• UAE decides to divest US-based P&O interests “primarily to salvage the relationship between the UAE and the US”
• Hornbeck Offshore Services announces exchange offer for outstanding aggregate principled 6.125% notes
• Rand Acquisition Corp consummates takeover of Great Lakes Towing and Grand River Navigation
• Seadrill announces intention to make mandatory offer for outstanding shares in Smedvig
• Stolt-Nielsen divests and Fredriksen consolidates in sea farm sector as Stolt and Nutreco sell Marine Harvest to
Geveran Trading for $1.4 billion
Week 11 March 16 • Top Tankers sells 13 vessels for $550 million with 5-7 year leases back in deals arranged by Pareto and Fortis
• KOMARF takes 4 of Top’s vessels in its first non-domestic lease financing
• OMI shakes up fleet, strengthens balance sheet
• Deep Sea Supply purchases 22 supply ship newbuildings from Fredriksen interests for a total consideration of $394
million
• First Securities, Pareto Securities and Fortis Bank lead $165 million placement, Fortis provides $225 million in debt
to fund Deep Sea acquisition
• Deutsche Bank hired to advise on DP World sale of P&O US assets
• Grindrod expands logistical capabilities with acquisition of interests in Auto Carrier Transport and Grindrod
Perishable Cargo Agents
• GATX expected to buy Oglebay Norton Fleet
Week 12 March 23 • Ship Finance buys 5 containership newbuildings and puts them away on 12-year bareboat charters to Horizon Lines
• DryShips dividend discrepancy happily resolved through HSH with $530 million refinancing
• CMA Shipping 2006 draws two thousand to Connecticut
Week 13 March 30 • Georgios Kassiotis’ Omega Navigation Enterprises prepares for $220 million IPO with Jefferies and JP Morgan in
the US and UOB Asia in Singapore
• HSH extends $295 million secured facility to Omega at L+100-120
• Ultrapetrol files IPO registration statement for $175 million with Credit Suisse and UBS
Week 14 April 6 • Marine Money launches its Asia Edition
• Omega Navigation prices first shipping IPO of year at $17 per share
• Goldenport lists in London with HSBC at 4x EBITDA, 1.2x NAV
• Menendez family’s Ultrapetrol files F-1 for NY IPO to raise $175 million
• Carnegie, Pareto and SEB Enskilda take SeaDrill to market to sell $540 million in shares
Week 15 April 13 • Caledonia Investments and Anthony Hardy sell Wallem holdings to Tom Steckmest and Nigel Hill under advisory
of HSH Gudme, valuing the company at $78 million
F
Week 16 April 20 • Top Tankers files registration statement to sell up to $17 million in shares not long after paying out $210 million in
e
b cash dividends
r • Jefferies inks joint venture agreement with Ness Risan
u • Dalian Port raises $275 million in IPO with UBS and BNP Paribas Peregrine reportedly hundreds of times over-
a subscribed
r • State Bank of India, KfW finance VLCC order for Shipping Corp of India
y
• Patrick Corp board recommends acceptance of revised bid from Toll Holdings valuing the company at around $4.2
/
billion
M
a Week 17 April 27 • 50th anniversary of the debut of Malcolm P. McLean’s “radical” idea
r • Interpool sells a large portion of its operating lease portfolio of containers for $515 million to investors in Switzerland
c Week 18 May 4 • Heidenreich Marine is on the market under the advisory of Lazard
h Week 19 May 11 • Quintana prepares to acquire Metrobulk for $735 million
• BW Gas agrees to acquire and leaseback Yara’s ammonia fleet for $347 million under advisory of DnB NOR, ABG
2
Sundall Collier
0
0
7

8 Marine Money www.marinemoney.com

52 Weeks of Shipping Transactions, continued
WEEK ENDING DEALS
Week 19 (continued) • AMA advises CECO on acquisition of Fouquet Sacop; speculation about chemical spin-off abounds
• Bourbon Offshore orders 56 platform supply vessels and 12 harbor tugs for over $880 million
Week 20 May 18 • Quintana acquires Metrobulk, supported by Dahlman Rose raising $191 million through PIPE offering and Fortis
providing $735 in debt
• Tianjin Port IPO 1,700x oversubscribed in Hong Kong
• Pacific Shipping Trust prepares for first Singapore shipping trust IPO with DBS, ABN Amro and DnB NOR
Week 21 May 25 • Ultrapetrol prepares to take IPO on the road
• PIL Closes Singapore’s First Shipping Trust IPO, raising $100 million
Week 22 June 1 • Diana files for follow-on offering with Bear Stearns and Wachovia looking to raise $77 million
• TEN files shelf registration to raise up to $300 million plus to allow up to $194 million in sales by selling share-
holder
• Castle Harlan interests file to sell off $75 million in Horizon stock with Deutsche Bank and JP Morgan
Week 23 June 8 • Oglebay Norton sells 6 of remaining 9 self-unloading “lakers” to GATX subsidiary American Steamship Company
for $120 million cash
• Ultrapetrol postpones IPO
• Genco increases credit facility with Nordea, DnB NOR and Citigroup to $550 million
• Oslo bond market sizzles, with $2.5 billion raised in first 5 months of year
• Analysts call bottom of bulk market
Week 24 June 15 • Teekay announces plan to spin off shuttle tanker and FSO business into MLP Teekay Offshore Partners
• Diana prices second follow-on offering right around NAV
• Horizon Lines secondary offering 2x oversubscribed
• Heerema Group and Wilh. Wilhelmsen appoint Deutsche Bank to advise on spin-off of heavy lift company
Dockwise Transport
• Tallink takes Silja Lines from Sea Containers for $594 million with Citigroup and Societe General advising
• First Ship Lease secures $90 million 12-yr sale leaseback with Berlian Laju Tankers
• Nordea receives mandate for $670 million Awilco Offshore refinance
• Natexis and Goldman awarded mandate for PT Apexindo $120 million financing
• Morgan Stanley awarded mandate for PSA $1 billion bond
• BW Gas prepares for issue of 3 bond loans with Nordea and Pareto to raise $193 million
• Belships announces issue of 5-yr NOK 200 million bond with Nordea
Week 25 June 22 • Morgan Stanley Capital Group announced as buyers of Heidenreich Marine for $200-$250 million with Lazard
advising
F
• HVB wins mandate to advise Croatian government on shipyard restructuring and privatization
e
Week 26 June 29 • Eagle celebrates first anniversary of IPO with acquisition of 3 supramaxes, issue of $33 million PIPE with UBS b
• ICON Capital reemerges with 2 4-vessel deals r
• After payment of hefty dividend, Top Tankers raises $19.5 million through at-the-market share offerings with Cantor u
Fitzgerald a
• NFC in $30 million sale leaseback with Golden Ocean Group r
y
• Fortis acquires Cinergy Market & Trading and Cinergy Canada from Duke Energy for Euro 330 million
/
• Singapore releases details of maritime finance incentive scheme
M
Week 27 July 6 • Golden Ocean takes one newbuilding order, one vessel on charter from NFC, one vessel on charter from Ship a
Finance r
• SeaDrill sells jack-up rig to Ship Finance for $210 million and takes back on 15-yr lease c
• BW Offshore signs $600 million credit facility with DnB NOR h
• BW Gas completes NOK 700 million bond issue with Nordea and Pareto
2
• Saverys-controlled Delphis takes TeamLines from Finnlines Group for $51 million
0
Week 28 July 13 • Morgan Stanley commits to taking 11 MR product on 3-5 year charters
0
7

www.marinemoney.com Marine Money 9

 52 Weeks of Shipping Transactions, continued
WEEK ENDING DEALS
Week 29 July 20 • US Shipping announces financing plan to fund construction of 9 Jones Act product carriers at NASSCO and 4 ATBs
• DP World bidding progresses
• CSAV mandates BNP Paribas to lead $300 million revolver
• Navigazione Montanari mandates BNP Paribas, MCC, ING to arrange $450 million loan
• HSH Nordbank lends $170 million to Fesco
• NFC closes $181 million Ezra deal
• J.F. Lehman to take Atlantic Marine for $172 million with debt financing from BNP Paribas, CIBC
Week 30 July 27 • Rumors surface of Bodouroglou planning London-based SPAC
• Gulf Navigation moves forward with $248 million Dubai IPO led by Shuaa Capital
• Secunda International renews IPO efforts with Genuity Capital Markets to lead the deal
• Fortis closes oversubscribed $735 million credit facility for Quintana
Week 31 August 3 • TBS revitalizes capital structure with $140 million Bank of America-led refinancing at L+225
• Terrapin-sponsored SPAC Aldabra sets sights on Madison Dearborn-controlled Great Lakes Dredge & Dock
• Wellington Management leads $13 million equity placement for Rand Logistics to fund chartering in of 3 self-
unloading vessels from Wisconsin & Michigan Steamship Co
• Golden Ocean takes over Clipper’s bareboat agreement on 5 panamax bulkers for $38 million
• First Ship Lease expands equity capital by $55 million
• US Shipping closes downsized bond deal to raise $100 million at 13% with Lehman Brothers and CIBC World
Markets
Week 32 August 10 • Marpetrol sold to Sovcomflot and Novoship
• Bjorn Aaserod and Cambridge Partners in market for product tanker project investors
• US Shipping pushes forward with USS Product Carriers project, with private equity placement led by Zimmer Lucas
Partners and Alerian Capital Management, downsized bond issue managed by CIBC World Markets and Lehman
Brothers, increase in existing credit facility
• Rumors that Fredriksen and Georgiopoulos near $40/share agreement for sale of General Maritime
• JF Lehman closes acquisition of Atlantic Marine
Week 33 August 17 • Nordea, DnB and Fortis are in the market with $940 million loan for Teekay Offshore Partners
• Nordea syndicating $475 million deal for Ray Shipping
• Horizon Lines files with Deutsche Bank and JP Morgan for further sell down of Castle Harlan stake
• Sohmen interests take Frontline stake in General Maritime for circa $150 million
• Essar restructures its business in shipping, terminals and logistics
Week 34 August 24 • Camillo Eitzen announces $1,280 million acquisition of Blystad-controlled Songa with Carnegie, Pareto and Nordea
F
advising
e
b Week 35 August 31 • SHUAA Capital leads Gulf Navigation in Dubai’s first shipping IPO with National Bank of Abu Dhabi and Emirates
r Bank
u • Teekay and Prosafe court Petrojarl
a • Eagle Bulk files $300 million shelf registration
r • Aldabra shareholders prepare to vote on Great Lakes acquisition
y
Week 36 September 7 • Seaspan files $300 million shelf registration
/
• Nordic American Tanker Shipping expands credit facility with DnB NOR to $500 million
M
a • Ship Finance looks to increase its $1,200 million credit facility with DnB, Fortis, Nordea and Calyon
r • Cargill acquires stake in dry bulk vessel vetter RightShip
c • Chandran-led Chemoil prepares to take the asset-light IPO in Singapore
h • Castle Harlan continues to sell off Horizon as JP Morgan prepares to price secondary
• Healy & Baillie merges with Blank Rome
2
Week 37 September 14 • Eagle sponsor Kelso and Horizon sponsor Castle Harlan both price secondary offerings at full valuations
0
• Pacific Basin uses Danish K/S market to expand controlled fleet
0
7

10 Marine Money www.marinemoney.com

52 Weeks of Shipping Transactions, continued

WEEK ENDING DEALS

Week 38 September 21 • John Coustas-led Danaos Corporation files prospectus for IPO to raise up to $226 million with Merrill Lynch and
Citigroup running the deal
• DnB NOR completes first PRC flag bilateral loan as a foreign lender, with $38.4 million 8-yr loan to Shanghai Times
Shipping
• Fortis Bank provides $62 million in newbuilding finance to Diana
• Teekay bids for Petrojarl at $804 million
• AET in $168 million sale leaseback to ABG Sundal KS
• Aker Philadelphia launches first in series of Jones Act newbuildings for OSG
Week 39 September 28 • OSG announces acquisition of Maritrans for $455 million to be advised by UBS, Merrill Lynch
• Chiquita Brands International hires Fortis to explore strategic alternatives for Great White Fleet
• Nordic American Tanker files for to raise up to $170 million with follow-on offering
• FreeSeas announces intent to raise up to $22 million with convertible issue
• First Ship Lease gets “Approved Shipping Investment Enterprise” status in Singapore
Week 40 October 5 • Danaos prices IPO at $21 per share, the midpoint of the targeted range
• Secunda files updated prospectus with Canadian securities regulators, targets October IPO
• Ultrapetrol files updated registration statement with UBS and Bear Stearns, increasing maximum offering size to
$215 million
• Aegean Marine returns, garners support from Peter Georgiopoulos
• China Cosco Holdings announces plans to raise circa $970 million with issue of 1.5 billion shares on Shanghai
exchange
• Teekay LNG files $400 million shelf registration
• Euroseas announces 3 for 1 reverse stock split, potential share issue
• Ship Finance upsizes credit facility
• Captain Charles Vandeperre sells 50% stake in Univan Shipmanagement to Clipper Group
• Simpson, Spence & Young launches capital arm
• Diana alters target capital structure to incorporate $150 million of semi-permanent debt
Week 41 October 12 • Seaspan acquires 4 vessels from Maersk for $160 million and puts them on 5-yr time charters back
• Dr. Peters emerges as HMM buyer
• Global Oceanic wins support of investors, hires Jefferies for AIM rights offering
• Grimaldi tenders for Finnlines valuing company at $814 million, around 8.7x 2005 EBITDA
• NAT raises $184 million with follow-on offering led by Bear Stearns and Morgan Stanley
Week 42 October 9 • Ultrapetrol prices IPO at $11 per share
F
• Naftotrade and advisor Eurofin cement $60 million NFC deal e
• Sea Containers files for Chapter 11 bankruptcy protection b
Week 43 October 26 • Berlian Laju Tankers prices Singapore offering with Deutsche Bank and UBS to raise $117 million r
• Seaspan files for $250 million follow-on offering to be led by Citigroup and Merrill Lynch u
Week 44 November 2 • KS organized by RS Platou and controlled by NFC sells PSV newbuilding contracts and options to KG controlled a
by HCI, Peter Dohle and Basil Papachristidis
r
y
• Allocean sells two vessels to Pareto with 5-yr bareboat back
/
• Eitzen Chemical issues two-tranche bond with Pareto and Nordea to raise circa $100 million at 350 basis points over M
floating, completes equity placement with Carnegie and Pareto to raise $300 million and looks to place $20 million a
in additional equity r
• Global Oceanic Carriers closes its AIM rights offering with Jefferies to raise _13 million c
• HVB bank commits to 5-yr amortizing term loan of up to $45 million, AB Bank commits to senior secured syndi- h
cated term loan of up to $16.5 million to finance GO Carriers
2
• Varun Shipping completes $51 million preferred placement of 3% shareholding to Caledonia Investments, Sofina
0
NA, SG, ICGQ, and IL&FS Trust C 0
7

www.marinemoney.com Marine Money 11

 52 Weeks of Shipping Transactions, continued
WEEK ENDING DEALS
Week 44 (continued) • Essar Shipping & Logistics raises $200 million in 10-yr syndicated loan led by NIBC Bank and priced at L+20 plus
$350 million in high yield offering led by Jefferies and NIBC
• Great Eastern to inject around $55 million into recently demerged offshore shipping subsidiary Greatship
Week 45 November 9 • Hornbeck Offshore issues convertible notes with Jefferies and Bear Stearns to raise $220 million initially bearing
interest at a fixed rate of 1.625%
• Jefferies and ABN Amro lead Britannia Bulk in $185 million bond issue
• Kristian Gerhard Jebsen Skipsrederi expands cement carrier fleet with $240 million acquisition of Belden advised by
DVB
• Pacific Basin announces plans for $157 million equity placement led by Goldman Sachs
• Fortis, KBC Securities raise Euro 75 million for Exmar in private placement
• Canada announces elimination of tax advantages for income trusts, market value of Toronto stock exchange falls
C$20 billion
Week 46 November 16 • Broker ACM Shipping prepares to list on London AIM with Noble & Company
• Oceania Cruises bank facility and private placement complete AMA Cruiseinvest effort
• Kelso and Castle Harlan affiliates continues to sell down their respective stakes in Eagle Bulk and Horizon Lines
• HSH and König & Cie take new ship investment vehicle Marenave Schiffahrts public
• China Shipping Development plans $250 million convertible to fund 42 vessel acquisition
• Green Reefers takes 20 vessels from Seatrade, Eidesvik and Odfjell interests
• MC Shipping in $52 million ale leaseback with MPC Capital KG fund
Week 47 November 23 • Carnival Corp hires Merrill Lynch, RBS, UBS for circa $958 million euro bond offering to mitigate foreign exchange
risk in shipbuilding contracts
• Vinashin hires Habubank for 9.6% $19 million bond offering
• Siam Commercial Bank and Deutsche Bank prepare for three-tranche Thorsen Thai notes issue
• HSH Nordbank leads $434 million 15-yr financing for Sovcomflot along with ING and Norddeutsche Landesbank
Girozentrale
Week 48 November 30 • Chemoil successfully closes $101 million bunkering IPO in Singapore with JP Morgan, UBS and UOB Asia Limited
• Aegean Marine Petroleum sets price range for New York bunkering IPO
• DnB NOR in record $293 million KS deal with Westfal-Larsen
• AP Moller-Maersk in $127 million sale leaseback with Danaos
• Navios announces plans for $300 million bond issue
• B+H completes private placement of bond loan with Pareto and Nordea to raise $60 million
• Fortis launches $775 million facility for Aker American Shipping
F
• OOIL sells four terminals to Ontario Teachers’ Pension Plan for $2,350 million with help of UBS
e
Week 49 December 7 • Aegean Marine prices Bear Stearns-led IPO at top of range or 25-30x earnings to raise $175 million
b
r • Teekay Offshore MLP files for IPO with Citigroup and Merrill Lynch
u • Bodouroglou’s Paragon Shipping raises $100 million in 144A US private equity issue led by Cantor Fitzgerald
a • HSH Nordbank provides $90.75 million credit facility to Paragon
r • Sevan Marine raises $140 million in bond issue with Pareto
y • Odfjell issues notes with DBS Bank in Singapore to raise SGD 160 million
/
• GulfMark Offshore raises $77.8 million in follow-on offering led by Jefferies
M
a • Tufton Oceanic closes $114 million in sale leasebacks with Geden Lines, Marsol
r Week 50 December 14 • Teekay Offshore Partners prices IPO at $21, raising $147 million
c • Navios Maritime issues $300 millions of 9.5% senior notes due 2014 with Merrill Lynch, JP Morgan, Banc of
h America and S. Goldman Advisors
• Deutsche Bank successfully sells DP World’s US ports to AIG with Lehman advising for 20-25x EBITDA
2 • Larsen & Tubro set up infrastructure finance company
0
Week 51 December 21 • GECAS sale of 41 aircraft portfolio to Genesis has greater implications for shipping
0
7 Week 52 December 28 • Time to start the next year…

12 Marine Money www.marinemoney.com

Bank Debt in 2006:
Public Companies Take on Dry Powder
& Lenders Wander the World
If the international ship
I
finance business is a body,
comprising complex system of
vital organs, then commercial
bank debt is its heart – and as
you can see from looking just
about every single transaction
highlighted in this special issue
of Marine Money - nothing
functions without it.
Whether you are talking about
XL Capital’s $1 billion invest-
ment grade credit wrap for
CMA-CGM, Top Tankers
sale/leaseback in Korea, Odfjell
bonds in Norway, Quintana’s
acquisition of Metrobulk or the
dozens and dozens of public
and private equity deals living
and breathing in New York
these days, the reality is that the
financial returns needed to
create virtually every capital
structure in the global shipping
industry are nourished by
leverage - and that leverage
comes from the bank debt
market.
And so long as transaction
activity is increasing in size and
complexity, as it has been for
years, we think that the market
for bank debt will become even
more vibrant.
Not surprisingly, the year 2006
was another great one for the
business of commercial ship
lending. According to Dealogic,
syndicated loan volume was up
www.marinemoney.com
from $60 billion in 2005 to
$70 billion in 2006. This
increase was thanks to high
asset prices, which can be seen
in figure 1. Another reason, we
think, for the increased deal
volume is simply that there are
more public companies than
ever before and these compa-
nies are legally bound to file
details of their financing with
Securities and Exchange
Commission, which means
they get included in the figures
compiled by data processors
like Dealogic.
Loan pricing was stable, thanks
to a balance between the supply
of and demand for capital,
coupled with the fact that loan
spreads simply could not go
much lower. Most importantly,
the shipping market was the
star of the show for the third
straight year - making just
about every deal, except those
done at the top tick of the
market, look like genius.
BNP jumped up the standings
in 2006 and DnB and Nordea
continued their high-spirited
competition for the top spot
among loan syndicators, while
HSH continues to be an
omnipresent Big Brother on
deals in every corner of the
world.
Another interesting trend that
continued through 2006 was
the evolution of certain ship-
ping companies into quasi-
operating lease providers such
as Seaspan and Danaos while
other shipping companies like
Ship Finance have evolved into
a financing vehicle providing
capital to other shipowners in
the form of bareboat leases. At
the same time, other owners
like Frontline, Pacific Basin and
Top Tankers have been taking
ships in on charters and
sale/leasebacks rather than
financing them on balance
sheet to maximize returns on
capital, unlock cash for divi-
dends and minimize residual
value risk. A result of all this is
that certain loan facilities, like
the $1 billion plus that Ship
Finance borrowed this year was
in fact used to finance a host of
other shipowners. Here is a
look at some specific transac-
tion highlights from
throughout the year.
Much Ado
About
Nothing…Yet
“It’s over,” a very well known
dry cargo owner said to me in
the early part of 2006.
Although the sun was shining
on our industry for most the
year, the first quarter saw a few
dark clouds pass by and serve as
a reminder of how it feels when
things aren’t so buoyant.
In March, after a steep drop in
dry cargo rates and the vintage
vessel values, analysts at invest-
ment bank Dahlman Rose
telegraphed to the market in a
research note that they believed
DryShips had either blown
covenants in its loan agreement,
or was close to doing so.
This set off a flurry of debate in
both shipping and Wall Street
about whether this was the
beginning of the end of the
golden era, especially for yield
oriented dry bulk companies
that might have their banks put
the kibosh on their dividends
and then have investors put the
kibosh on their yield driven
valuations.
Around the same time, a
number of dry cargo deals that
had been concluded at the top
of the market with aggressive
amortization had to have their
amortization profiles extended F
to make the cashflows work. e
DryShips vigorously denied b
Dahlman’s assertion and came r
u
to market with a $530 million
a
refinancing with HSH just few r
weeks later. The bulk market y
recovered, and then soared to /
all time highs, and talk of M
blown covenants vanished. a
r
c
Banks Wander h
the World in
Search of Deals 2
The year 2006 saw interna- 0
tional banks pack up their bags, 0
7
Marine Money 13
 pick their spots around the
world and then hire lots of local
lawyers to help them under-
stand rights and remedies.
More than any other year that
we can recall (at least since the
Asian Crisis in 1997), commer-
cial shipping bankers have been
aggressively moving into
emerging markets that they feel
they understand. This is partly
a function of the fact that banks
are looking for ways to leverage
their expertise and comfort
with the assets into higher
yields, and partly because banks
seem to be functioning so well
that bankers have the time to
devote to the harder deals.
Hardly a week went by in 2006
that we did not see deals of this
nature, and here are a few
selected examples.
Royal Bank of Scotland and
DnB Finance PRC Flag Vessels
After many years of talking
about it, 2006 saw interna-
tional banks make a confident
move onto Mainland China.
Although much of the business
was still conducted with the big
and state owned companies that
F have long had access to interna-
e tional coffers, such as the $52
b million deal that China Ship-
r ping Development did with
u 9
Citibank, HSH Nordbank and
a
r DnB, we saw some smaller
y companies access bank funds as
/ well this year.
M
a The most celebrated (literally)
r 15
example of this occurred with
c
h great fanfare in September
when DnB completed its first
2 PRC flag bilateral loan as a
0 foreign lender. That deal
0 involved the Norwegian bank
7 Total
14 Marine Money
signing a loan agreement with
the Chinese company Shanghai
Times Shipping for a $38.4
million bilateral term loan of 8
years. The bilateral is the first of
its kind being offered by a
foreign lender towards a
People’s Republic of China
(PRC) flag mortgage, which
until then had been viewed as
too high risk by foreign lenders.
This was an ideal first transac-
tion in that it involved solid
players, quality vessels and
industrial employment the
demand for which is unlikely to
diminish. Specifically, proceeds
of the deal financed Shanghai
Times purchase of one
panamax and one handymax
from Danaos Shipping, both
built in 1994 in Japan. As for
employment, the bulkers are
Some Horses Change Position in 2006
Top 20 Bookrunner Table - Syndicated Shipping Loans – Full Year 2006
Rank Bookrunner
1 DnB NOR Bank ASA
2 Nordea Bank AB
3 BNP Paribas
4 Citigroup
5 ING
6 Fortis
7 Sumitomo Mitsui Banking Corp
8 Calyon
SG CIB
10 HSH Nordbank
11 Mitsubishi UFJ Financial Group
12 Mizuho
13 Korea Development Bank - KDB
14 Gulf International Bank BSC
Lloyds TSB
16 Barclays Capital
17 RBS
18 NATIXIS SA
19 Bank of America
20 HSBC
Source: Dealogic
transporting coal on behalf of lucrative deals, 2006 was the
the beneficial owner of year when the international
Shanghai Times, who provide lending community got a few
10% of the electrical power to signs that it may be close to a
China’s 1.3 billion citizens. breakthrough in Japan – and
Wikborg Rein & Co, Shanghai Sumitomo Bank is in perfect
Branch was legal counsel on the position to facilitate that break-
transaction so those interested through.
in doing financings in that
market are well advised to call Although Japanese shipping
our friends at Wikborg Rein. companies have long had their
appetite for capital satiated by
Royal Bank of Scotland also LIBOR minus debt from
entered the PRC flag market Japanese banks and shipyard-
when they, together with Bank related trading companies, it
of China, closed a club deal for now appears that the state of
3 PRC flag vessels in the second that economy, the truly enor-
quarter of 2006. mous newbuilding orders
undertaken by the large
Japan (Finally) Japanese companies, and the
Opens Up growing trend by Shikoku
After many years of making owners to provide long term
sales calls that resulted in more bareboat financing to compa-
embarrassing karaoke than nies outside Japan have
Amt ($m) No. % share
13,691 68 20.6
13,334 54 20.1
5,306 22 8.0
4,682 15 7.1
3,622 15 5.5
2,951 16 4.5
2,715 19 4.1
2,689 5 4.1
2,386 15 3.6
1,995 6 3.0
1,166 11 1.8
960 17 1.5
907 6 1.4
762 2 1.2
654 3 1.0
654 1 1.0
651 3 1.0
603 1 0.9
565 3 0.9
493 3 0.7
76,380 286 100.0
www.marinemoney.com
combined to pique the interest as the 4th largest owners of financed one vessel, the other international syndicated loan.
of Japanese owners in interna- these vehicles. The vessels will was financed by KfW, Citi-
tional sources of capital. go on charter to NYK and Cido group and Nordea. This is the Asia &
Shipping Group. The other largest amount ever raised at Latin America
One example of the emerging lenders involved in the senior one time by the Shipping Corp Natexis went from participant
phenomena came when part are Allied Irish Banks, The of India, the two largest VLCCs to arranger when it, along with
Sumitomo Mitsui Banking Bank of Fukuoka, Ltd., ever ordered under the India Goldman Sachs, was awarded a
Corporation’s head of shipping Commerzbank AG, Crédit registry, and it is evidence of a mandate from drilling rig
Stanislas Roger closed a $240 Industriel et Commercial, growing relationship between company PT Apexindo for a
million syndicated club deal for Kansai Urban Banking Corpo- SCI and international ship $120 million financing in
Cido Shipping Group. ration, Natexis, and The finance community. Indonesia. The ten year
According to our records, this is Norinchukin Bank – a nice mix financing, the first of its kind in
the first ever shipping deal of banks that we could easily In November, Essar Shipping Indonesia, was used for the
where a Japanese bank has acted imagine coming together on & Logistics raised $200 million construction of a jack-up rig to
with the role as sole mandated future deals. in the international banking be delivered early 2007 from
arranger and facility agent for a market in the form of a 10-year PPL in Singapore at a total
club deal with Japanese and India Embraces syndicated loan with the help of price of $145 million. Interest-
foreign banks. The proceeds of the Dollars mandated lead arranger and ingly, Sea Drill owns 30% of
the 10-year loan were used to There were plenty of other facility agent NIBC Bank, who PT Apexindo, which shows that
fund for Cido’s 6 PCC global firsts in 2006. In May, took in DnB NOR, DVB and consolidation is also a catalyst
newbuildings to be delivered government-controlled Ship- Bank of Scotland as arrangers for internationalization of ship
from Shin Kurushima Dock- ping Corp of India signed and Nordea as lead arranger. finance.
yard between 2006 and 2009. financing for two 319,000 The facility, priced at L+120,
Each vessel will have a capacity DWT VLCC newbuildings for goes towards the company’s No conversation about
of 6,400 RT and brings Cido’s a total of $206 million. $300 million ship acquisition emerging markets is complete
PCC fleet to 44 putting them Although State Bank of India program and is Essar’s first with a stop in Latin America,
that resource rich part of the
Top 20 Mandated Arranger Table - Syndicated Shipping Loans – Full Year 2006 world known for the age of its
Rank Mandated Arranger Amt ($m) No. %share fleet and the challenge of some
1 DnB NOR Bank ASA 12,521 87 16.4 of its flags. In May, Chile’s
2 Nordea Bank AB 11,714 78 15.3 CSAV mandated BNP Paribas
3 BNP Paribas 4,638 32 6.1 as sole MLA, bookrunner and
4 Citigroup 4,391 27 5.8 facility agent to lead a $300
5 Fortis 3,875 24 5.1 million revolver with proceeds
6 HSH Nordbank 3,610 23 4.7 to be used to fund future vessel F
7 Calyon 3,477 11 4.6 acquisitions. DVB, Natexis and e
BTM have also been active in b
8 SG CIB 3,460 27 4.5
Mexico with deals for TMM. r
9 Sumitomo Mitsui Banking Corp 3,214 29 4.2 u
10 ING 2,973 24 3.9 Meanwhile, HSH Nordbank
a
11 HSBC 1,733 15 2.3 has made a move into the r
12 Mitsubishi UFJ Financial Group 1,418 19 1.9 Russian market for shipping y
13 Mizuho 1,205 24 1.6 lending with a $170 million /
facility for Russian liner M
14 Korea Development Bank - KDB 935 6 1.2
company Fesco. a
15 DZ Bank AG 915 8 1.2 r
16 RBS 889 7 1.2 c
17 Deutsche Bank AG 780 8 1.0 Public h
18 Lloyds TSB 598 5 0.8 Companies
19 Goldman Sachs 583 2 0.8 Reload 2
It is difficult for any of us to 0
20 Commerzbank Group 556 5 0.73
fully comprehend the impact 0
Total 76,380 286 100 7

www.marinemoney.com Marine Money 15

 that having so many public
companies will have on the
global shipping industry, but it
is very clear in the bank market.
One result of this increased
transparency of having more
public companies is that loan
pricing and covenants have
become much more efficient
than they were in the past.
As you can see from the Marine
Money deal table that accom-
panies this article, public
companies were voracious
consumers of capital commit-
ments in 2006, though in many
case this involved the recycling
and topping off of existing
loans. In addition to the sheer
volume of deals, the public
companies, and their require-
ment to file their loan agree-
ments, has opened wide a
window into the previously
private world of commercial
ship lending. Of course, when
companies go public the juicy
details of their personal guaran-
tees and other assets involved in
cross collateralization melt
away, but nevertheless public
company loan filings have
exposed the inner workings of
the commercial ship finance
market previously only seen by
those doing the deals.
Commercial
Banks Find
Ways to Add
More Value
A few years ago, when shipping
companies began their steady
march up Wall Street, there
were, as always, a lot of gossip
chattering in the ship finance
market. One refrain was that
“equity markets are going to
reduce the demand for bank
debt, especially because compa-
nies like Diana Shipping will
not even have any debt! They
won’t need debt!”
That didn’t last long. In fact, as
we stated above, we believe
increased capital market trans-
action volume stimulates
demand for bank debt, not
competes with it. In May of
2006, Diana Shipping, which
initially proclaimed it would
never use leverage for anything
more than a bridge between
buying a ship and concluding a
follow on stock offering, made
the following formal announce-
ment, “…it is in the best
interest of its shareholders to
target a capital structure incor-

Noteworthy 2006 Events in Commercial Banking

3 Dry Ships covenants "almost blown", issue blows over quickly
3 Dnb completes bilateral loan in PRC flag for Shanghai Times
3 BNP jumps up the league tables, active in every corner of the planet
3 Diana Shipping changes policy to include permanent bank debt
3 Sumitomo closes first Japanese/Foreign Club Deal - for Cido
3 Monaline Insurance company XL Capital wraps CMA-CGM credit
3 Healthy demand and good valuations in follow-on offering market take pressure off banks
3 Fredriksen, Troim, Bylstad, DnB swap personnel, dig into the offshore market
3 Despite high leverage, Lehman gets Nakilat Aa3/A+ rating on the back of Qatar contracts
3 Robust demand in KS, KG, Korean and other leasing markets create demand for bank debt
3 Bond market deleverages Navios' balance sheet, in favor of HSH
3 Fortis Bank continues to integrate commercial and investment banking with Metrobulk
3 Regional shipping companies outstrip local capital and mandate more foreign banks
F 3 Natexis goes from participant to arranger
e 3 TBS Shipping graduates from finance companies into bank market, chops cost of funds in half
b 3 Some shipping companies evolve into finance providers
3
r
Others evolve into non-vessel owning trading companies
3
u
a Loan volumes jump on high asset prices, consolidation, more reporting
r 3 Loan volumes enhaced by non-traditional shipping assets like LNG and Rigs
y 3 Dividend paying companies turn to bank debt market to boost yields
/ 3 French banks seen wandering the world with deals in South America and Asia
M 3 Trading companies begin to see that by owning tonnage that they control physical commodities
3
a
$1 billion deals being pushed out of the top 10
3
r
c International banking tiptoeing into mainland China, South America, Mexico, FSU
h 3 Prosperity continues in Norway's transaction community
3 Strong freight markets have all but those who paid highest prices feeling good
2 3 Loan pricing stabilizes, with no room to go down further with credit enhancement
0 3 Credit hogs tk, etc out of market in 06
3
0
Public companies reload revolves, for public relations and increased buying power
3
7
Indian and Italian shipping companies increasingly active in global capital markets

16 Marine Money www.marinemoney.com

 "LISCR advertised here in the hard copy this month and

reached the most influential readers of our industry, why don't you? Interested?

Please contact info@marinemoney.com, for more information!"

 porating $150 million of semi-
permanent debt to support the
company’s long-term growth
plans.”
So why did they change their
strategy? It is simple – because a
good deal is almost always made
better with a slug of bank debt.
Scott Burk, analyst at Bear
Stearns pretty much sums up the
beauty of bank debt; “The new
policy results in higher divi-
dends because the company now
won’t need to use equity to pay
for its recent $91 million cape-
size acquisition. We think this is
positive for the stock as it
increases its dividends, improves
its equity gearing and lowers its
cost of capital.”
Yeah, as long as the market
remain firm.
And Diana wasn’t alone. As you
can see from our own league
tables, the availability of
standby bank debt became a
prime public relations message
for just about all of the freshly
minted public companies,
looking for ways to articulate to
investors that they are able to
grow, even if they chose not to
in a market with high asset
prices.
Citigroup, Nordea, DnB and
HSBC put together a $1.5
billion unsecured, floating rate
credit facility for OSG priced at
L+80, Bank of Scotland and
Nordea extended Aries $360
million in credit with CEO
Mons Bolin saying, “With a
$75 million undrawn commit-
ment, Aries is in a strong posi-
tion to pursue future growth
opportunities.” Aries immedi-
ately snapped up two panamax
tankers from Stena for $56
million each. HSH and Bank of
Scotland gave DryShips the
ultimate in investor relations
services when granting George
$530 million with about 30%
of the amortization, which we
figure equated to a 10-year
profile on assets already 10
years old. It immediately
soothed any investor worried
about Dahlman Rose’s claim
that the company was in tech-
nical default.
In March, the name HSH again
surfaced in an US IPO
prospectus as the money behind
soon to be public Omega Navi-
gation’s $295 million senior
secured credit facility. About
$145 million of the term loan
portion and a $63 million draw
down on the revolving credit
facility will fund repayment of
the company’s old facility and a
substantial portion of the iden-
tified fleet - and leave Omega
with some liquidity if it chooses
to exercise any of its purchase
options on the panamax
tankers. As always, bank debt
provided the grease that made
Omega’s sensitive economics

Top 10 Largest Syndicated Loans in 2006

Credit Date Borrower Deal Value ($m) Deal Nationality Mandated Arranger Parent Bookrunner Parent

14-Dec-06 Qatar Gas Transport Co Ltd - 2,615 Qatar Barclays Capital, BNP Paribas, DnB NOR Bank Barclays Capital, BNP Paribas,
Nakilat ASA, Gulf International Bank BSC, Arab Banking DnB NOR Bank ASA, Gulf
Corp - BSC, Calyon, Citigroup, Credit Suisse, International Bank BSC
Dexia Group, Fortis, Goldman Sachs & Co,
HSBC, JP Morgan, Lehman Brothers, Mizuho
Financial Group Inc, Morgan Stanley,

9-Feb-06 Overseas Shipholding 1,800 United States Citigroup, DnB NOR Bank ASA, HSBC, Citigroup, Nordea Bank AB
Group Inc Nordea Bank AB
22-Sep-06 F3 ONE Ltd & F3 Two Ltd 1,687 United States BNP Paribas, SG Corporate & Investment
Banking, Calyon, HSBC
F
9-Jun-06 Euronav SA/NV 1,645 Belgium Nordea Bank AB, DnB NOR Bank ASA Nordea Bank AB
e
b 26-Jan-06 J5 Nakilat Ltd 1,632 Qatar Mitsubishi UFJ Financial Group Inc, DnB NOR Mitsubishi UFJ Financial
Bank ASA, SG Corporate & Investment Banking, Group Inc, DnB NOR Bank
r Sumitomo Mitsui Banking Corp ASA, SG Corporate &
u Investment Banking
a
11-Sep-06 Mediterranean Shipping Co 1,473 Greece Calyon Calyon
r
18-Sep-06 Ship Finance International Ltd 1,131 Norway Calyon, DnB NOR Bank ASA, Fortis, DnB NOR Bank ASA,
y Nordea Bank AB Nordea Bank AB
/
M 20-Nov-06 J.O.Q Shipping SA, J.O.R 954 South Korea Export-Import Bank of Korea - KEXIM, BNP BNP Paribas, DnB NOR Bank
Shipping SA, J.O.S Shipping Paribas, ING, DnB NOR Bank ASA, Industrial & ASA, ING
a
SA, J.O.T Shipping SA, Commercial Bank of China - ICBC, Lloyds TSB
r J.O.U Shipping SA Group plc, Sumitomo Mitsui Banking Corp, DBS
c Bank Ltd, Woori Finance Holdings Co Ltd,
h Mizuho Financial Group Inc

7-Nov-06 Royal Caribbean Cruises Ltd 953 United States Citigroup, Goldman Sachs & Co Citigroup, Goldman
2 Sachs & Co
0
2-Oct-06 Teekay Offshore Partners LP 940.000 Bahamas DnB NOR Bank ASA, Fortis, Nordea Bank AB DnB NOR Bank ASA, Fortis,
0 Nordea Bank AB
7
Source: Dealogic

18 Marine Money www.marinemoney.com

work. Pricing on the loan was
LIBOR + 100 if the company
keeps its debt to capitalization
at less than 0.55 to 1.0, and
LIBOR + 120 otherwise. Repli-
cating bond like features, the
term loan requires semi-annual
payments of a paltry $1.5
million until the facility
matures in five years, at which
point $131.5 million is due.
The cornerstone of the finan-
cial structure needed to make
Quintana’s $735 million acqui-
sition of the Metrobulk fleet
work was the $735 million
secured revolving credit facility
provided by the advisor, Fortis
Bank. The facility, which has a
term of 8.25 years, will also
repay debt drawn down out of
Quintana’s current $250
million facility with Citigroup
and Bank of Scotland. Secured
by vessels, the majority of
which are on charter to invest-
ment-grade Bunge, the facility
is priced at only 85 basis points
over LIBOR until the end of
2010, at which point the
margin will increase to 110
basis points. A bullet repay-
ment of $294 million is due on
final maturity date. Here is an
example of the privy look that
the world gets at loan agree-
ments, like the one Quintana
entered into the acquire
Metrostar. The degree if detail
that was disclosed at the time of
the loan closing, discussed
further in our M&A article in
which Fortis receives an award
for its work on this transaction,
is an excellent example of the
private look the world gets at
public company loan agree-
ments due to disclosure require-
ments and concerns.
www.marinemoney.com
Shortly after Diana made its
announcement, Genco Ship-
ping & Trading announced its
agreement to increase its credit
facility with Nordea, DnB
NOR and Citigroup from $450
million to $550 million.
Genco, which was appreciative
enough to not make any
changes to the participants or
terms of the facility, agreed to
pay LIBOR + 95 to LIBOR +
100 basis points for the 10 year
deal. The new deal left Genco
with undrawn commitments of
$419 million, which was a clear
signal to investors that they
could still grow without dilu-
tion. And this phenomenon is
not limited to America. In May,
the debt component of the "Anglo-Eastern advertised here in the hard
Pacific Shipping Trust which
did an IPO in Singapore was copy this month and
provided through amortizing
loan facilities from DBS Bank, reached the most influential readers of our
DnB NOR, HSH Nordbank
and OCBC totaling $155 industry, why don't you? Interested?
million. The DBS, HSH, and
OCBC loans all have 12-year Please contact info@marinemoney.com, for
terms, while the DnB loan is to
have a term of 10 years. more information!"
And the deals kept on coming.
On May 19, 2006, Seaspan
Corporation entered into a 10 F
to 13-year (based on the e
delivery dates of certain vessels), b
senior secured, $365 million r
u
revolving credit facility with
a
DnB Nor, Credit Suisse and r
Fortis Capital Corp. as y
Mandated Lead Arrangers, /
DNB Nor Bank ASA as Sole M
Book runner, Administrative a
r
Agent and Security Agent,
c
Landesbank Hessen-Thuringen h
as Documentation Agent and
various participating banks 2
including: Bayerische Hypo- 0
Und Vereinsbank, Deutsche 0
7
Marine Money 19
 Bank AG in Hamburg, Credit
Industriel et Commercial and
Deutsche Schiffsbank. Indebt-
edness under the revolving
credit facility bears interest at a
rate equal to LIBOR + 85 basis
points until approximately July
31, 2013, for the first tranche,
and LIBOR + 92.5 basis points
thereafter.
Eagle Bulk Shipping also
increased its credit facility,
lowering their overall cost of
capital while also attaining the
dry powder to acquire addi-
tional tonnage. But unlike
Genco and Seaspan, Eagle also
tapped the equity markets
through a PIPE to help fund
their latest acquisitions. It is
also interesting to note that
Eagle’s facility is strikingly
similar to the high yield bond
structures so alluring in the late
90s – no principle repayment
obligations during the loan’s
six-year tenor. So similar, but
blessedly cheaper in terms of
both costs and filing obliga-
tions. Royal Bank of Scotland,
which led the Eagle facility,
created a similar one for Diana,
which also amended their
facility to provide cash avail-
ability for expansion and to
lower overall finance costs.
To B/D or
Not to B/D
Another frequent topic of
discussion amongst commercial
banks at the beginning of ship-
ping’s bull run for securities
issuance was whether they
should apply with the National
Association of Securities
Dealers to become a registered
Broker/Dealer, thus allowing
them to collect underwriting
fees from public debt and
equity deals. The logic was that
since many of the commercial
banks basically controlled the
client relationships, why should
they simply let the investment
banks skim the cream of non-
risk placement fees, which run
into the millions of dollars.
Some leading banks did, like

Nordea Largest 2006 Debt Deals

Customer Currency Global Facility Tenor Signing Nationality
Amount Type (In Months) Date
Nakilat Inc USD 2,225,000,000 T/L 228 12/14/06 Qatar
Overseas Shipholding Group USD 1,800,000,000 R/C 84 5/10/06 United States
Euronav NV USD 1,650,000,000 R/C 84 6/9/06 Belgium
Seadrill Limited USD 1,200,000,000 T/l 24 6/23/06 Bermuda
Eastwind USD 80,000,000 TL+RC 1/30/06 United States
Ship Finance International Ltd. USD 1,131,439,219 T/L 53 9/18/06 Norway
SeaDrill Limited NOK 7,410,631,696 Guarantee 2.5 2/17/06 Bermuda
Teekay Offshore Operating L.P. USD 940,000,000 R/C 96 10/11/06 Bahamas
Bonny Gas Transport Limited USD 680,000,000 T/L 144 9/29/06 Nigeria
Awilco Offshore ASA USD 670,000,000 T/L & R/C 40 9/11/06 Norway
Teekay Shipping Corp. USD 650,000,000 R/C 78 9/29/06 Canada
NCL Corporation Ltd USD 610,000,000 R/C 60 12/22/06 United States
SeaDrill Tender Rigs Ltd. USD 585,000,000 R/C 72 7/7/06 Bermuda
Genco Shipping & Trading Limited USD 550,000,000 R/C 108 7/10/06 United States
F Victoria Marine, Inc. USD 537,000,000 T/L 115 10/25/06 Virgin Islands (British)
e Hurtigruten Group ASA NOK 3,300,000,000 R/C 84 9/22/06 Norway
b Songa Shipholding Pte Ltd. USD 510,000,000 T/L & R/C 96 7/13/06 Singapore
r
Ray Car Carriers Ltd. USD 475,000,000 T/L 120 10/13/06 Israel
u
a Prosafe ASA USD 450,000,000 R/C 84 7/6/06 Norway
r Silja Oy Ab EUR 350,000,000 T/L 90 6/11/06 Finland
y Masterbulk Pte Ltd USD 418,000,000 T/L 96 8/30/06 Singapore
/ MSC Mediterranean Shipping Co. USD 410,000,000 T/L 144 8/1206 Switzerland
M Songa Offshore ASA USD 400,000,000 R/C 30 9/27/06 Norway
a
Sea Containers / Silja EUR 306,000,000 T/L $ R/C 60 6/15/06 United Kingdom
r
c Aries Maritime Transport Ltd. USD 360,000,000 R/C 60 4/3/06 Greece
h Seacor Holdings Inc. USD 300,000,000 R/C 84 11/3/06 United States
Color Group ASA NOK 1,626,000,000 R/C 96 6/12/06 Norway
2 Concordia Maritime AB USD 250,000,000 RCF 96 6/19/06 Sweden
0 First Olsen Cruise Lines GBP 122,000,000 T/L 110 8/29/06 Norway
0
Clipper Fourth Ltd. USD 230,000,000 T/L & R/C 120 3/23/06 Bahamas
7
Source: Nordea

20 Marine Money www.marinemoney.com

Fortis, DnB and DVB, and
some leading banks didn’t, like
HSH Nordbank, Nordea and
Royal Bank of Scotland.
What has borne out since then,
and was especially clear in
2006, is that underwriting
securities deals is not as easy as
it looks, especially in a market
that is anything less than a
feeding frenzy. Instead, some of
those banks that chose not to
pursue the coveted “B/D”
license as it is called in Wall
Street parlance, perhaps antici-
pating that the risk was in fact
greater than the opportunity
cost. Banks like Nordea, have
found plenty of other ways to
give value to their customers,
and one of such deals has put
Nordea in the winner’s circle for
the third straight year in the
category of bank debt. What
will be clear for close readers of
Marine Money, is that anyone
who thought investment
banking carries all the return
without any of the risk was
wrong. What time and data
have shown is that there are few
business activities that have as
little risk as lending reasonable
amounts of money against rela-
tively modern assets controlled
by experienced operators.
The Winners
Nordea for Songa Shipholding
Behind every great shipping
dealmaker, there is a financial
institution – and usually a
bunch of them. In the case of
Axel Eitzen, our dealmaker of
the year, his efforts to grow the
world’s largest product tanker
company almost overnight have
been aided by no fewer than 25
financial institutions, ranging
from American Marine Advi-
sors to Carnegie. And while
there have been many parties
who have helped Axel turn his
vision into a reality, the work of
Nordea stands out as extraordi-
nary for a “traditional”
commercial bank.
Like many complex deals, the
financing in question involves a
few steps. In July, Nordea lead
arranged a $510 million credit
facility for Songa Shipholding.
This facility consolidated all of
the indebtedness for the
company while providing long-
term financing for its signifi-
cant newbuilding program. The
transaction was also intended to
streamline Songa’s capital struc-
ture ahead of being acquired
and was assumed as part of the
acquisition.
Then, in October, Nordea was
sole lead arranger, sole
bookrunner and agent for the
$265 million, 7-year facility
that allowed Eitzen Chemical
ASA to acquire Songa
Shipholding AS for $1.28
billion. What is interesting to
note is that Nordea actually
represented Arne Blystad in the
sale of Songa, but also served as
Joint Lead Manager for the $25
million unsecured bond deal
that helped the transaction get
done and Nordea even provided
a $75 million bridge loan and
provided all of the FX services
required.
Conclusion
Those companies that have the
healthiest relationships with the
commercial banking commu-
nity are by definition the same
companies that have access to
the broadest and cheapest
capital in the world – and this is
an important thing when you
consider that the cost of capital
is single largest daily expense
for most ships. The converse is
also true – those companies that
for whatever reason do not have
access to the bank market have
to work a lot hard to achieve
fewer and more costly financing
alternatives. But buttressed by
years of strong earnings and
basically no defaults, the good
news is banks continue to be
hungry.

DnB NOR Selected 2006 Financings

Borrower/Group Nationality Amount Currency Facility type Deal date Maturity date
Qatar Gas Transport Co Ltd - Nakilat Qatar 2,615 USD Term Loan / Export Credit 14-Dec-06 12/14/25
J5 Nakilat Ltd Qatar 1,632 USD Term Loan 26-Jan-06 26-Jan-21
F
Hanjin Group South Korea 954 USD Term Loan 20-Nov-06 20-Nov-18
e
Teekay Offshore Partners LP Bahamas 940 USD Revolving Credit 2-Oct-06 2-Oct-13
b
Eastern Drilling ASA Norway 800 USD Revolving Credit/Trem Loan 6-Dec-06 6-Dec-09
r
Aker Drilling ASA Norway 775 USD Term Loan/Revolving Credit 19-Jan-06 19-Jan-09
u
Star Cruises Ltd Hong Kong 750 USD Term Loan/Revolving Credit 18-Dec-06 18-Dec-14
a
NCL Corp Ltd United States 610 USD Term Loan 22-Dec-06 22-Dec-11
r
Bergesen Worldwide Offshore Ltd Norway 600 USD Revolving Credit 5-Jul-06 5-Jul-12
y
Universal Terminals Singapore 539 SGD Term Loan 7-Jul-06 7-Jul-16
/
Nordic American Tanker Shipping Ltd Bermuda 500 USD Revolving Credit 21-Sep-06 21-Sep-10
M
Carnival plc United States 461 USD Term Loan 19-Sep-06 19-Sep-20
a
Acergy Treasury Ltd United Kingdom 400 USD Revolving Credit 10-Aug-06 1-Aug-11
r
Odfjell Invest Ltd Norway 388 USD Term Loan 4-May-06 4-May-11
c
Grieg Shipping Norway 370 USD Term Loan 8-Nov-06 8-Nov-16
h
Seaspan Corp Hong Kong 365 USD Revolving Credit 11-May-06 31-Aug-19
Cido Tanker Holding Co Japan 324 USD Term Loan 24-Jul-06 24-Jul-16
2
Seacor United States 300 USD Revolving Credit 31-Oct-06 31-Oct-13
0
Exmar NV Belgium 280 USD Term Loan 4-May-06 4-May-18
0
Westfal-Larsen Chemical Carriers I KS Norway 233 USD Term Loan 18-Dec-06 18-Mar-15
7
Source: DnB NOR

www.marinemoney.com Marine Money 21

 Selected Bank Debt Deals 2006
Borrower Lender Amount ($mm) Purpose Month
Thoresen Thai Societe General $50-$60 Funding for 2 x handmax newbuildings Dec-06
Navibulgar Nord Bank $70 Funding for newbuilding program Dec-06
Precious Shipping DnB NOR $250 1-yr extension of existing but as-yet unused credit facility Nov-06
Aker American Shipping Fortis Capital $775 Senior secured credit facility to fund acquisition of 10 Jones Nov-06
Act product tanker under construction on BB to OSG
Westfal-Larsen KS DnB NOR Bank $240 8 year first priority mortgage at L+75 Nov-06
Nakilat Korea Export Insurance Co $225 Funding for 16-ship LNG newbuilding program Nov-06
Nakilat KEXIM $500 Funding for 16-ship LNG newbuilding program Nov-06
Diana Shipping RBS $200 Offer letter for 364-day facility to become available upon Nov-06
full utilization of existing revolving facility
Sovcomflot HSH Nordbank as lead arranger, $434 15-yr loan to finance 3 x ice-class shuttle tankers + Nov-06
ING Bank advisor, Norddeutsche 3 x product carriers
Landesbank Girozentrale as
co-lender
Oceania Cruises UBS, Lehman Brothers $400 $300m 6-yr term loan, $75m 7-yr loan, Nov-06
$25m 5-yr revolver
Bonny Gas Transport BNP Paribas $680 Refinancing for 13 x LNG carriers on charter to Oct-06
Nigeria LNG
Nanjing Tanker Corporation ICBC, Agricultural Bank of $1,850 Funding for 4x VLCCs & 18x product tanker newbuilds Oct-06
China, Bank of Communications, delivered by Bohai Shipbuilding
China Construction Bank
Nanjing Tanker Corporation Credit Agricole Indosuez $180 Funding for 2x VLCC newbuildings at Jiangnan Changxing Oct-06
Pakistan National ABN Amro $135 Funding for 2 x aframax tankers, 1 x panamax bulker Oct-06
Shipping Corporation
Global Oceanic Carriers AB Bank $17 10-yr senior secured syndicated term loan at a benchmark Oct-06
rate + 120 bp to finance 1 x dry bulk carrier
Global Oceanic Carriers HVB $45 5-yr committed amortizing term loan at a benchmark rate + Oct-06
160 bps to finance 1 x dry bulk carrier
Sovcomflot / NYK / Societe General $400 Limited recourse facility of 2 x LNG carriers on long Sep-06
Samudera term charter to Tangguh LNG
Szczecin shipyard Agencja Rozwoju Przemyslu $81 Loans from Polish industrial-development agency Sep-06
F done along with consortium of private banks
e Ship Finance International DnB NOR, Fortis, Nordea, $220 Increase to existing facility; pricing at L+70; original had Sep-06
b Calyon 6-year term
r
Star Cruises BNP Paribas, Calyon, HSBC, $1,700 Financing for two by 4,200 passenger newbuildings Sep-06
u
a Societe General
r Nel Lines First Business Bank as lender, EUR 21 7-year loan to refinance existing disputed loan agreement Sep-06
y XRTC as advisor
/ Shanghai Time DnB NOR $38 8-yr mortgage financing for Chinese-flag panamax & Sep-06
M handymax
a
Diana Shipping Fortis $62 Construction financing for 2 x capesize bulkers from Sep-06
r
c Shanghai Waigaoqiao Shipbuilding w/ 2010 delivery
h Eitzen Chemical Nordea Circa $150 Financing for Songa acquisition Sep-06
Regional Container Lines DnB NOR $40 10-yr financing for 2 x 1,108 teu containership newbuildings Sep-06
2 KGs managed by HSH Nordbank, $86 Construction financing for 3 x 73,400 dwt product Sep-06
0 Hellespont Hammonia Exim Bank of China tankers bound for KGs
0
Energy Spring LNG Carrier Gulf International Bank $136 Refinancing for MOL/Oman Shipping Co JV funding Sep-06
7
purchase of 1 x LNG carrier with 16-year term

22 Marine Money www.marinemoney.com

 Selected Bank Debt Deals 2006 continued
Borrower Lender Amount ($mm) Purpose Month
Nordic American DnB NOR $200 Increase in existing facility to $500m; terms to Sep-06
Tanker Shipping remain unchanged
Bluewater ING $850 Refinancing on$600m in leases with Lloyds TSB for Aug-06
fleet of 4 FPSOs
Grupo TMM Deutsche Bank $200 Securitization to refinance existing debt and provide Aug-06
capital for future projects
B+H Ocean Carriers Nordea, DVB, HSH Nordbank, $202 Refinancing and funding for future acquisitoins Aug-06
Bank of Scotland
Essar Shipping De Nationale Invester-ingsbank $200 Funding for acquisitions in 10-yr facility at L+120 Aug-06
Ray Shipping Nordea $475 Aug-06
Teekay Offshore Partners Nordea, DnB, Fortis $940 Planned facility for Teekay's offshore spin-off Aug-06
China Shipping ICBC Bank as lead arranger, $186 10-yr yuan-denominted financing for 4 x Aug-06
Container Lines Agricultural Bank, China containership newbuildings
Merchant Bank, Shenzhen
Development
US Shipping Lehman Brothers, $350 Amendment to existing facility; upsized from Aug-06
CIBC World Markets $310 to $350m
TBS International Bank of America $140 $65m revolver + $75m 4-yr term loan; pricing at L+225 Jul-06
China Shipping DnB NOR, ICBC as $246 Financing for 3 x supertankers Jul-06
bookrunners, BTM, Mizuho,
Bank of Nova Scotia, Swedbank
MC Shipping Scotiabank $127 Refinancing, acquisition funding; L+85-95 Jul-06
Euronav Nordea, DnB NOR $150 Increase to revolving portion of existing $1.6b facility; Jul-06
L+80 pricing, 25bp commitment fee to remain unchanged
J.F. Lehman & Co BNP Paribas $155 LBO to finance acquisition of Atlantic Marine, comprising Jul-06
$35m revolver and $120m term loan; pricing expected
around L+300
Navigazione Montanari BNP Paribas, MCC, ING $450 8-yr senior secured loan to fund general corporate purposes, Jul-06
vessel financing
Compania Sudamericana BNP Paribas $300 Revolving credit facility; pricing expected in Jul-06
de Vapores range of L+112.5-125
B+H Ocean Carriers Undetermined $70 In market for financing for 2 x aframax tankers Jul-06 F
USS Product Investors Blackstone Group, $325 Conditional debt financing for US Shipping / NASSCO Jul-06 e
Lehman Brothers JV to fund construction of 9 x Jones Act product carriers b
r
Fesco HSH Nordbank $170 Financing for 3 x containership newbuildings, Jul-06
u
refi of existing debt a
JF Lehman & Co BNP Paribas $155 Financing for purchase of Atlantic Marine Jul-06 r
Eagle Bulk Shipping Royal Bank of Scotland $450 Amendment to existing $330m facility, increasing amount, Jul-06 y
extending term from 4 to 6 years, and dropping pricing /
from L+95 to L+75-85 M
a
Bergesen Worldwide Offshore DnB NOR $600 6-year unsecured reducing revolving credit facility at L+97.5 Jul-06
r
Kirby Corp JPMorgan $250 $100m increase to existing credit faciltiy; extension of Jun-06 c
maturity from 2007 to 2011; variable rate currently at L+40 h
PT Apexindo Natexis, Goldman Sachs $120 10-year financing for construction of jack-up rig Jun-06
Awilco Offshore Nordea as lead arranger, DnB $670 Refinancing of existing $410m facility towards 7 x jack-up Jun-06 2
NOR, Fokus Bank, Calyon, rigs and 2 x floatels 0
0
Deutsche Bank, HVB
7

www.marinemoney.com Marine Money 23

 Selected Bank Debt Deals 2006 continued
Borrower Lender Amount ($mm) Purpose Month
PSA RBS, Barclays, DBS $3,420 Financing for acquisition of stake in Jun-06
Hutchison Port Holdings
Genco Nordea, DnB NOR, Citigroup $550 Amendment of existing $450m facility to $550m; Jun-06
all other terms remain unchanged
Black Sea European Bank for $20 Financing for 5 x 5,500 dwt dry bulk newbuildings Jun-06
Shipping Management Reconstruction & Development
Concordia Maritime $250 7-year refinancing at L+75 (down from L+125) May-06
Seaspan DnB NOR, credit Suisse, Fortis, $365 Revolving credit facility w/ 10-13 year term at L+85-92.5 May-06
Landesbank Hessen-Thuringen
Pacific Shipping Trust DBS, DnB NOR, HSH $155 Credit facilities in conjunction with IPO; 10-12 year terms May-06
Nordbank, OCBC
Gulf Energy Maritime Abu Dhabi Commercial Bank $100 Funding for 2 x panamax product tanker newbuildings May-06
from Hyundai Mipo
Diana Shipping Royal Bank of Scotland $300 Amendment to existing $230m facility; 10-year term; May-06
priced at L+75-85 vs. original at L+100
OSG Nordea, Citi, DnB NOR, $1,800 Amendment to February facility; 7-year term at L+70-75 May-06
HSBC, RBS, Lloyds TSB
Quintana Maritime Fortis $735 Funding for acquisition of Metrobulk; May-06
8.25 year secured facility at L+85-L+110
Songa Shipholding Pte Nordea, SEB, Calyon, $510 8-year term with pricing at L+85 for Blystad-controlled Apr-06
DVB, HVB chemical carrier owner
Goldenport EFG Eurobank Ergasias $120 Syndicated loan concurrent with IPO at L+112.5 Apr-06
Tallink HSH Nordbank, KfW $340 Financing for 3 x superfast ferries; 10-yr EUR 240m Apr-06
tranche & 2-yr EUR 40m tranche
Ship Finance International Fortis $210 Financing for 5 x containerships on lt charter to Horizon Apr-06
Shipping Corp of India KfW, Citigroup, Nordea $103 10-year financing for 1 of 2 x 319,000 dwt Apr-06
VLCC newbuildings
Shipping Corp of India State Bank of India $103 10-year financing for 1 of 2 x 319,000 dwt Apr-06
VLCC newbuildings
Chittagong port Japan Bank for $278 Funding for 2 container terminals and Apr-06
International Cooperation associated logisitical developments
F Daeyang Shipping Co Hana Bank $15 Bilateral 1-year revolving credit Apr-06
e Hanjin Shipping ING, Woori $55 8-year tenor Apr-06
b Eukor Car Carriers KDB $58 Bilateral loan with 3-yr pre and 15-yr post delivery tranches Apr-06
r
Eukor Car Carriers Kookmin $40 5-yr refinancing Apr-06
u
Aries Maritime Transport Bank of Scotland, $360 Refinancing of $140m term loan and $150m revolving Mar-06
a
r Nordea Bank Finland
y Qatar Gas Transport SMBC as bookrunner, HSBC, $500 9-year loan to fund LNG newbuildings Mar-06
/ Qatar National Bank,
M Commercial Bank of Qatar,
a
Apicorp
r
Omega Navigation HSH Nordbank $295 Concurrent with IPO; 5-year term at L+100 to L+120 Mar-06
c
h General National Calyon $31 Funding for acquisition of 3 x aframax tankers from Mar-06
Maritime Transport Chartworld for Libyan company
2 DryShips HSH Nordbank as lead $673 Up to $530m to refinance existing indebtedness due 2016, Mar-06
0 arranger, Bank of Scotland up to $71.25m for future vessel acquisitions w/ terms tbd
0
FAL Shipping BNP Paribas $90 Funding for 6 vessel purchase by UAE-based Mar-06
7
FAL Oil subsidiary

24 Marine Money www.marinemoney.com

 Selected Bank Debt Deals 2006 continued
Borrower Lender Amount ($mm) Purpose Month
Stocznia Szczecinska Nowa Citibank, Bank Pekao, $200 Polish shipyard takes out financing as state Mar-06
(SSN) Nord LB guarantees set to expire
Deep Sea Supply Fortis $225 Funding for purchase of supply vessels from Hemen Holdings Mar-06
Aker Yards $151 Refinancing and upsizing of existed syndicated bank loan Mar-06
due 2011
OSG Citigroup and Nordea as $1,500 1-year unsecured credit facility Feb-06
bookrunners, DnB NOR, HSBC
Aries Maritime Transport Bank of Scotland, Nordea $360 5-year revolving credit facility to refinance existing debt Feb-06
Navantia Lloyds TSB as bookrunner, Euro 359 6.5-year syndicated bonding facility for Feb-06
BBVA Spanish state-owned military shipbuilder
CMA CGM BNP Paribas $250 Debt tranche of securitization; syndicated to 6 shipping Feb-06
banks w/ pricing estimated around L+70
CMA CGM Natexis Banques Populaires as Euro 500 5-year multi-currency revolving credit facility at L+90; Feb-06
bookrunner, SG, Barclays oversubscribed and upsized
Trogir Zagrebacka Banka $28 Financing for busy production schedule and restructuring Feb-06
program of Croatian shipyard
Irano-Hind Shipping Undisclosed $150 Soft loans to fund fleet expansion Feb-06
Korea Line Citigroup as bookrunner, Bank $400 Financing for 2 x LNG newbuildings at L+50 Feb-06
of Nova Scotia, ING Bank,
United Overseas Bank,
Sumitomo
Odfjell Invest DnB NOR $388 To fund acquisition of 6th generatoin Feb-06
semi-submersible drilling rig
Cido Shipping Group Sumitomo Mitsui $240 10-year term; first Japanese-led international Feb-06
Banking Corp shipping syndicate
Cosco Container Lines BNP Paribas, Bank of China, $466 Financing for 8 containerships Jan-06
Societe General, ING
Hanjin Shipping Unnamed domestic $206 Financing for 4 x 4,300 teu containerships with Jan-06
November delivery; 12-yr post delivery tranche at L+70
China Shipping Citibank, HSH Nordbank, DnB $52 Funding for company's shipbuilding plans Jan-06
Development
Industrial Shipping DVB $85 Debt financing for acquisition of 8-vessel fleet Jan-06 F
Enterprises e
Viken LR2 A.S. Bank of Scotland (agent/arranger), $167 Acquisition of 3 newbuild LR2 product tankers Jan-06 b
r
BNP Paribas, NIB Capital
u
Prime Marine Bank of Scotland (agent/arranger), $405 Corporate fleet refinancing Jan-06
a
Credit Suisse, Fortis, HSH r
Nordbank, BTM Capital y
Korea Gas Corp Citibank, Korea $800 Funding for LNG JV; each bank extends half of financing Jan-06 /
Development Bank M
a
DP World Barclays, Deutsche Bank $6,500 Debt financing for intended P&O acquisition at Jan-06
r
top-level all-in of L+108
c
Marine Harvest Euro 300 5-year unsecured revolving facility to fund repayment of Jan-06 h
shareholder loans from Stolt-Nielsen & Nutreco
2
0
0
7

www.marinemoney.com Marine Money 25

 “Junk” – The Public
Debt Award
t was another interesting
I
year in the public debt
market. The bond market
continued to be active with
transactions that ran the gamut
from the simplicity of straight
issuance to the complexity of
project financing. In the latter
category, US Shipping (“USS”),
for example, accessed the bond
market to assist in the capital-
ization of its joint venture with
The Blackstone Group and
Lehman Brothers, which will
warehouse USS’s fleet renewal
program. Also of interest, was
the final resolution of the Navi-
gator Gas saga with the bond-
holders finally getting control
of the company and its vessels.
Of the various transactions that
occurred this year, two transac-
tions and a trend stood out.
High yield bonds returned in the
US, a niche player successfully
issued in Europe, and a new
F capital of high yield evolved.
e
b
r
u
a
r
y
/
M
a
r
c
h
With the assistance of Merrill
Lynch and JP Morgan, Angeliki
Frangou’s Navios Maritime
issued high yield bonds for the
first time since the junk bond
debacle of the late 1990s.
Navios does not fear leverage
and manages it well. So it was
no surprise that in December,
the company announced the
successful sale of its $300
million of 9.5% Senior Notes
due 2014, the proceeds of
which were used to refinance its
existing credit facility with
HSH Nordbank. Priced at
99.316% to yield 9.625%, the
Notes were offered in the
United States only to qualified
institutional buyers pursuant to
Rule 144A. The Notes will
initially be guaranteed by all of
Navios’ existing subsidiaries,
other than its South American
business. One of the key attrac-
tions of the refinancing was the
lack of principal amortization
during the tenor, which is
typical of these deals. Investors
were attracted by the company’s
charter coverage, the value of its
purchase options, the
company’s low break-even
levels, and the dynamics of the
dry bulk market in the interme-
diate term. For many US
investors this was a first time
experience with dry bulk ship-
ping company bonds. As to the
company, the relatively low
EBITDA multiple at which its
shares trade made bonds a
dramatically less expensive way
to raise growth funding than
the issuance of additional
equity.
In November, Jefferies and
ABN Amro successfully sold
high yield bonds for Britannia
Bulk. Given the company’s debt
rating of B-/B3, the challenge
for the bankers was to raise
capital to enable this company,
which was burdened with a
short operating history, high
leverage and an old fleet, to
modernize and grow. Despite
having to downsize the offer
and increase pricing, Jefferies
and ABN Amro were successful
in raising $185 million in
capital, without equity dilution,
which was used to pay off
existing debt and create a Vessel
Acquisition Account of $140
million. Also in a very inter-
esting structural detail, the
company negotiated the ability
to prepay up to 35% of the
bonds within the first three
years from the proceeds of an
equity offering at a price of
112.75% plus interest.
Britannia is a niche player in
the larger international dry
bulk business. It focuses on
transporting coal exports from
the Baltic region primarily to
northern and western Europe.
Based upon geography, this
trade is characterized by short-
hauls and icy conditions and

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26 Marine Money www.marinemoney.com

 "Top Tankers advertised here in the hard copy this month and

reached the most influential readers of our industry, why don't you? Interested?

Please contact info@marinemoney.com, for more information!"

 requires knowledgeable requirements have soared. In inated in Norwegian kroner or argue that everything has a
management. Trade in this order to meet this growing US dollars. The bonds do not price, we do not believe that to
region has grown in recent years demand, local investment have official credit ratings, be the case here. Other than the
based upon increased exports of banks, including Pareto, although shadow ratings often niche play and the COAs, there
coal from Russia to Europe. Nordea, and DnB, have found are provided, leaving analysis to was not much to hang a hat on.
Also unlike most businesses in sufficient appetite in their own the purchasers. The latter Yield is important but you still
this segment, the company backyard as well as from inter- allows marketing without a need to get your money back.
generates a substantial portion national investors. They know roadshow and fast closure.
of its income from fixed price their customers and have We view the Norwegian Bond
COAs, which have terms of up designed a product accordingly. Although the deals are not Market almost as a force of
to two years. Key customers This is clearly evident in the SEC-compliant creating a nature. Like oil demand,
include Glencore International volume in the shipping, barrier to US investors, there appetite for this financing has
AG, Siberian Coal Energy offshore and oil services has been no shortage of appetite not been sated. In fact, Norway
Company and Wegloloks S.A. segment, which totaled $2.8 for the NOK denominated seems to have taken the lead
billion in 2005 and grew to $4 bonds from the Norwegian when it comes to the financing
A local market for high yield billion in 2006. market which is not only of the offshore industry and
bonds has evolved in Norway familiar with the sectors and demand for this financing
based upon the significance of Aside from the fact that they are issuers but also has an insatiable should grow hand in hand with
the offshore and shipping high yield; the bonds have appetite for the paper. The demand for new rigs.
industries to that country. As many other attractive features. USD denominated bonds have
demand for rigs, currently the They have relatively short been sold to UK high yield and These bonds are ideally struc-
primary growth driver, has tenors (3-7 years), are largely hedge fund investors which also tured to meet the medium term
increased reflecting greater unsecured, with few and flex- have a large appetite for ship- needs of the borrowers while
exploration activities, capital ible covenants, and are denom- ping and offshore issues tailored to meet the require-
although they lack the breadth ments of a knowledgeable
of knowledge of the industry investor base. Execution is
and issuers that Norway has. quick, easy and low cost.
Spreads are at historical lows
Although an extremely difficult reflecting in large part the
choice, we are pleased to demand. And best of all, the
present our Public Debt Deal of investors given their familiarity
the Year Award to Jefferies and with the industry and the
ABN Amro for Britannia and issuers, take “reasonably”
"Emirates Ship Investment Company adver- to Pareto, Nordea and DnB for aggressive positions. We are not
F making the Norwegian High sure whether a credit card could
e tised here in the hard copy this month and Yield Bond Market the new be any easier. Finally we note
b capital of high yield in 2006. that the bond business together
r reached the most influential readers of our Although groundbreaking in with the syndication desks
u
that it restored an old tech- demonstrates Norway’s contin-
a industry, why don't you? Interested?
r nique, the Navios transaction uing dominance as a supplier of
y was well executed but in a sense credit to the industry.
Please contact info@marinemoney.com, for
/ somewhat less inspiring.
M We congratulate Jefferies and
a more information!"
On the other hand, the ABN Amro for their hard work
r
Britannia transaction, albeit on Britannia and Pareto,
c
h small in scale, demonstrated Nordea and DnB for devel-
that with hard working bankers oping both a product and a
2 and a good story perceived market for the times.
0 difficulties could be
0 surmounted. Although one can
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28 Marine Money www.marinemoney.com

 Selected 2006 Public Debt Transactions
Borrower Arrangers / Advisors Amount (US$ M) Interest Rate Maturity Purpose / Remarks Month

Navios Maritime Merrill Lynch, JP Morgan, $300 9.50% 2014 Refinance existing debt Dec-06
Bank of America, S. Goldman

Odfjell Asia II Pte DBS Bank $33 4.15% 2011 Guaranteed by Odfjell Dec-06

Odfjell Asia II Pte DBS Bank $72 Floating at 2011 Priced over 6-mo SGD swap offer rate Dec-06
+ 0.88

Sevan Marine Pareto Securities $140 9.25% 2011 FPSO construction financing Dec-06

Nakilat, Inc. Unknown $850 Secured bond issue Nov-06

Nakilat, Inc. Unknown $200-$300 Subordinated debt issue Nov-06

B+H Ocean Carriers Pareto Securities, Nordea Bank Norge $60 3mLibor +4% 2013 Senior unsecured bond loan Nov-06

Carnival Corp Merrill Lynch, RBS, UBS, Barclays $958 4.33% 2013 Euro offering; issued at 99.532% of par w/ Nov-06
4.25% coupon

Vinashin Habubank $19 9.60% 2008 Funding for export shipbuilding projects Nov-06

Israel Corp $151 Sale to institutional investors by Ofer entity Nov-06

Thoresen Thai Siam Commercial Bank, $220 2009, 2011, Refinance debt, expand fleet Nov-06
Deutsche Bank 2013

China Shipping China International $249 1.30% - 2011 Convertible issue to fund acquisition Nov-06

Development Capital Corporation 2.70%

Hornbeck Offshore Jefferies, Bear Stearns $220 1.63% 2026 Convertible at 37.5% premium Nov-06

Britannia Bulk Jefferies, ABN Amro $185 11.00% 2011 Issued at 93.62% of par Nov-06

Zim $114 5.45% 2013-2015 Private offering to institutional investors Oct-06

Blue Star Maritime Citigroup $13 Euribor + 2014 Secured acquisition funding Sep-06
1.25%

Hellenic Seaways Natexis Banques Populaires $38 2016 Convertible issue to fund fast Sep-06
ferry construction
F
FreeSeas $22 Undet. 2011 Funds to acquire handysize vessels Sep-06 e
b
Eitzen Chemical Pareto, Nordea $101 3-mo L/ 2011 Senior unsecured notes Sep-06 r
NIBOR u
+3.50% a
r
NYK Merrill Lynch $470 2026 Converts at 16% premium Sep-06 y
/
Nepline $46 Islamic bond issue by Malaysian co Aug-06
M
IM Skaugen Nordea Markets $100 L+1.80% 2009 Replacing NOK bonds with USD bonds Aug-06 a
r
US Shipping Lehman Brothers, $100 13.00% 2014 Funding for construction project Aug-06 c
CIBC World Markets h

BW Gas Nordea, Pareto $112 3-mo. NIBOR 2009 Partly to finance Yara fleet Jul-06 2
+ 30 0
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www.marinemoney.com Marine Money 29

 Selected 2006 Public Debt Transactions continued
Borrower Arrangers / Advisors Amount (US$ M) Interest Rate Maturity Purpose / Remarks Month

BW Gas Nordea, Pareto $112 3-mo. NIBOR 2011 Partly to finance Yara fleet; pricing for Jul-06
+ 50 1st NOK250m tranche only

Belships Nordea $16 2011 Senior unsecured notes Jul-06

PSA Corp $1,000 Funding for acq. of stake in Jun-06

Hutchison Port Holdings

Royal Caribbean GS, Barclays, BNP, $550 7.00% 2013 General corporate purposes, including Jun-06
Morgan Stanley, RBS redemption of notes, repurchase of stock

Royal Caribbean GS, Barclays, BNP, $350 7.25% 2016 General corporate purposes, including Jun-06
Morgan Stanley, RBS redemption of notes, repurchase of stock

IM Skaugen Nordea $100 L+1.80% 2009 Will buyback outstanding NOK300m issue Jun-06

Mitsui OSK Lines Nomura, Daiwa Securities, SMBC $380 2011 Zero coupon convertibles May-06

Arpeni Pratama Citigroup $160 8.75% 2013 Callable after 4 years Apr-06
Ocean Line

HMM SK Securities $241 5.00% 2011 Issued at 6% discount to par value Apr-06

Aker Yards Pareto Securities, $91 NIBOR + 2013 Acquisition funding, refinancing Mar-06
DnB NOR Markets 2.50%

Hornbeck Wells Fargo Bank $75 6.13% 2014 Exchange offer; new notes registered w/ Mar-06
SEC & freely tradable

Seacor UBS $139 9.50% 2013 Consent solicitation for Seabulk notes Feb-06

Odfjell DnB NOR $89 N+80 2011 Feb-06

HMM Hannuri Investment & Securities $156 5.00% 2009 Corporate bonds; 8% discount to par Feb-06

CMA CGM BNP Paribas $300 7.25% 2013 Senior notes Feb-06

CMA CGM BNP Paribas $254 5.56% Various Asset-backed securities Feb-06

DP World Barclays, Dubai Islamic Bank $3,500 Sharia bonds to help fund P&O acquisition Jan-06
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30 Marine Money www.marinemoney.com

Restructuring Deals –
Breathing Life into Worthy Projects
n a year of relative pros-
I
perity there were as might
be expected few restructurings.
What to do with an Award that
a few years ago dominated these
pages? The race came down to
two very different deals both in
terms of size and sector, and
while we may be accused of
flipping a coin, there is no
proof of that!
We have observed first hand
restructurings and understand
how difficult it can be to coor-
dinate interests and resolve
problems in a fashion that does
not simply temporarily bandage
a wound but enables future
health and value creation. Rela-
tionships, strong understanding
of the business and thoughtful
structuring are common hall-
marks, but easier said than
done.
So we start by congratulating
both deals and all the parties
involved.
Our runner-up is Oceania
Cruises where a restructuring
orchestrated by AMA’s Jim
Dolphin has achieved great
results. Earlier this year,
Oceania Cruises completed a
$400 million bank debt facility.
The facility, placed by UBS and
Lehman Brothers, enabled the
successful 2002 start-up to
purchase the three cruise ships
it previously operated under
long-term lease agreements
www.marinemoney.com
from Cruiseinvest. The
purchase price totaled $375
million.
The $400 million facility
consists of a $300 million six-
year term loan, a $75 million
seven-year loan and a $25
million five-year revolving
credit facility. DnB and DVB
were most involved in the first
two tiers. The company is
currently out on the road
looking to raise an additional
$125 to $150 million from the
private equity, hedge fund,
institutional world for future
expansion plans.
For the company the acquisi-
tion significantly reduced
overall capital expenditures and
carrying costs of operating the
vessels, which positively
impacts EBITDA.
V.Ships Leisure remained as
marine and fleet managers and
ICS, a subsidiary of Miami
based Apollo Ship Chandlers,
continues to provide hotel serv-
ices.
This financing wrapped up
what can only be called a very
successful restructuring that
began with the collapse of
Renaissance Cruise and the
arrival of AMA on the scene
and their subsequent creation
of Cruiseinvest, which with the
$400 million financing deal are
now done with the Renaissance
recovery. Back of the envelope
estimates would indicate that
the Cruiseinvest effort, greatly
facilitated by the fact that
Oceania CEO Frank Del Rio
and his team delivered on their
vision, returned somewhere
between a 50 percent and a
doubling of their money. Not
too shabby.
Our winner though is DVB
Bank and NFC Shipping Funds
for their support of the restruc-
turing and rebirth of Marmex,
the former 60/40 joint venture
between Grupo TMM and
Seacor, into New Marmex.
Grupo TMM at one time was a
darling of these pages back in
the early 1990’s when Wall
Street saw the company as a
Mexico play. It was one of the
first capital markets practi-
tioners. In 1993 their $200
million debt offering led by
Goldman and Bear Stearns was
second in size in Marine
Money’s database to Royal
Caribbean’s $207 million IPO.
But, Mexico faltered, shipping
slumped and expansions into
railroad activities lead to a
prolonged legal battle with the
Mexican government tying up
management, all of which left
TMM a shell of its former
glory.
Although TMM has had its
financial difficulties, a compli-
cated financial structure, and all
sorts of complexities associated
with the Mexican Flag, cabo-
tage rules and mortgage protec-
tion, DVB and NFC saw
potential in 2005. The
financing team, led by DVB’s
Camila Policarpio and NFC’s
Carol Ann Malinowski, built a
strong rapport with CFO Juan
Fernandez who was in the
process of methodically
creating and executing a plan to
improve financial structure and
strengthen the company’s posi-
tion as the largest Mexican
logistics and transportation
provider in Latin America and
improving its relationships with
key financial institutions.
Management was also focused
on its core competencies and
markets.
The relationship began with the
financing of two product
tankers in the middle of 2005.
This transaction featured a
recognizable asset, but nonethe-
less posed all the risks associated
with both a turn-around F
company in a difficult jurisdic- e
tion. These ships were financed b
largely against 5-year charters r
u
from Pemex, which enabled
a
DVB and NFC to get comfort- r
able with all the other risks and y
most importantly become /
familiar with management. It M
also gave the team the opportu- a
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on acceptable financing struc- h
ture within the Mexican legal
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Marine Money 31
 But it is for the 2006 transac-
tion when Grupo TMM sought
DVB and NFC’s assistance in
their buy out of Seacor’s 40%
share of the Maritima Mexicana
S.A. de C.V. “Marmex”, that we
give the Award. For TMM, a
company in transition, 100%
control of Marmex was the key
objective in furthering the
company’s three-legged strategy
for rebirth and growth.
In 2006 TMM successfully sold
their stake in the Kansas City
railroad, a transaction that
provided enough liquidity to
pre-pay their outstanding
bonds and to help get their
larger finances in some order.
The strategy was now to focus
on three business areas: product
tankers, the offshore sector and
logistics – including trucking
and warehousing.
The deal to acquire Seacor’s
shares in Marmex was a modest
$22 million, a sum that until
recently was beyond reach.
DVB and their partner NFC
lent TMM $18 million, sharing
the exposure almost equally
between them. TMM came up
with $4 million in equity.
Structuring the security for the
deal was a work of art possible
only because of the previous
experience with the product
tankers, knowledge of manage-
ment, the Mexican Guarantee
Trust structure and a diversified
and acceptable mix of collat-
erals. The loan was secured
primarily by a fleet of 12 of
Marmex’s supply boats and
anchor handlers, which had a
year to a year and a half of
charter cover primarily from
Pemex, but other charterers as
well.
The transaction though was a
four-year deal and the supply
boat business is riskier than other
segments so additional collateral

Example of Financing with Mexican Trust Structure

(Exsiting shipowner)

Purchase & Sale

of vessel
5-year
Bareboat
Chartering
(C0-Charterers) Mexican SPC Loan Agreement
Lenders
Mexican Company (subsidiary)

2)
F Bal Remi
BB Charter anc ttan es
e e (V ce SPC transfers fiduciary legal ch
AT, o ran
and Technical OPE f rema title to trustee (Mexican Bank)
eb
t T
b Management X, a inin fD
nd g o
r Agreement pro e
fit) r vic
u Se
1)
a Subcharterer(s)
r Guarantee and USD
(Mexican
y Monthly pay-
Administration Account
Companies) Converts MXN
/ ments of BB Trust* Into USD
M Charter and Tecnical
Management Agreement
a (USD denominated,
r MXN paid)
c : Cash Flows
h : Contractual Obligations
*to be registered with Mexican Maritime Registry along with vessel

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32 Marine Money www.marinemoney.com

was secured through a second
priority lien against the product
tankers and other collateral
outside Mexico. Like most DVB
and NFC deals they are well
structured to effectively stand
alone, most importantly the rela-
tionship nature of their approach
enabled them to develop a diver-
sified collateral package
providing the security needed to
complete the transaction.
Critical to the success of the
transaction was becoming
comfortable with TMM of
course, but structuring security
via a Guarantee Trust structure
for a Mexican flag and at the
same time meeting Mexico’s
cabotage rules was critical. The
closing procedure and timing of
the funding became an artful
balancing act, as the financing
structure required the go-ahead
from Pemex, the Mexican
Trustee, Mexico’s Maritime
Registry and even the United
States Coast Guard. Nancy
Hengen and Gerardo Lozano at
Holland and Knight led the
legal team representing the
lenders on the US and Mexican
side, respectively. Paul Amiel
and Romualdo Segovia of
Haynes and Boone represented
the borrower in the US and
Mexico, respectively.
Since completion of the
Marmex deal the company has
set out to modernize its fleet,
concluding several other
financings with BTMU Capital
and West LB. For Seacor the
deal permitted a profitable
monetization of a strategic
investment. So both sides come
out happy.
Taking a chance on a company
with a complicated financial
history and in a difficult regula-
tory and mortgage environ-
ment demonstrates commit-
ment. For us those are true
measures of success and reason
we are pleased to give DVB and
NFC Shipping Funds the
Restructuring Deal of the Year
Award.

F
"IMMARBE International Merchant Marine Registry of Belize advertised e
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 Out-of the-Box Thinking
or the Structured
Finance Award
ne transaction executed
O
this year was sufficiently
impressive and out of the ordi-
nary to cause the Marine
Money editors to see the need to
create a new category of award
as we view it as a precursor of
the future. No matter what our
more jaded readership may
think, it is not a quick solution
just to reward another institu-
tion as a consequence of a
plethora of good deals. We do
not take additions lightly. The
transaction is, as you will see
below, a public debt deal; yet it
is also so much more than that.
It represents the recurrent
themes of out of the box
thinking, best practices and
imagination gone wild on the
balance sheet.
As a consequence of large
capital requirements, credit
capacity constraints and a desire
to shift risk, owners saw the
limitations of the available stan-
dard finance products to deal
with these issues and sat down
with their bankers to see if any
of the existing structured
finance tools could be applied
to shipping. Although banks
had previously securitized their
loan portfolios, it was BNP
Paribas that put together the
first securitization of a fleet of
vessels rated by Standard &
Poor’s and Moody’s. It was their
experience in and lessons
learned from aircraft financing
that were clearly critical to
making this happen.
As a beginning, we thought it
important to define what we are
talking about. According to
Mark Fisher and Zoe Shaw’s
text, Securitization, “securitiza-
tion is the packaging of desig-
nated pools of loans or receiv-
ables with an appropriate level
of credit enhancement and the
redistribution of these packages
to investors. Investors buy
repackaged assets in the form of
securities or loans which are
collateralized on the underlying
pool and its associated income
stream.”
At the low-end of investment
grade (BBB-/Ba1), CMA-
CGM was looking to raise
$800 million to buy 12
containerships as part of its
expansion plans and

Innovative Structure

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Figure 1

34 Marine Money www.marinemoney.com

 "CMA SHIPPING 2007 advertised here in the hard copy this month and

reached the most influential readers of our industry, why don't you? Interested?

Please contact info@marinemoney.com, for more information!"

 Vega ContainerVessel 2006-1 plc
Class Principal
Amount
(MUSD)
A 254
B 245
Corporate Bond 300
Total 799
approached their friends at
BNP Paribas for help. BNP,
understanding how well securi-
tization would work for this
client’s situation, as described in
general terms above, came up
with Vega Containervessel
2006-1 plc (“Vega”), an Irish
special purpose entity, which
through careful structuring of
the debt was able to borrow
100% of the contract value of
these 12 vessels and in turn
lease them to CMA-CGM
under long-term capital leases.
In the securitization structure,
CMA-CGM is the lessee of 12
SPV lessors, which will acquire
the 12 vessels beginning in
2008. Each SPV lessor refi-
nances itself thanks to Vega,
which will have issued two
classes of notes and one loan as
shown in Figure 1.
F agencies that the Enhanced
e Due to the capacity limitations
b of the ABS market and in order
r to obtain a competitive all-in
u addition to the 100% financing
cost of financing for a compre-
a
hensive debt package of 100%
r
y of the value of the assets, BNP
/ structured three different
M tranches of debt to meet the
a demands of three distinct
r in advance.
investor bases. These included
c
h the AAA/Aaa ABS investor
(Class A), the shipping bank
2 market (Class B) and the corpo-
0 rate bond investor market. Each
0 tranche isolated the risk and
7
36 Marine Money
Rating Rating Average
Without Life
the Wrap
A-/A3 AAA/Aaa 7.2
NR NR 7.1
NR NR 7.0
Figure 2
efficiently priced that risk
generating an all-in cost of
about 5.5% or 100 basis points
over 10 year US Treasuries.
To put the significance of this
accomplishment in context, we
need to outline the issues and
challenges with which BNP
Paribas had to deal. Key to the
transaction was to get a debt
rating for the ABS piece which
sounds simple but which had
never been done in shipping or
in Europe. The rating agencies
had figured out that shipping is
volatile. However, the fact that
it was an “industrial” shipping
story and the specific routes the
vessels were to be operated on
were outlined mitigated some
of the risk. However, BNP still
had to convince the rating
Equipment Trust Certificate
(“EETC”) methodology, which
was used in the US to structure
the financing of aircraft on the
ABS market could be applied to
shipping. According to this
methodology, notching up
above CMA-CGM’s credit
rating is a function of two main
criteria:
A) Is the legal environment
strong enough to allow
repossession of the vessels in
a timely fashion? By
LTV Expected
Maturity
33% 2018
65% 2018
NR 2013
defining the scope of the
issue, BNP satisfied the
agencies by incorporating a
covenant which defined
acceptable jurisdictions
where the vessels were
required to call every 90
days which were compatible
with the company’s business
plan.
B) What is the resale value of
the vessels and is the
second-hand market suffi-
ciently liquid for each type?
This question was particu-
larly difficult for the new
5,100 TEU vessels for
which little data was avail-
able. To solve this issue,
BNP developed a model
that simulated the stressed
values of the vessels as a
function of targeted rating.
Ultimately, the transaction was
placed simultaneously in three
different but complementary
financial markets with each
market effectively tapped for
what it is most price efficient at
providing:
Class A - $253.7 million of
senior notes rated AAA/Aaa
thanks to the XL Capital Assur-
ance wrap with an “attachment
point” of A-/A3 was placed on
the ABS market. The 144A
issuance was a European deal
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Financial Market
ABS Bond Market 144 A
European Shipping Bank Market
Corporate Bond Market 144A
for US investors. And for the
first time in Europe, S&P rated
an EETC type structure after
declining four aircraft deals.
Class B – a $245 million subor-
dinated and unrated loan was
pre-placed as a club deal with
experienced shipping banks. To
obtain similar pricing to a clas-
sical non-tranched transaction,
the combined A and B tranches
represented a conservative LTV
of 62%.
Class C - $300 million was
funded through an unrated
corporate bond issued directly
by CMA-CGM. The bond due
in 2013 was unsecured and
issued at par to yield 7.25%
(225 bps over like term treas-
uries) and was three times over-
subscribed resulting in the
issuance being increased from
$250 million to $300 million.
The beauty of this structure, in
at all-in competitive pricing,
was that it allowed CMA-CGM
to lock its financing in fixed
rates and to secure some of its
financing needs over three years
We congratulate all involved
and would not be surprised to
see Vega-2 very soon.
 "hci Capital advertised here in the hard copy this month and

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 M&A: Financial Buyers,
Niche Players & Two
Special Deals
his year’s M&A market was that the commercial, opera- conditions protected acquirers sitions in 2006. It’s safe to say
T
smaller in volume than that tional and other services from the threat of over supply that their highest volume was in
of 2005, but also more inter- provided by such companies in the medium term. the big ticket ports and
esting. With a total volume of overlap with those some ship- terminal sector while their
around $11.3 billion, the 2006 ping companies provide for These sectors were also highest market share was prob-
M&A market falls short of themselves and thus their value preferred by financial buyers, ably in the realm of shipping
2005’s $14.4 billion in volume, should be considered a part of whose emergence as major services – not surprising as
yet the smaller numbers belie the the shipping sector. players in the business was the these businesses tend to be
fact that there are more than most noteworthy trend in the unique, tricky merge or to
20% more deals in 2006. That said, on the one hand shipping M&A markets last understand and value. It is in
what we saw in 2006 was a year. They came out as bidders just such acts of understanding
The difference can be attrib- proliferation of niche sector and buyers in a variety of deals and assigning value to complex,
uted to a few large transactions M&A deals. A common market and sectors, creating a whole asset-light businesses that
in 2005, and also depends on perception that vessel values new level of marketability for private equity firms specialize.
how you cut the numbers. Take had peaked put pressure on shipping companies who now
away TUI’s $2.3 billion acquisi- valuations and made many must worry less about finding The first of these deals came in
tion of CP Ships and AP large-scale acquisitions appear the “perfect fit” and more about early January, with Dubai
Moller’s $2.7 billion acquisition less attractive than they would the perfect price. government-owned Istithmar’s
of Royal P&O Nedlloyd, both have as vessel values were still acquisition of Inchcape Ship-
in 2005, and the numbers tell a rising. The search for value Financial ping Services from Electra
different story. The story has to therefore became more focused Buyers Shake Investment Trust for $285
do both with a shift in sectors on sectors like the Jones Act or Up the Market million. Electra had hired
and a growth in consolidating chemical tanker sectors where Private equity players were out Lazard to explore opportuni-
activity among smaller compa- regulations or general market in force making shipping acqui- ties, while the buyer was
F nies. While the name of the
e game in 2005 was liner consol-
b idation, the big-ticket transac-
r tions we witnessed in 2006
u
tended to be within the rig and
a
r infrastructure industries. While
y many of these deals involve
/ some of the same players as
M pure shipping deals and are
a followed in these pages, it does
r
not seem appropriate to count
c
h them in shipping M&A
volume. The sale of shipping
2 services companies such as
0 Heidenreich Marine, however,
0 are counted based on the idea
7

38 Marine Money www.marinemoney.com

advised by Merrill Lynch and
ultimately paid a little north of
7x 2005 earnings for what was
reported to be the world’s
largest marine management
company. Notably, Carlyle and
Exponent Capital were also
contenders and were willing to
pay within 5% of the final sales
price.
Even more exciting for the ship-
ping services landscape was
when it was announced in June
that Morgan Stanley would
purchase Heidenreich Marine,
which was also advised by
Lazard. While the final price
was never disclosed, it was
understood to be upwards of
$200 million.
Financial buyers also showed a
strong interest in the ports and
terminals sector, with AIG
Global Investment Group
being the ultimate buyer for
DP World’s US assets for circa
$700 million, around 20-25x
earnings, under the advisory of
Deutsche Bank. With its steady
earnings stream, largely pre-
determined supply, and high
earnings multiples, ports and
terminals have proved particu-
larly attractive to long-term
investors. OOIL’s sale of four
Canadian terminals at 21x
EBITDA to the Ontario
Teacher’s Pension Plan further
illustrated the point. UBS
advised the seller and HSBC
the buyer in this $2.35 billion
transaction.
Private equity also got involved
in the purchase of shipping
assets in 2006, though again
primarily in niche sectors. For
example Jefferies advised
www.marinemoney.com
Oglebay Norton on the sale of
six of its self-unloading Great
Lakes bulk vessels to GATX
subsidiary American Steamship
Company for $120 million in
June of 2006. Then in June,
Heerema Group and Wilh
Wilhelmsen appointed
Deutsche Bank to advise on the
sale of heavy lift company
Dockwise Transport, and in
2007 we learned that they too
found a financial buyer for the
circa $800 million transaction,
Lehman-advised 3i.
SPACs
Back in the Great Lakes sector
in the US and Canada, we saw
a surprisingly large showing of
SPAC (Special Purpose Acquisi-
tion Company) M&A. Like
financial buyers, SPAC
investors acquire primarily for
investment purposes, but
unlike financial buyers their
shares have the liquidity and
varied investor base of a public
company. Laurence Levy-led
Rand acquired Lower Lakes
Towing and Grand River Navi-
gation in February for $54
million, then in December
Terrapin SPAC Aldabra’s share-
holders voted to approve a
merger with Great Lakes
Dredge & Dock from private
equity firm Madison Dearborn
Capital Partners.
Consolidation
Moves Forward
All this talk of SPACs and
financial buyers should in no
way downplay the torrent of
consolidation that characterized
the M&A market in 2006.
Product and chemical tanker
companies were among the
more common fleet combina-
tions that occurred during the And activity in this market was
year, while Fredriksen aimed to rampant, starting with Tsakos
consolidate the Norwegian rig Energy Navigation’s acquisition
sector with a number of massive of nine 1A ice class product
deals. Other activity ran the tankers for $530 million in
gamut, including LPG, Jones March. Important deals
Act, OBOs, the cement trade, included Palmali Shipping’s
offshore, dry bulk – you name acquisition of 10 handysize
it. product tankers from Lukoil in
April 2006 and the August sale
There is a theory that consoli- by Marpetrol of a fleet of 12
dation moves from the largest modern chemical tankers to
size vessels to the smallest ones Sovcomflot and Novoship. Axel
because of the capital required Eitzen is our 2006 Dealmaker
to reach commercial, technical of the Year, largely due to his
and regulatory critical mass. activities in this sector, which
The trend towards consolida- included the acquisition of
tion in the product and chem- Fouquet Sacop’s 12 chemical
ical tanker market witnessed in tankers and culminated in the
2006 could therefore be consid- $1,280 million acquisition of
ered particularly indicative of Arne Blystad-controlled Songa
growing maturity in the Shipholding AS and its fleet of
patterns of ship ownership and 49 chemical tanker vessels and
ship operation. newbuilding contracts ranging
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more information!" a
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Marine Money 39
 from 8,750 dwt to 40,000 dwt.
The smaller size theory
certainly didn’t apply to the rig
sector, where Fredriksen’s SeaD-
rill continued to work towards
being a consolidator in the Oslo
rig market with the acquisition
of Smedvig and Mosvold
Drilling, pursuit of Eastern
Drilling, and development of a
stake in Aker Drilling.
One deal of particular interest
was done in the gas sector
comprised the largest transac-
tion ever closed on the Italian
Shipping Market and between
Italian Shipping operators. In a
transaction nicknamed
“Sparkling”, Synergas, owned
50% by the Venice-based
Zacchello family and 50% by
the Naples-based Cafiero
Mattioli family, acquired
Navgas and its fleet of 10 LPG
vessels for $220.6 million. This
represents a healthy price of
around 9.6x 2006 earnings.
Efibanca advised Synergas on
the deal, as well as providing
the $28 million mezzanine
component of the transaction’s
financing.
In the fall, OSG’s $471 million
acquisition of Maritrans under
the advisory of UBS and
Merrill Lynch signaled a move
towards consolidation in the
Jones Act sector, while Kristian
Gerhard Jebsen Skipsrederi’s
$240 million acquisition of
Belden Ship Holding and its
23-vessel cement carrier fleet
under the advisory of DVB was
one of a few signs of life we saw
in the cement sector in 2006.
Worthy of honorable mention
are Citigroup and Societe
General for the Euro 470
million (circa $574 million)
acquisition of Silja Oy Ab by
Tallink from Sea Containers.
The transaction followed
Tallink’s $235 million Estonian
IPO by not more than six
months and also played an
important role in Sea
Containers’ ongoing restruc-
turing. At the time we esti-
mated that the vessels were sold
at around 15x EBITDA,
allowing Sea Containers,
advised by Societe General, to
repay approximately $510
million in related bank debt
while also receiving $60 million
in cash proceeds. For Tallink,
advised by Citigroup, the trans-
action cemented its position as
leading Baltic cruise ferry oper-
ator while also comprising what
we some officials have called the
biggest company acquisition
every by a Baltic company in
the Western European market.
What’s more, all this was
accomplished in a complex
anti-trust environment,
requiring three independent
reviews in Sweden, Finland and
Estonia, all of which were
achieved without a hitch
through appropriate struc-
turing.
And the
Winners are…
With all this excitement and
competition in the shipping
M&A market, it was tricky to
narrow the field down to just
two outstanding transactions.
At the end of the day, both our
winners had to not just make

The Acquired Fleet from Metrobulk

Vessel Type DWT Built Expected Delivery Average Charterfree*
to Quintana
Bulk One Panamax 76,466 2004 Sep-06 $43.2 $42.0
Bulk Two Panamax 76,429 2004 Sep-06 $43.2 $42.0
Bulk Three Panamax 76,417 2004 Sep-06 $43.2 $42.0
Bulk Four Kamsarmax 82,769 2005 Sep-06 $43.2 $42.0
Bulk Five Kamsarmax 82,209 2006 Sep-06 $43.2 $42.0
F Bulk Six Kamsarmax 82,224 2006 Sep-06 $43.2 $42.0
e
Bulk Seven Kamsarmax 82,209 2006 Jul-06 $43.2 $42.0
b
r Bulk Eight Kamsarmax 82,266 2006 Jul-06 $43.2 $42.0
u Kamsarmax H.1373 Kamsarmax 82,000 2006 Jul-06 $43.2 $42.0
a Kamsarmax H.1374 Kamsarmax 82,000 2006 Aug-06 $43.2 $42.0
r Kamsarmax H.1375 Kamsarmax 82,000 2006 Oct-06 $43.2 $42.0
y Kamsarmax H.1394 Kamsarmax 82,300 2007 Nov-06 $43.2 $42.0
/
Kamsarmax H.1395 Kamsarmax 82,300 2007 Jan-07 $43.2 $42.0
M
a Kamsarmax H.1357 Kamsarmax 82,300 2007 Jan-07 $43.2 $42.0
r Kamsarmax H.1358 Kamsarmax 82,300 2007 Jan-07 $43.2 $42.0
c Kamsarmax H.1396 Kamsarmax 82,300 2007 Mar-07 $43.2 $42.0
h Kamsarmax H.1359 Kamsarmax 82,300 2007 Jun-07 $43.2 $42.0
Total 1,380,789 $734.4 $714.0
2
Average: 81,222 Premium: $20.4
0
Source: Company presentation
0
*Based on per dwt value compared to sale of Jin Yang, 2005 built 76kdwt, for $39.1m
7
Figure 2

40 Marine Money www.marinemoney.com

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 Charters & Estimated EBITDA for Acquired Fleet
2007 2008 2009 2010 Average EBITDA Multiple*
Average floor rate $16,350 $16,269 $14,400 $14,460 $15,370 10.4
Average $21,601 $21,494 $18,803 $18,902 $20,200 7.3
Average ceiling rate $26,851 $26,719 $23,206 $23,343 $25,030 5.6
Average Opex + Dry Dock Capex** $3,950
*Estimate based on $735 million acquisition price, 365 day operating year
**Average is for existing & acquired Quintana fleet
Figure 3

an impressive and accretive
acquisition, but had to do so
against difficult odds and to
make a real meaningful differ-
ence in the future of their
company. Advisors in these
transactions had to go above
and beyond to align the stars
for their clients, and we are
happy to say we saw that in
both the work that Fortis and
Dahlman Rose did for Quin-
tana Maritime’s acquisition of
Metrobulk and in the work that
DnB NOR Markets and ABG
Sundal Collier did for Teekay
and Petrojarl. So here, in no
particular order other than
chronological, are the winners.
Fortis &
Dahlman Rose
for Quintana
Product and chemical tankers
may be smaller in tonnage than
kamsarmaxes, but they’re not
necessarily cheaper, and the
international dry bulk industry
has long had the reputation of
being one of shipping’s more
fragmented sectors. The spate
of dry bulk IPOs in 2005 led to
expectations of consolidation
within the industry, but Quin-
tana Maritime was the first to
do this in one massive stroke
with the acquisition of 17 dry
vessels from Metrobulk for
$735 million. Details on the
fleet are shown in Figures 2 &
3. The transaction not only
represented the first public dry
cargo company to execute a
major fleet acquisition and
improve their cash flow in a
meaningful way since doing an
IPO, but for success also
required Dahlman Rose to
place the largest PIPE (Private
Investment Public Entity) ever
in shipping only weeks after
getting the mandate while
requiring Harris Antoniou of
Fortis to emerge as a very able
M&A advisor and to provide
the bank facility that would be
the cornerstone of the financial
structure.
Beyond the fact that this is the
biggest dollar dry cargo we can
recall, it truly required its advi-
sors to go above and beyond in
securing the necessary
financing while transforming
the nature of the acquirer.
Our understanding is that
Harris Antoniou that was first
to spot the opportunity in
Theodore Angelopoulos’
Metrobulk, more inspiring
when you consider he envi-
sioned a company that had
recently IPO-ed for only $192
million as a perfect fit for a
$735 million acquisition. But
Stamatis Molaris’ team was

F
e
$191 Million in Equity: Nothing Personal
b
r Holder Relation Firm (if applicable) Preferred Shares Common Shares
u Corby Robertson, Jr. Director, 10% owner Quintana Maritime Partners 160,000 3,500
a Corby Robertson III Director EMPAR Partnership 10,667 3,500
r
Luke Stevens Putman VP, General Counsel, Secretary 28,000
y
/ S James Nelson Director FSD Corp 3,500
M Stamatis Molaris Director, President, CEO 1,867 100,000
a Hans J Mende Director AMCI Acquisition II, LLC 106,667 3,500
r Nikos Franzeskakis Chief Commercial Officer 42,500
c Paul J Cornell CFO 42,500
h
FRX Offshore GP LTD Director, 10% owner 160,000
2 Total 439,200 227,000
0 Cost $93.75 $8.00
0 Amount raised (gross) $41,175,000.09 $1,816,000.00
7
Figure 4

42 Marine Money www.marinemoney.com

 Fortis Facility Amortization Schedule
Installment 1
Installments 2-5
Installments 6-17
Installments 18-32
Total amortization
Final maturity
Figure 5
clearly more excited about the
prospects than concerned about
the difficulties of execution.
Twenty percent of $735 million
is $147 million, and at least this
much equity needed to be
obtained within about three
weeks. This would not be so
intimidating if you were John
Fredriksen in Oslo but for a
small-cap dry bulk company in
the US the task was a bit more
daunting. This is where up-
and-coming NY-based invest-
ment bank Dahlman Rose
stepped in. The timeframe
made it not remotely feasible to
file with the SEC and organize
a shareholder vote for a tradi-
tional follow-on offering, while
Quintana’s $200 million equity
market capitalization at the
time severely limited the effi-
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Amount (US$ millions)
$10.00
$11.75
$13.25
$15.00
$441.00
$294.00
cacy of a straight PIPE offering,
which in the US is limited to
20% of the value of the equity
outstanding, or in Quintana’s
case at the time $40 million.
Given these parameters,
Dahlman Rose and Quintana
were left with the challenge of
designing a security that could
be sold legally for a Nasdaq
listed company – within three
weeks. The security was also to
be convertible into common
shares as soon as practicable.
We understand that Dahlman
Rose had about a week to work
on the structure before taking it
on the road.
Fortunately the story and scale
were enough to get investors
excited, and reception was
generally excellent, with across
the board interest from normal
shipping investors as well as
PIPE buyers. The result was
that Dahlman Rose raised $191
million for Quintana in ship-
ping’s largest PIPE offering
within the allotted timeframe.
The accredited institutional
investors to whom it was sold
bought the 2,045,542 units
offered for $93.75 a piece. Each
unit consisted of 12.5 convert-
ible preferred shares of stock –
roughly $7.50 per preferred
share – plus four Class A
warrants. Pending approval
which was attained later in the
year, each warrant entitles its
holder to purchase one share of
common stock for $8.00. If all
the warrants are ultimately
exercised within the three year
term, an additional $65.5
million would be raised for the
company. Incidentally, Quin-
tana’s shares closed out 2006 at
$11.01 and at press time have
traded up to $12.51.
It’s also worth noting that over
$41 million of the new equity
was contributed by “insiders”,
shown in Figure 4 and defined
in this case as individuals or
holding organizations
controlled by individuals who
are either on the board of direc-
tors, part of senior manage-
ment, or both. This demon-
strated a commitment on the
part of Quintana’s board and
management, who were not
only willing to put their skin in
the game, but were actually
keen not to allow their own
exposure to be diluted.
Also committed to making the
deal work was Fortis Bank,
which provided the cornerstone
of the financial structure in the
form of the $735 million
revolving credit facility it
provided. The 8.25-year facility
was large enough to allow
Quintana to repay debt drawn
down out of their previous
$250 million facility with Citi-
group and Bank of Scotland,
streamlining their debt while
also financing the acquisitions.
Secured by vessels, the majority
of which are on charter to
investment-grade Bunge, the
facility is priced at only 85 basis
points over LIBOR until the
end of 2010, at which point the
margin will increase to 110
basis points. The facility amor-
tizes in 32 quarterly install- F
ments, as shown in Figure 5, e
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Marine Money 43
 beginning four months from • The minimum liquidity, DnB NOR and Petroleum Geo-Services, faith-
the delivery of the newbuilding including available undrawn ABG Sundal fully providing a stable cash
vessel “Bulk Eleven” but not credit line, must be $550,000 for Teekay & stream to its parent who had
later that December 31, 2006. per vessel to begin with, Petrojarl entered into Chapter 11 bank-
A lump sum payment of the moving incrementally up to Sometimes a small part of a ruptcy protection in 2003.
$294 million balance is to be $741,000; larger organization holds a lot Then on June 30, 2006, Petro-
made upon the final maturity • The ratio of 12-month of hidden value in its assets, jarl and its four sophisticated
date, although voluntary trailing EBITDA to interest relationships, and expertise that FPSOs, two shuttle tankers,
prepayments to go towards expense must not be less than is just waiting to be unlocked. and one storage tanker were set
reducing this sum are 2.00 to 1.00; DnB NOR and ABG Sundal free in their very own listing on
permitted. This crucial facility • Total debt over total assets Collier were instrumental in the Oslo stock exchange with
carries with it a number of may not exceed 75%; unlocking just such value in an initial equity market capital-
important, though quite • Minimum market adjusted Petrojarl with its $860 million ization of around $510 million.
manageable, maintenance net worth shall be $200 acquisition by Teekay in the By the end of August, Teekay
covenants, notably: million. autumn of 2006. It was a fitting Shipping and Prosafe had
• The aggregate fair value of the end to a series of divestments engaged in a bidding war for
vessels securing the facility Needless to say, Bunge’s credit and investments that ultimately the company, having a very
must be no less than 115% of and support were instrumental ended with positive results for positive impact on its share
the aggregate amount to making this deal work. But Petrojarl parent Petroleum price as shown in Figure 6.
outstanding under the facility so was the commitment of Geo-Services, bidder Prosafe,
until December 31, 2010, Quintana’s management, its Petrojarl investors and buyer Prior to that, in February of
and no less than 125% there- advisors and lenders at Fortis, Teekay Shipping. 2006, Teekay and Petrjoarl had
after; and its bankers at Dahlman formed a joint venture, the
Rose. For years, Petrojarl belonged to purpose of which analyst Omar
Nokta of Dahlman Rose
described as providing Teekay
access to Petrojarl’s expertise in
engineering FPSOs. By that
spring, Teekay had announced
its plans to spin off its shuttle
tanker and FSO business into
an MLP to be named Teekay
Offshore. While we have no
confirmation, it is certainly
F conceivable that by this time
e Teekay was already mulling
b whether their cooperation with
r Petrojarl had the potential to
u
develop into a more meaningful
a
r relationship.
y
/ But he who hesitates is (some-
M times) lost, and whatever
a Teekay’s intentions may or may
r
not have been, it was Prosafe, a
c
h leading owner and operator of
semi-submersible service rigs
2 and of FPSOs outside the
0 North Sea, who first moved on
0 Petrojarl, picking up a 29.7%
7
Figure 6

44 Marine Money www.marinemoney.com

stake in August. Within two
days of that announcement,
Teekay had acquired its own
15% stake in Petrojarl for over
$100 million, which it quickly
built up to a 38% stake. During
the same week, Prosafe
announced its intention to
propose a merger.
Petrojarl noted in response to
Prosafe’s advances its interest in
being acquired if the transac-
tion would include the creation
of a stand-alone, focused FPSO
company, and when it became
clear that Prosafe’s interest
would be to merge its target
into its current, more diversi-
fied structure Petrojarl
demurely described this as “not
an ideal solution” though did
not write it off entirely. This all
but invited a competing offer
from Teekay, who soon raised
its shareholding over 40%,
requiring Teekay to either make
a mandatory offer for the
company or a reduce its stake.
Both Teekay’s immediate action
upon hearing of Prosafe’s stake
and offer and Petrojarl’s answers
to Prosafe indicate that Teekay
and Petrojarl’s joint venture had
been a positive experience for
both companies and that there
was mutual interest in a future
together.
On September 18, Teekay
launched its bid for Petrojarl at
NOK 70 per share, and by the
time the bid had expired Teekay
had taken ownership of 63.8%
of the shares outstanding at
price representing a robust
multiple of about 13x Petro-
jarl’s 2005 EBITDA. Petrojarl’s
board came out encouraging its
shareholders to accept the offer,
saying that Teekay, as a leading
global shipping company,
would be a very positive owner
of Petrojarl, one who shares
Petrojarl’s ambitions, and who
would actively support the
company’s future develop-
ments.
Soon after this transaction was
completed, Teekay moved
forward with its offshore MLP
IPO, Teekay Offshore Partners.
While the majority stake in
Petrojarl was not bundled with
the MLP IPO assets, opportu-
nities for future cooperation
were and certainly are beneficial
to Teekay’s standing in the
offshore market. So ultimately,
Petrojarl was able to find value
with its own listing, its investors
were able to find value with the
sale of their shares to Teekay,
bidder Prosafe too saw its stake
appreciate massively, and
Teekay won an important ally
and asset in a market it is devel-
oping and found value it could
spin to a new group of US
investors. Congratulations to
all.

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www.marinemoney.com Marine Money 45

 Selected 2006 M&A Transactions
Acquirer, New Partners, Advisors Amount Target / New Company Comments Month
or Parent Seller (US$ M)
James Fisher EC Hambro Rabben, $45 FT Everard Plus assumption of $55m in debt; includes 11-vessel Dec-06
Evolution Securities fleet, 4 more vessels to enter service in 2007, 1 facility
Dorchester Atlantic N/A N/A N/A Merger between shipmanagement companies Dec-06
Marine Atlantic Marine and Dorchester Maritime
Gunther Hertz Unknown 40%+ share in White knight to stave off BV bid Dec-06
Germanischer Lloyd
Bureau Veritas Unknown $664 Germanischer Lloyd Bid for German classification company Dec-06
DP World US assets Deutsche Bank Circa $700 AIG Global 20-25x earnings; price not yet released Dec-06
Investment Group
Kleimar Unknown Unknown Potential sale of JP Morgan, Pan Ocean as possible bidders Nov-06
Belgian Bulker
Serius Rederi AB Unknown Undisclosed Rederi AB Brevik Acquisition of Rederi AB's 3-tanker fleet Nov-06
Centrans Ocean Shipping Unknown Unknown SYMS Potential takeover; acquiree hopes to exclude debts, Nov-06
Logistics Group charter obligations
Ontario Teachers' UBS for seller, HSBC for buyer $2,350,000 4 x OOIL terminals Sold at 21x EBITDA Nov-06
Pension Plan
OSG UBS for OSG, $471 Maritrans Acquisition for $37.50 per share Nov-06
Merrill Lynch for Maritrans
Compagnie Marocaine Unknown Starting at Morocco state owned Expected launch of privatisation tender Nov-06
de Navigation $259 ferry/liner/roro co
Green Reefers Nordea $175 20 reefer vessels From affiliates of Seatrade, Caiano, Nov-06
Norchem, Rederiparter
China Shipping China International $308 42 dry bulk carriers From China Shipping Nov-06
Development Corp Capital Corporation
Kristian Gerhard Jebsen DVB $240 Belden Ship Holding 14 x cement carriers owned by CSAV, Nov-06
Skipsrederi AS International Shipholding Group, Belden Invest
China Shipping Unknown $314 42-vessel bulk fleet From parent China Shipping Nov-06
Development Corp
Teekay DnB NOR Markets for Teekay, $480 Petrojarl Mandatory bid, backed by Petrojarl's board; Oct-06
ABG Sundal Collier for Petrojarl Stake came to 63.2%
Clessidra Capitalia Undisclosed Moby Private equity fund takes 30% stake in Oct-06
Italian ro-pax operator
Scandlines NM Rothschild, Morgan Stanley Circa $950 For sale Danish/German ro-ro & ferry operator; Stena Line, Oct-06
F
e Deutsche Seereederei consortiums lead bidding
b J.C. Flowers Unknown $1,600 Stake in HSH Nordbank Co-invested with GS and JPM, 27% stake Oct-06
r Wallenius Unknown $16 Singapore Shipping Corp Purchase of SSC's 40% interest in Ow Shipping & Oct-06
u 50% interest in Wallenius Ship Management
a Fredriksen interests Unknown $163 Hanjin Shipping Sale of 10% stake Oct-06
r Marine Terminals Corp Goldman Sachs Circa $2,000 Possible future sale US west coast terminal operator; potential bidders Oct-06
y likely to include SSA, Macquarie
/ Great White Fleet Fortis Undetermined For sale Chiquita exploring strategic alternatives for subsidiary Sep-06
M ACL Unknown $32 Consortium of Divestiture of Venezuela barge, towboat, Sep-06
a
Venezuelan businessmen and related assets
r
Moby Lines Unknown $63 Lloyd Sardegna Acquisition of 5 x ro-pax vessels from Marsano by Sep-06
c
Onorato interests
h
Eimskip Unknown $10 Kursiu Linija Acquisition of remaining 30% stake for Sep-06
2 complete ownership
0 Grandi Navi Veloci Unknown Up to $1,000 Sale of stake Bank of America Capital Partners, Apax Partners, Sep-06
0 Investitori Associati in takeover talks
7

46 Marine Money www.marinemoney.com

"Ehlermann Rindfleisch Gadow advertised here in the hard copy this month and

reached the most influential readers of our industry, why don't you? Interested?

Please contact info@marinemoney.com, for more information!"

 Selected 2006 M&A Transactions continued
Acquirer, New Partners, Advisors Amount Target / New Company Comments Month
or Parent Seller (US$ M)
Grimaldi Unknown $275 Finnlines Stake up to 35.4%; last purchase valued at $41m Aug-06
V.Ships NM Rothschild $400-$500 Possible future sale Appointment of advisor to examine future options Aug-06
Teekay DnB NOR $186 Petrojarl Stake over 40% requiring mandatory bid to be Aug-06
launched within 4 weeks
Prosafe ABG Sundal Collier Circa $800 Petrojarl Proposed merger - failed Aug-06
Aldabra Acquisition Corp BearingPoint Capital Great Lakes Dredge & Acquisition of Madison Dearborn-controlled Aug-06
Dock Corp Great Lakes by blank check entity
RCCL Unknown $898 Pullmantur Acquisition of five-ship Spanish cruise company; Aug-06
inclusive of E270m in debt
Prosafe ABG Sundal Collier $145 29.57% Petrojarl stake At NOK 50 Aug-06
Teekay DnB NOR $108 15% Petrojarl stake 11,250,000 shares at NOK 60 Aug-06
Oldendorff Carriers Unknown Undisclosed CEC Lines Sale by Clipper Elite Carriers of 60% stake in Aug-06
liner & heavy lift division
Djuva 11, Bergshav Tankers, Unknown $78 Wilson Bid for remaining 53.4% of shares at Aug-06
Aktieselskabet Borgestad, NOK 24/share - failed
Osiris Prosjekt
Camillo Eitzen Carnegie & Pareto for CECO, $1,280 Songa Shipholding 49 x chemical tanker vessels & newbuildings Aug-06
Nordea for Songa
Frontline $154 General Maritime stake Sale of shares to World Wide at $40 each Aug-06
Crosby Marine Parks Paton Hoepful & Brown $32 Tidewater tugs Sale of 10 tugs out of 14 contracted Aug-06
Pacific International Unknown Pacific Direct Line Purchase of "significant interest" in Aug-06
Lines New Zealand-based 7-ship operator
SvitzerWijsmuller Unknown $529 Adsteam Bid for Australian towage company by Maersk Aug-06
subsidiary; regulatory approval received
Howe Robinson Unknown Undisclosed Angus Graham & Partners Merger of dry cargo chartering firms Aug-06
Kristian Eidsvik Unknown Wilson Bid for remaining 52.4% of shares at NOK 20.33; Aug-06
cited as low
Teledata Unknown Undisclosed ECM Marine Acquisition by Indian co of US-based QI firm Aug-06
Golden Ocean Group None $105 5 x vessels on bareboat GOGL takes over bareboat commitments & Aug-06
to Clipper purchase options
Sovcomflot & Novoship Morgan Stanley, Cuatrecasas, Circa $100 Marpetrol Fleet of 12 x modern chemical tankers Aug-06
Drewry, Moore Stephens for
F buyside, Jefferies, Poten for sellside
e OOIL UBS Undetermined Selling assets Considering sale of North American terminals division Jul-06
b Kirby Corp Unknown $15 Capital Towing Fleet of 11 x inland towboats Jul-06
r Pullmantur Banesto Undetermined For sale Owners seeking 40% partner for 6-ship Spanish Jul-06
u cruise line but full sale considered
a Iberojet Unknown Unknown Carlyle Purchase of 2-ship Spanish cruise line Jul-06
r Vermogensverwaltungs- DVB $869 Containers owned by Sale by COSCO subsidiary to special purpose entity; Jul-06
y gesellschaft MBH Florens Container, Inc. all lease contracts to remain intact
/
Atlantic Marine First International, $172 JF Lehman & Co Purchase by private equity firm of shipyard group Jul-06
M
Davidson Capital
a
Chimimport Unknown $14 Bulgarian River Acquisition of 70% of shares in Jul-06
r
c Shipping Corp Danube tug barge operator
h Cobelfret Unknown $94 Simon Group Assets comprise Humber Sea Terminal, Jul-06
Port Sutton Bridge
2 Genco Dahlman Rose $81 2 x panamax, Franco Compania Naviera ships intended for use in Jul-06
0 1 x handymax pulled cavan IPO
0 Delphis Unknown $51 TeamLines Purchase by Saverys shortsea liner operator of Jul-06
7 2nd largest north Europe feedership operator

48 Marine Money www.marinemoney.com

 Selected 2006 M&A Transactions continued
Acquirer, New Partners, Advisors Amount Target / New Company Comments Month
or Parent Seller (US$ M)
Blue Star Maritime Unknown $20 Dane Sea Lines Purchase of Greek ferry operator assets at auction Jul-06
Fortis Unknown EUR 330 cinergy Acquisition of North American energy trader Jun-06
Clarkson Unknown $9-$18 Genchem Chartering Acquisition of specialized chemical products provider Jun-06
Heidenreich Lazard $200-$250 Morgan Stanley Sold Jun-06
Tallink Societe General, Citigroup $574 Silja Lines Purchase by Estonian public ferry company from Jun-06
Sea Containers
Associated British Ports Unknown $5,100 Goldman & Macquarie in bidding war; GS raised Jun-06
American Steamship Jefferies $120 Oglebay Norton Acquisition of 6 x vessels by GATX subsidiary Jun-06
Company Great Lakes Fleet
Berlian Laju Tankers Unknown Up to $260 Undetermined Shareholder approval for possible acquisition Jun-06
Aker Yards Unknown $61 Alstom Marine's 75/25 JV Aker SA through 2010, when Alstom is to May-06
Shipbuilding relinquish remaining interest
Attica Holdings Unknown Up to $255 Undetermined Possibly English Channel ferry operation May-06
Uralsib Unknown Circa $156 Novorossiysk Sea Port Co Sale of 30% stake to Investsberbank May-06
Eimskip Unknown Kursiu Linja Acquisition of 50% share in equity May-06
Quintana Fortis $735 Metrobulk 17 x panamax and kamsarmax fleet May-06
Scandlines NM Rothschild, Morgan Stanley $950 For sale Danish/German ro-ro & ferry operator May-06
Palmali Shipping Unknown $265 10 x handysize From Lukoil Apr-06
product tankers
BW Gas DnB NOR, ABG Sundal Collier $347 Yara's LPB/Ammonia fleet Long-term charterback to Yara Apr-06
Camillo Eitzen AMA Capital Partners $276 Fouquet Sacop Fleet of 12 x modern chemical tankers Apr-06
PSA International Unknown $4,388 20% stake Hutchison Whampoa's portfolio of ports & terminals Apr-06
Emirates Shipping Line Unknown SCI/Zim Line JV 8 x 2600 TEU vessels Apr-06
SeaDrill Enskilda for Smedvig; Enskilda, Smedvig Final bid by SeaDrill of NOK205/A-share, Apr-06
Carnegie, Fondsfinans for SeaDrill NOK165/B-share successful
Tom Steckmest & HSH Gudme Circa $80 Wallem Group Sold by Caledonia Investments (78%) and Apr-06
Nigel Hill Anthony Hardy (21%)
Marmaras Maritime Unknown $1,000 For sale Diamantides 12-tanker fleet Apr-06
Triton Container Goldman Sachs $2,500 For sale Bermuda-based shipping container company Apr-06
International
Torm Unknown Circa $350 32% stake in Norden Possible sale Apr-06
Diana Shipping Unknown $20 Diana Shipping Services Public company brings manager in-house Mar-06
Gearbulk Unknown $61 Borgestad Shipping 5 x open-hatch bulkers to Jebsen/MOL company Mar-06 F
DP World Unknown $865 Gwadar Frontrunner in bid for Pakistani port Mar-06 e
SSA Marine Citigroup For sale US container terminal operator Mar-06 b
Oiltanking Stolthaven Unknown $64 Stolt-Nielsen, Oiltanking SNSA subsidiary to buy 50% interest in Mar-06 r
Antwerp Antwerp terminal u
Grindrod Undisclosed Undisclosed 50% of Auto Carriers, Grindrod now owns 100% of both entities Mar-06 a
25% of Grindrod r
Perishable Cargo Agents
y
/
Deep Sea Supply Unknown $394 22 supply vessel From Fredriksen's Hemen Holdings; $120m paid, Mar-06
M
newbuilding contracts $274m in construction commitments
a
Kirby Corp Unknown $16 Dixie Offshore Purchase of Progress Fuel's 65% stake Mar-06
r
Transportation c
Geveran Trading ABG Sundal Collier for $1,410,000 Marine Harvest Fredriksen entity; purchase from Nutreco Holdings, Mar-06 h
Stolt-Nielsen Stolt-Nielsen (25%)
Grupo TMM Unknown $10 Servicios Mexicanos Purchase from Smit of remaining 40% minority stake Mar-06 2
en Remolcadores 0
Grupo TMM DVB / NFC $57 Maritima Mexicana, Purchase of 40% Marmex interest plus vessels Mar-06 0
5 x offshore vessels from Seacor 7

www.marinemoney.com Marine Money 49

 Selected 2006 M&A Transactions continued
Acquirer, New Partners, Advisors Amount Target / New Company Comments Month
or Parent Seller (US$ M)
Grupo TMM Unknown $20 3 x offshore vessels Conversion from leased to owned Mar-06
Tsakos Energy Navigation Unknown $530 Western Petroleum S.A. 9 x ice class product tankers Mar-06
Eolos fleet Unknown Circa $110 3 x panamax bulkers For sale Feb-06
Tanker Pacific Unknown $248 GenMar ships 9 x OBOs; originally thought sold to Fredriksen interests Feb-06
OOIL & Shanghai Unknown $185 Property JV Shipping group to join with state-owned property Feb-06
New Changing Group company for development project
SeaDrill Unknown Circa $160 Mosvold Drilling NOK14 per share bid upped to NOK17; Feb-06
92.97% accepted
Tanker Pacific None $248 Genmar OBOs 9x aframax OBOs Feb-06
Vafias None $110 Eolos bulker fleet Fleet of bulkers - failed Feb-06
Industrial Investors Unknown $139 Fesco Privatization of 19.8% stake at Feb-06
18% premium to asking price
MPC Munchmeyer Unknown $483 Seatrade Groningen Acquisition of 14 x reefers by KG fund Feb-06
Petersen Steamship reefers
Cobelfret Unknown $105 Dart Line Purchase by Belgian ferry & shipping group of UK Feb-06
ferry operation including 4 x ro-ro ships and 1 terminal
Rand Acquisition Corp NatCity Investments, Macquarie $54 Lower Lakes Dredging Proposed acquisition by blank check company; Feb-06
shareholders approved
AL Ships KGAL $450 8 x panamax tanker Rumored sale by KG/V. Ships JV for $26m premium to Feb-06
newbuildings October purchase price
Prime Marine Unknown $135 6 x OBOs Sale to Norwegian interests w/ 2-4 yr TC back to Feb-06
Klaveness at $12.5-15k/day
Industrial Shipping JP Morgan Circa $115 8 vessels from Box feederships & vegoil tankers Jan-06
Enterprises multiple sellers
MSC Unknown $210 Phillip Morris Exercising options for 3 x 20-year-old conros Jan-06
Capital ships
PSA UBS $6,100 P&O Steam Counterbid by Temasek-owned PSA at 470p/share; Jan-06
Navigation Co. 26x 2006E earnings
Dorian (Hellas) Unknown $50 Reportedly for sale Fleet of 5 gas ships Jan-06
JB Ugland Unknown $90 Sovcomflot ships 2 x suezmax tankers Jan-06
Korea Line, KoGas, Unknown Korea Gas Corp To handle LNG shipments of around 3m tons annually Jan-06
HMM, STX JV subsidiary
F Chartworld Shipping Unknown Circa $80 4 x J Lauritzen reefers Jan-06
e General Maritime Unknown $155 Oaktree's stake Buyout of Oaktree's 4,176,756 share stake at $37/share, Jan-06
b a 2.4% discount to closing price
r Camillo Eitzen Unknown $100 Sigloo Gas KS Bid for outstanding shares of Sigloo; Jan-06
u Eitzen currently owns 50.5%
a Istithmar PJSC Lazard $235 Inchcape Shipping Done Jan-06
r
Affin Holdings Unknown $45 37% stake in Affin Sale of MISC stake completed Jan-06
y
Merchant Bank
/
Rettig Group Unknown Undisclosed Rederi AB Engship Sale of Engblom family's 11 dry bulk, Jan-06
M
a container & ro-ro vessels
r Golar LNG N/A N/A HMM Speculation that Golar offshoot Geveran may be Jan-06
c plotting takeover after raising stake to 17.76%
h Transocean Unknown $540 Petrojack Option to purchase 3 x jack-up rigs until Jan-06
March 15, 2006
2
0
0
7

50 Marine Money www.marinemoney.com

 "Blank Rome LLP advertised here in the hard copy this month and

reached the most influential readers of our industry, why don't you? Interested?

Please contact info@marinemoney.com, for more information!"

 “Hell, I don’t know what you’re talking
about, but at that rate sign me up!”

Convertibles:
The Equity Linked Award
he use of convertibles is
T generally not common-
place despite the low coupon
rate. The likely explanation is
the high cost in terms of equity
dilution. This year we reinsti-
tuted this award reflecting
increased activity in this cate-
gory by a widely diverse group
of borrowers including Horn-
beck Offshore, FreeSeas and
China Shipping Development.
In September, FreeSeas
announced its plans to issue up
to $22 million of senior
convertible secured notes due
2011 to private investors. The
proceeds were to be used to
acquire more modern handysize
vessels. From our standpoint,
the significance of this transac-
tion was that it served as a bell-
wether of market sentiment.
How would the market receive
a debt offering, properly priced
with upside, from a company
with a market capitalization of
$30 million? Or, in other
words, can a very small cap
company utilize its access to
public markets to grow? Unfor-
tunately these questions will
remain unanswered at this time,
as the company has decided to
defer the deal as announced.
In the Far East, China Shipping
Development planned a RMB
2 billion ($250 million)
convertible bond to fund its
exercise of purchase options on
42 dry bulk vessels from China
Shipping. The bond would
have a term of five years and
have a coupon of between
1.30% and 2.70%. The initial
conversion price is to be the
higher of the average closing
prices of the A shares 20 days
before the issuance of the
offering memorandum and the
average trading price of the A
shares on the trading date
immediately preceding the issue
of the memorandum with an
additional upward margin of
15-20%.
The company’s board believes
that the convertible bond issue
would allow the company to
take advantage of the current
favorable low interest rate envi-
ronment while providing a
much more attractive coupon
than a straight bond issue and
not leading to any immediate

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52 Marine Money www.marinemoney.com

dilution to earnings per share.
China International Capital
Corporation is serving as finan-
cial advisor to the company
while Evolution Watterson
securities is serving as inde-
pendent financial advisor to the
independent board committee.
Now for the winner! How do
you begin to describe a transac-
tion that provides 20 year
financing at 1.625%, declining
to 1.375% after year seven,
mitigates dilution risk and is
described as Convertible Senior
Notes with Concurrent Share
Repurchase and Call Spread
Overlay. You immediately call
James Harp at Hornbeck
Offshore Services or his advi-
sors, Jefferies & Company and
Bear Stearns and ask for help.
Hornbeck Offshore Services
sold $250 million aggregate
principal amount of convertible
senior notes due November 25,
2026 that were privately offered
to qualified institutional buyers
under Rule 144A. Concur-
rently, the company is using a
portion of the proceeds to pay
the cost of convertible note
hedges, issue warrants and buy
back 1.8 million shares of its
stock.
The convertible notes initially
bear interest at a fixed rate of
1.625%, declining to 1.375%
beginning in November 2013,
and are convertible into cash up
to the principal amount and
shares of Hornbeck for any
conversion value above the
principal amount or, upon the
company’s election in certain
circumstances prior to
www.marinemoney.com
November 15, 2013, solely into
shares, at a conversion price of
$48.48, a premium of 37.5%
over the last reported sale price.
The convertible note hedge
together with the warrants,
done by Jefferies, increases the
conversion price to $62.59 per
share with a corresponding
premium of 77.5%. In effect,
Hornbeck has synthetically
increased the premium through
the hedge.
From the Company’s perspec-
tive, it has shifted the burden of
dilution for any stock apprecia-
tion from 37.5%-up to 77.5%-
up from the stock price on the
day of closing, which was
$35.26. If the share price is less
than $48.48, the note holders
get cash and an interest return
of 1.625%. Over $48.48, the
convertible is in the money but
the risk of dilution is shifted to
the counterparty. The company
only begins to suffer dilution if
its shares are above $62.59.
However any future dilution
above that level is mitigated
even further by their purchase
of 1.8 million shares of Horn-
beck stock, which was also
funded through the net
proceeds of the offering. The
stock appreciation will help the
company get back the differ-
ence.
With $300 million of 6.125%
senior notes due 2014 and
$250 million of 1.625%
convertible senior notes due
2026, the blended (weighted)
average coupon on pro forma
company-wide debt of $550
million will be about 4.1%
(fixed). Meanwhile, after
adding the incremental $129 And based upon the reception
million of new cash raised to by investors, they too were
the September 30, 2006 happy with the deal both in
reported cash balance of $320 terms of structure and the deep-
million, Hornbeck will have in water story. With a minimal
excess of $450 million of “dry sales effort, the original base
powder” cash that will be offering was upsized and the
earning interest income in the $30 million over allotment was
5.00% range, making them a exercised prior to closing. The
temporary net lender. In fact, deal was priced at the low-end
the arbitrage and the share of the coupon range (1 7/8 +/-
buyback made the deal imme- 25 bps) and the high-end of the
diately accretive by increasing conversion premium range
2007’s projected EPS by $0.30. (35% +/- 2.5%).
With the help of their invest-
ment bankers, Hornbeck, by This is surely an example of
monetizing the volatility of its financial engineering at its best
stock and strong credit spreads, and it was no surprise that it
has borrowed cheaply and was chosen as the Equity-
created a nice arbitrage. Linked deal of the year.
"PetroTank advertised here in the hard copy
F
this month and e
b
reached the most influential readers of our r
u
industry, why don't you? Interested? a
r
y
Please contact info@marinemoney.com, for
/
M
more information!" a
r
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2
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Marine Money 53
 Shipping IPOs Forge
into New Territory
he volume of shipping
T
equity raised from the
public markets in 2006 repre-
sents a drop from the amount
raised in 2005, but it could
hardly have been any other way.
What is amazing, really, is high
how the volume remained, with
nearly $5.8 billion of new
public equity brought into
shipping. Between vessel values
and the overall size of the ship
finance market remaining fairly
stable and the cumulative effect
of the public equity raised over
the past few years in the bull
market, the trend toward public
ownership of the global
merchant fleet is definitely
growing.
Worth noting is that nearly half
of all equity raised in 2006 was
done so through non-initial
offerings, whether through new
share issues, sponsor sell-offs, or
F private placements for public
e entities. In other words over the
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Sources: Citigroup, Marine Money Research
54 Marine Money
past year growing public invest-
ment in shipping has been split
between enlarging existing
public companies, shrinking
sponsor holdings, and taking
new companies public.
And as this has occurred the
market for public equity in
shipping has begun to stabilize.
There was a time in 2005 when
the market for new shipping
IPOs could rightfully be char-
acterized as a bloody mess. But
since the start of 2006, the vast
majority of the 2005 IPOs
(with exceptions, of course),
have traded above their IPO
price and have made quarterly
payments of the promised yield
to investors.
The 2006 IPO market was
correspondingly a good bit
more rational, with owners,
bankers and investors all a bit
more educated and less impul-
sive. Our 2006 winner showed
Figure 1
a cleaner, more predictable side
of the IPO market where
proper structuring and
reputable principals can yield
dependable results with both
shipping companies and IPO
investors attaining the desired
benefit. While lacking a sense
of swashbuckling excitement,
there is a lot to be said for
creating such a product among
the sometimes insufficiently
risk averse shipping crowd.
A more stable market has
allowed the quality of deals to
evolve as their variety has
increased. Whereas the focus in
2005 was largely on commodity
bulk shipping companies more
often than not in the US
markets, 2006 IPOs were far
more varied, with companies
focusing on anything from
bunkering to newbuilding orders
to brokering and on exchanges
from New York and London to
Dubai and Singapore.
www.marinemoney.com
The Year
in Review
It’s hard to say whether devel-
opments in exchanges or devel-
opments in sectors were more
interesting in 2006. From both
a geographical standpoint and a
business model standpoint, we
think it’s safe to say that
bankers and owners had their
work cut out for them as far as
educating new investors – and
expanding the capital base that
ultimately is available to ship-
ping.
It’s therefore best to attack the
year from a chronological
standpoint. We all held our
breath a bit in the winter and
early spring as deals would
surface then be postponed or
quietly disappear. Would the
public equity market be open to
shipping in 2006, or had it
been oversaturated?
Omega Navigation was first
out, and in early April it
successfully priced its dual New
York / Singapore IPO while
Goldenport executed an IPO
on the London Stock
Exchange. Response to either
deal was not ravenous, but it
was willing. Jefferies and JP
Morgan-led Omega priced
below its $19-$21 price range
at $17 per share and has not
traded up, though if the results
of 2005’s IPO class are indica-
tive there is certainly hope for
the coming year. Goldenport
on the other hand, save for a
dip in the summer, has been
trading above its _2.35 offer
price.
Interesting considering that
where Omega is an example of
short operating history, new
ships, Goldenport went out as
just the reverse, with a long
operating history and old ships.
However we said at the time
that the HSBC-led Goldenport
deal may actually have been
appealing because investors
believed that there would be a
downturn. Goldenport used
$25 million of its proceeds to
repay debt and held on to $68
million to buy new ships “when
the prevailing market condi-
tions are favorable to do so.”
With ships in their twilight
years on charter, investors were
willing to bet that they would
get enough dividend back to
remove the risk of residual value
and then be in a perfect posi-
tion to strike when the market
hits bottom. Somewhat ironi-
cally however, 2006 turned out
to be a better than anticipated
year for the bulk market in
which both companies operate.
www.marinemoney.com
Neither of these transactions,
therefore, indicated bullish
sentiment on the shipping
market or on shipping deals,
and we would watch companies
like Ultrapetrol, Danaos,
Berlian Laju Tankers, Secunda
Marine, Chemoil and others
hover on the sidelines for some
months to come. Meanwhile it
was Chinese infrastructure
projects that were really in
vogue in the spring of last year,
with Dalian Port’s IPO as much
as 300x oversubscribed and
Tianjin Port Development
Holdings’ IPO reportedly as
much as 1,700x oversubscribed.
Then in late May, shortly after
Singapore put a new maritime
finance incentive scheme into
place, Pacific International
Lines was among the first to
take advantage of it with the
sale and long-term bareboat
charter back of eight container
vessels to new publicly-listed
entity Pacific Shipping Trust
(PST). DBS led the deal, which
was the first of its kind, and
successfully raised around $100
million. Besides being innova-
tive in the use of a tax-advan-
taged public company as a
special purpose lessor for an
entire fleet of vessels, the deal
was also a big step forward from
the only IPO done in Singapore
in 2005, Courage Marine’s tiny
$35 million deal. In the end,
Singapore’s investors were not
entirely comfortable with the
new structure and PST was
forced to downsize its offering
by about 20%. Share perform-
ance has been flat, but together
with a projected yield of over
9%, the company is treating
investors solidly and the door
should be open to more deals of
this kind.
Next out was Gulf Navigation
in late August with Dubai’s first
shipping IPO. SHUAA Capital
led the $248 million deal,
which was groundbreaking in
that it was the first shipping
company to actually tap the oft-
touted Dubai market, and we’re
sure many other companies
were watching very closely to
see how the deal went. But Gulf
Navigation was not content to
pioneer a new exchange for
shipping, or a new sector for
the DIFX, the company also
sold a fleet to the public where
nearly 80% by dwt was yet to
exist, and met with success.
As the year progressed, John
Coustas-sponsored Danaos also
met with success as his IPO
priced at the midpoint of its
targeted range and then traded
up. Kevin Wong’s Berlian Laju
Tankers succeeded in securing a
Singapore listing, opening the
company up to a more interna-
tional base of investors than was
previously available to BLT
when it was listed only in
Indonesia. The Menendez
family’s Ultrapetrol deal led by
UBS and Bear Stearns in New
York had to accept a discount to
their price target, but was ulti-
mately successful in selling a
rather eclectic bundle of busi-
nesses based largely in South
America and investors have
since seen the shares trade up
substantially.
ACM Shipping, a broker, had a
tiny offering of circa $15
million led by Noble &
Company on the AIM in
London. The success of this
deal was particularly indicative
of the importance of exchange
choice – the AIM welcomes
smaller deals, requires less
compliance and fees, and is in
London, where two other ship-
broking companies were
already listed.
Meanwhile, two bunkering
deals on opposite sides of the
globe, each of which had been
pulled at least once, succeeded
in the span of little over a week.
Chandran’s Chemoil, in a deal
run by JP Morgan and UBS
along with UOB Asia, raised
around $100 million in Singa-
pore. While we were thrilled to
see a bunkering deal accom-
plished, the deal did hit some
rough spots and ultimately had
to reduce its price range and
saw the sponsor purchase
around 34,000,000 shares.
That’s why we were all the more
impressed to see Melisanidis’
Aegean Marine Petroleum price
at the top of its range, more
than 25x 2005 net income, in a
deal led by Bear Stearns in New
York. No doubt Peter Geor-
giopoulos and John Tavlarios’
sponsorship and participation F
bolstered the deal’s credibility; e
it couldn’t have been the quar- b
terly dividend payment set to r
u
start at $0.01. When Aegean
a
priced, it was evident that not r
only had the shipping IPO y
market tightened, particularly /
in New York, but it was open to M
new types of deals that would a
r
have been hard to even consider
c
less than two years earlier. h
Then, finally, just before the 2
end of the year, Teekay filed for 0
its long-awaited Teekay 0
7
Marine Money 55
 Offshore MLP IPO, Citigroup
and Merrill Lynch took the deal
on the road, and it was priced
less than two weeks later at the
high end of its range.
And the
Winner is…
In a year full of firsts and unex-
pected successes, our award
goes to Merrill Lynch and Citi-
group, Dahlman Rose, Jefferies,
Fortis and Nomura Interna-
tional for their execution of the
Danaos Corporation IPO. An
IPO by a containership owner
with a solid operating history
structured as a C-Corp and
priced in the midpoint of its
range at first glance might seem
a bit “vanilla”, but that’s
precisely what makes it ground-
breaking.
Not only did the sponsors and
investors both get what they
were looking for, but in so
doing they have taken a major
step forward in creating a foun-
dation for the shipping asset
class in the US markets, helping
investors to see shipping just
like any other yield-generating
asset class, incorporate it into
their portfolios, and periodi-
cally look for new deals.
At the same time, like Ship
Finance International and
Seaspan, Danaos Corporation
provides a source of equity to
public and non-public shipping
companies alike in its role as a
lessor. Danaos has already exer-
cised this capability with the
purchase and long-term charter
back of three containerships to
AP Moller-Maersk in a deal
strikingly similar to one done
between Seaspan and Maersk
Ultimately what the deal

Guts of the Deal

Danaos Corporation
Number of Shares 10.25 million
% of Total O/S Shares 18.8%
Offering Price Range $20 - 22
Deal Size $205.0 to 225.5 million
Existing Fleet 27 Vessels of 116,115 TEU (4 subject to purchase options)
Average Age of Fleet 11.4 years declining to 9.1 after delivery of all contracted vessels.
Newbuildings 9 vessels of 76,104 TEU
Vessels under Contract 2 x 4,300 TEU
Dividend Policy Quarterly dividends of $0.44 per share
Dilution $11.91
Lock-up 180 days/730 for Coustas Family
Management Company External; Danaos Shipping, owned by the Coustas family
Credit Facility $1.4 billion ($700 million each)
Commercial Banks RBS & Aegean Baltic/HSH Nordbank
F Cost of Debt L + 0.75%
e Primary Shares All
b Secondary Shares None
r Selling Shareholder Danaos Corporation
u
% Retained 80.00%
a
r Use of Proceeds Repay outstanding indebtedness under the RBS and Aegean Baltic Bank credit facilities
y Annual EBITDA $171.00
/ Investment Banks Merrill Lynch, Citigroup, Dahlman Rose, Jefferies, Fortis, Nomura
M Issuer's Counsel Morgan, Lewis & Bockius
a Underwriters' Counsel Cravath, Swaine & Moore
r
Accountants PricewaterhouseCoopers
c
h Incorporation Marshall Islands
Industry Information Clarkson Research Services
2 Exchange NYSE
0 Ticker DAC
0
7
Figure 2

56 Marine Money www.marinemoney.com

 "Bureau Veritas advertised here in the hard copy this month and

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 Danaos' Current Fleet

Vessel Year TEU Time Daily Charter Charterer

Built Charter Rate
Term (USD thousands)
Post-Panamax
CSCL Pusan 2006 9,580 12 years $34.0 China Shipping
CSCL America 2004 8,468 12 years $29.5 China Shipping
CSCL Europe 2004 8,468 12 years $29.5 China Shipping
APL Belgium 2002 5,506 6 years $25.5 APL-NOL
APL England 2001 5,506 6 years $25.5 APL-NOL
APL Holland 2001 5,506 6 years $25.5 APL-NOL
APL Scotland 2001 5,506 6 years $25.5 APL-NOL
Hyundai Commodore 1992 4,651 8 years $20.0 Hyundai
Hyundai Duke 1992 4,651 8 years $20.0 Hyundai
MOL Confidence 1994 4,651 6.5 years $20.8 Hyundai
Panamax
Maersk Derby (ex P&O Nedlloyd Caracas) 2004 4,253 5 years $20.6 Maersk
Vancouver Express (ex P&O Nedlloyd Caribbean) 2004 4,253 5 years $20.6 Maersk
Norasia Hamburg 1989 3,908 5 years $20.8 COSCO
YM Yantian 1989 3,908 5 years $30.5 Yang Ming
YM Milano 1988 3,129 3 years $23.5 Yang Ming
Victory I 1988 3,098 3 years $25.1 Norasia
Independence 1986 3,045 3 years $23.6 Wan Hai
Henry 1986 3,039 3 years $23.6 Wan Hai
CMA CGM Elbe 1991 2,917 5 years $20.4 CMA-CGM
CMA CGM Kalamata 1991 2,917 5 years $20.4 CMA-CGM
CMA CGM Komodo 1991 2,917 5 years $20.4 CMA-CGM
F Pacific Bridge 1984 2,130 3 years $27.0 Hapag-Lloyd
e Eagle Express 1977 1,704 2.5-3 years $22.0 Hapag-Lloyd
b
r
u
a Vessel Year TEU Bareboat Daily Charter Charterer
r Built Charter Rate
y Term (USD thousands)
/ Panamax
M
a Maersk Constantia 1979 3,101 2.0 years $10.0 Maersk
r S.A. Helderberg 1977 3,101 2.0 years $10.0 Maersk
c
h S.A. Sederberg 1978 3,101 2.0 years $10.0 Maersk
S.A. Winterberg 1978 3,101 2.0 years $10.0 Maersk
2
0
0
7 Figure 3

58 Marine Money www.marinemoney.com

 Contracted Vessels

Newbuildings Year TEU Expected Time Charter Daily Charter Charterer

Built Delivery Charter Expiration Rate
Term (USD thousands)
HN 1561 2006 9,580 2006 12 years 2018 $34.0 China Shipping
HN 1639 2007 4,253 2007 12 years 2019 $26.1 Yang Ming
HN 1640 2007 4,253 2007 12 years 2019 $26.1 Yang Ming
HN 1670 2008 4,253 2008 12 years 2020 $22.8 Zim
HN 1671 2008 4,253 2008 12 years 2020 $22.8 Zim
HN 1672 2008 4,253 2008 12 years 2020 $22.8 Zim
HN 1673 2008 4,253 2008 12 years 2020 $22.8 Zim
HN 1698 2009 4,253 2009 12 years 2021 $22.8 Zim
HN S4001 2009 6,500 2009 12 years 2021 $34.4 CMA-CGM
HN 1699 2009 4,253 2009 12 years 2021 $22.8 Zim
HN S4002 2009 6,500 2009 12 years 2021 $34.4 CMA-CGM
HN S4003 2009 6,500 2009 12 years 2021 $34.4 CMA-CGM
HN S4004 2009 6,500 2009 12 years 2021 $34.4 CMA-CGM
HN S4005 2009 6,500 2009 12 years 2021 $34.4 CMA-CGM
Secondhand Vessels
E.R. Auckland 2004 4,300 2007 12 years 2019 $27.8 Yang Ming
E.R. Wellington 2004 4,300 2007 12 years 2019 $27.8 Yang Ming

Figure 4

showed, however, was that with
the right combination of struc-
ture, sponsor, and yield, it is
possible to do a clean shipping
IPO and to make all parties
happy. John Coustas raised
around $200 million for his
company while retaining a take
of more than 80%. The stock
priced to yield a little over 8%
initially and has since traded
upwards. The vessels are on
long-term charters with strong
counterparties, and while the
fleet on average is not young,
16 vessels are currently on order
to be delivered through 2010.
Investors have visible yield,
visible cash flow, and visible
growth, while Dr. Coustas
retains significant control over
his fleet and, free from the
requirements on cash flow
distribution that an MLP struc-
ture would impose, will be able
to retain the income necessary
to make strategic vessel or
newbuilding acquisitions if and
when management deems them
appropriate, such as those done
with Maersk.
To review the deal briefly,
Danaos consists of 27 existing
containerships that average
11.4 years in age along with
nine vessels currently under
construction. Merrill Lynch
and Citigroup ran the books on The IPO came to market with
the deal, with Dahlman Rose, an EV/EBITDA valuation of
Jefferies, Fortis and Nomura 9.5x and a price/book value of
also acting as underwriters. 3x. We have not performed a
charterfree valuation of the fleet
All the ships in the deal are on nor do we think it is the appro-
long-term charters with compa- priate technique for valuing this
nies such as China Shipping, company. Planned quarterly F
APL, Hyundai, Maersk, CMA dividends of $0.44 per share e
CGM and other blue chip provided an initial yield at $21 b
credits. Details on the fleet and per share of 8.4%; that yield has r
u
charters are available in Figures since lowered to around 7% as
a
3 & 4. Proceeds were used to the stock traded up to $24, r
repay debt on the fleet, which indicating the comfort level y
had been provided by RBS, investors feel with the /
Aegean Baltic and HSH Nord- company. M
bank. Figure 2 breaks out a
r
further the “guts” of the deal.
c
h

2
0
0
7

www.marinemoney.com Marine Money 59

 Selected 2006 Initial Public Offerings
Issuer Underwriters / Advisors Amount Structure / Pricing / Comments Status Month
(US$ M)
Teekay Offshore Partners Citigroup, Merrill Lynch $147 Spin-off by Teekay of offshore assets; 7,000,000 Priced Dec-06
common units w/ 1,050,000 shoe at $19-$21 per unit
Aegean Marine Petroleum Bear Stearns, Johnson Rice, Simmons, $175 NYSE IPO priced at top of range Priced Dec-06
Dahlman Rose
ACM Shipping Noble & Co $15 AIM listing by London-based tanker broker Done Dec-06
Chemoil JPMorgan, UBS, UOB Asia $101 Bunkering IPO in Singapore Priced Nov-06
China Merchants China International Capital Corp. $566 Shanghai IPO of 1.2 billion 'A' shares for expansion Done Nov-06
Energy Shipping of tanker fleet and LNG vessels
Marenave HSH Gudme Corporate Finance $192 Creation by HSH Nordbank and Konig & Cie of new product Done Nov-06
for institutional investors and public listing in Germany
Berlian Laju Tankers Deutsche Bank, UBS $117 Singapore offering by selling shareholder Done Oct-06
Danaos Corporation Merrill Lynch, Citigroup $215 IPO on NYSE of 10,250,000 shares at $21 each, Done Oct-06
midpoint of range
Ocean Tankers Cyprus Investment and $14 First Cyprus international shipping IPO; priced at Done Oct-06
Securities Corporation (CISCO) $0.55/share, circa 1.3x book
Ultrapetrol UBS, Bear Stearns, Merrill Lynch, $138 Nasdaq IPO Done Oct-06
Jeffereis, Raymond James, DVB
Eitzen Chemical Carnegie, Pareto $302 Equity placement to raise funds for Songa acquisition; In progress Oct-06
to be spun off from Camillo Eitzen into separate Oslo-listed
company with chemical tanker focus
Lloyds Fonds fund $35 8,200-teu post panamax containership purchased by In progress Aug-06
KG for $101m to be sold to public
Gulf Navigation SHUAA Capital, National Bank of $248 Dubai IPO of 55% stake in tanker owner; Done Aug-06
Abu Dhabi, Emirates Bank proceeds to fund fleet expansion
Johan Shipping Merchant Bank $13 Kuala Lumpur IPO as Swee Joo In progress Aug-06
Energy Infrastructure Maxim Group LLC, Ferris, Banker Watts $203 Blank check IPO in New York Done Jul-06
Acquisition Corp.

F Pacific Shipping Trust DBS as bookrunner, ABN Amro, $100 IPO of Singapore's first shipping investment fund by Done May-06
e DnB NOR containership owner/operator PIL
b Tianjin Port ABN Amro Rothschild, CLSA Circa $140 Hong Kong IPO of 578,000,000 news shares at HK$1.88 Done May-06
r
Development Holdings comprising 34% of enlarged share capital; 1700x oversubscribed
u
a Dalian Port Co BNP Paribas, UBS $240 Hong Kong IPO to help fund expansion plan - Done Apr-06
r 300x oversubscribed
y Omega Navigation Jefferies, JP Morgan $204 12,000,000 share IPO in New York & Singpore at Done Apr-06
/
$17 per share
M
a Goldenport HSBC $110 London Stock Exchange IPO Done Mar-06
r Vietnam Ocean Shipping Unknown $11 Ho Chi Minh City IPO of 38.55% stake; Done Mar-06
c Agency (VOSA) 8x over subscribed
h
Global Logistics BB&T Capital Markets $88 Blank check company formed to target cross section of Done Mar-06

2 Acquisition Corp transport & logistics companies

0 Avion $162 Iceland IPO by Eimskip parent; largest ever on Icex Priced Jan-06
0
7

60 Marine Money www.marinemoney.com

Follow-ons
Find a Following
t the end of 2006,
A
Clarkson identified 169
public shipowning companies
with a combined market capi-
talization of $207 billion and a
fleet of 7,288 ships. While this
might be considered over-inclu-
sive, the reality is that 22 of
those were merchant shipping
companies that went public in
2005 while another 17 went
public during 2006. The
combination of the growing
number of existing public ship-
ping companies and the growth
in annual IPOs has led us to
distinguish the awards given
out for the act of going public
initially from what companies
use their publicly-listed status
to accomplish in the equity
markets once they arrive.
To do this we have introduced a
new award for the best follow-
on offering of the year. We have
used the term follow-on
offering as a catchall to include
www.marinemoney.com
any offering of shares after a
company’s initial public
offering. This includes the sale
of new shares to the public to
raise funds as well as secondary
offerings, where a selling share-
holder registers to sell a large
block of its securities. Private
placements where new shares in
an existing public company are
placed in a private offering to
institutional investors then
subsequently listed on the
appropriate exchange would
also qualify for these purposes
as follow-on offerings.
As Figure 2 shows, 2006 was a
very busy year in the equity
follow-on markets. It started
with a bang when Fredriksen
rig-entity SeaDrill, led by Tor
Olav Trøim, hired Carnegie and
Pareto to raise close to $750
million in new equity in Oslo
to go towards the acquisition of
Smedvig and financing for a
semi-submersible drilling rig
Figure 1
under construction. This was
only the first of many forays by
Fredriksen entities into the
Norwegian equity market in
2006, and while particularly
striking in size was indicative of
the amount of liquidity that
existed in the Oslo market
throughout the year, particu-
larly in relation to offshore
ventures.
Over the course of 2006, ship-
ping companies across the
globe used follow-on offerings
to do everything from fund
incremental organic growth to
finance major acquisitions, to
allow private equity investors an
opportunity for divestment or
to give themselves a fresh start.
NY-listed Nordic American
Tanker Shipping, for example,
used a follow-on offering to
raise $123 million in March
concurrent with the acquisition
of their ninth suezmax tanker,
then went back to the public
markets again in October to
raise $184 million. Also in New
York, Diana continued its
strategy of buying with debt,
backfilling with equity in a June
follow-on offering worth $77
million.
In Hong Kong Goldman Sachs
took Pacific Basin back to the
public equity markets to raise
$157 million, while KBC Secu-
rities and Fortis took Exmar
back to the Euronext to raise
around $96 million in an
offering that was upsized due to
demand. At least as impressive,
in December Jefferies led Gulf-
mark Offshore in a $77 million
follow-on offering that saw
Gulfmark’s stock actually close
at an all-time high of $40.80 on
the day Jefferies bid the stock.
The deal was done on a
“bought deal” basis, which
reduced timing and market risk
and required no roadshow. F
e
Eagle Bulk Shipping worked b
r
with UBS to use the follow-on
u
market for multiple purposes, a
raising $33 million in a June r
PIPE (Private Investment y
Public Entity) offering, then /
allowing private equity sponsor M
a
Kelso to sell a $30 million
r
block of shares in September c
followed by a $42 million block h
of shares in November, with a
base share price that continued 2
to rise and pay dividends all the 0
0
while.
7
Marine Money 61
 Selected 2006 Non-Initial Share Offerings
Issuer Underwriters / Advisors Amount Structure / Pricing / Comments Month
(US$ M)
Star Cruises CIMB-GK Securities $228 Hong Kong rights issue by Malaysion cruise Dec-06
operator to fund 3 newbuildings
GulfMark Offshore Jefferies $78 Follow-on offering Dec-06
Horizon Lines JP Morgan Securities Circa $64 Sale by selling shareholder of 2,355,083 shares Nov-06
Eagle Bulk Shipping UBS Investment Bank $42 Offering by selling shareholders of 2,700,000 shares Nov-06
priced at $15.70 per share
Pacific Basin Goldman Sachs $157 Placement of 257,000,000 new shares Nov-06
Exmar KBC Securities as bookrunner, $96 Private placement of 3,200,000 new shares to professional Nov-06
Fortis as selling agent & institutional investors at E23.5 per share
Seaspan Citigroup, Merrill Lynch $247 Offering of 10 million new shares + 1.5 million share Nov-06
overallotment at $21.50 per share
Eitzen Chemical Carnegie, Pareto $20 Offering of 4,700,000 new shares concurrent with listing e Oct-06
of issued shares on Oslo Bors
Hyundai Merchant Marine Unknown $314 Issue of 20,000,000 preferred shares at KRW15,000 each; Oct-06
funding to back attempted Hyundai Engineering buyback
Nordic American Bear Stearns, Morgan Stanley, DnB NOR, $184 Follow-on offering of 5,000,000 common shares at Oct-06
Tanker Shipping Dahlman Rose, Scotia Capital $32 each + 750,000 share shoe
Global Oceanic Carriers Jefferies $25 AIM rights offering of 20,016,396 new ordinary shares at Oct-06
65p to fund 2 x dry bulk vessels
Eagle Bulk Shipping UBS Investment Bank $30 Secondary offering by selling shareholder per Sep-06
recently filed shelf registration
Horizon Lines Deutsche Bank, JP Morgan, $88 Second secondary offering at $14.50/share by selling Sep-06
Goldman Sachs shareholders, primarily Castle Harlan Partners IV and
Stockwell Fund
Tallink $121 Rights issue to fund growth; Citigroup Venture Capital Aug-06
International, Infortar, Amber Trust II, Firebird to take stakes
Camillo Eitzen & Co. ASA Pareto Securities ASA $36 Private placement fo fund acquisition of Sigas Kosan Aug-06
Golden Ocean Group Carnegie $21 Equity placement to raise funds for Clipper acquisition; Aug-06
underwritten by Hemen Holdings, who kept 40%
F
e Rand Logistics Wellington Management $13 Placement of 2,402,957 shares common stock at $5.41 per Aug-06
b share to institutional investors
r Svithoid Tankers Nordea $12 Rights issue in Sweden by small product & chemical tanker Jul-06
u company that plans to move up to the "O" list of
a
Stockholm exchange
r
y Top Tankers Cantor Fitzgerald $20 "At-the-market" offerings of 2,600,000 shares at Jun-06
/ $7.50 per share; Top has registered for the sale of
M an additional 5,000,000 shares
a Eagle Bulk Shipping UBS $33 PIPE offering to fund acquisition of 3 x supramax bulk carriers Jun-06
r
Diana Shipping Bear Stearns, Wachovia $77 Follow-on offering of 7,000,000 shares common stock + Jun-06
c
h 1,050,000 share shoe w/ rights to purchase preferred stock
attached at $9.50 per share
2 Horizon Lines Deutsche Bank, JP Morgan $81 Offering by selling shareholders of 5,750,000 shares + May-06
0 862,500 shoe at $14 per share
0
7 Figure 2

62 Marine Money www.marinemoney.com

 "Holman Fenwick & Willan advertised here in the hard copy this month and

reached the most influential readers of our industry, why don't you? Interested?

Please contact info@marinemoney.com, for more information!"

 Selected 2006 Non-Initial Share Offerings continued
Issuer Underwriters / Advisors Amount Structure / Pricing / Comments Month
(US$ M)
Quintana Maritime Dahlman Rose $191 PIPE offering to fund Metrobulk acquisition May-06
B+H Ocean Carriers Pareto Securities ASA $0.4 Oslo offering of 20,000 shares to non-US investors Mar-06
Awilco Offshore $82 Oslo private placement of 9,500,000 shares Mar-06
Deep Sea Supply First Securities, Pareto, Fortis $165 Funding for purchase of supply vessels; rapidly Mar-06
oversubscribed; Hemen to hold over 20%
Nordic American Tankers Bear Stearns, UBS as joint bookrunners, $123 Offering of 3,750,000 million shares with 547,500 Mar-06
DnB NOR overallotment option exercised; priced at $28.50
ASL Marine Kim Eng Securities $12 Planned placement of 30,000,000 new shares at S$0.68 each Feb-06
Sevan Pareto Securities ASA $230 Financing for construction of drilling unit Feb-06
Odfjell Drilling DnB NOR $140 Private placement to fund acquisition of 6th generation Feb-06
semi-submersible drilling rig; 10x oversubscribed
SeaDrill Ltd. Carnegie, Pareto $747 Private placement of 75,000,000 new shares at NOK66/share Jan-06
to fund acquisition of Smedvig & finance contracted rig
Martin Midstream Partners Citigroup as bookrunner, Raymond $100 NY offering of 3,450,000 common units (including shoe) at Jan-06
James, RBC, AG Edwards, KeyBanc $29.12/unit by diversified company with shipping operations

Figure 2 con’t

Global Oceanic Carriers in
London was able to use a small
but meaningful $41 million
rights offering on the AIM
(Alternative Investment
Market) with Jefferies in
London to fund an essential re-
launching of its public business
under new management.
This only scratches the surface
F of the myriad uses the follow-
e on market served for shipping
b companies in 2006, but should
r serve to provide a sense of the
u
size, scale, variation, and overall
a
r impressive performance the
y market has witnessed. In
/ essence, it is the ultimate
M provider of the liquidity sought
a with a public listing. It allows
r
companies to raise equity as
c
h necessary to complete projects
or to sell large blocks of shares
2 in short periods of time –
0 generally without serious price
0 disruption.
7
Horizon:
A Story of
Value Creation
It is against this exciting back-
drop that we are pleased to
announce the winner of our
first annual Follow-On Deal of
the Year Award: JP Morgan,
Deutsche Bank and Goldman
Sachs for Horizon Lines. In an
interesting resurface of history,
the foundation for the 2006
Horizon Lines transactions was
laid in 2004 in a deal that won
our Private Equity Deal of the
Year Award that year. That
happened when the Carlyle
Group sold Horizon Lines to
Castle Harlan under the advi-
sory of Goldman Sachs. Carlyle
had purchased CSX Lines,
renamed Horizon, in 2003 for
$375 million, but was able to
sell it only one year later to
Castle Harlan in a $650 million
LBO priced around 7.3x cash
flow. It had clearly been a good
deal for Carlyle; the question
that remained at the time was
where Castle Harlan was going
to find its return.
Therefore it was little surprise
when preparations for a
Horizon Lines IPO came into
the public light. 2005 was a
busy but difficult year for ship-
ping IPOs, however, and Castle
Harlan was forced to downsize
their offering and wait until
October to sell the company to
the public. The initial sale
brought in $110.5 million in
proceeds, $62.2 million of
which went toward redeeming
preferred stock, bringing Castle
Harlan Group’s holding in
Horizon Lines down from 65%
to 39%. After the $10 per share
offering, the company had a net
tangible book value of -$12.29
per share and a private equity
firm who was somewhat disap-
pointed with the divestment it
was able to make, having
initially invested $157 million
of cash.
Burdened with debt, the
company’s new shareholders
had reason to be wary while its
sponsor had reason to be
concerned. What they did have
going for them, however, was
an experienced management
team and an established trade
in a market with strong funda-
mentals.
Just over a year later, the
playing field is substantially
different, with Horizon selling
shareholders having been able
to sell $233 million worth of
shares in a series of secondary
offerings in June, September
and November of 2006. These
priced successively at $14.00,
$14.50, and amazingly $25.50
per share. Deutsche Bank, JP
Morgan and Goldman Sachs

64 Marine Money www.marinemoney.com

handled the first two offerings,
while JP Morgan alone handled
the final. Horizon then closed
the year at a share price of
$26.96 per share and has traded
up since.
Money, Money Everywhere -
The Award for Private Equity
here was no shortage of
T
great deals this year. The
difficulty was in categorizing
them and nowhere was that
more apparent than in the
private equity category. The
classic private equity deal in
shipping was the Carlyle acqui-
sition of Horizon Lines. It
clearly met the parameters of
buying a non-public business,
fixing it up and exiting prof-
itably. However, private equity’s
money is omnipresent while
deals are few and far between.
And, as we know, money moves
to wherever the deals are. So,
how do you, for example, treat
Morgan Stanley’s strategic
acquisition of Heidmar no less
the Ontario Teacher’s Pension
Plan’s purchase of OOIL’s US
ports? With the blending of
categories are these more M&A
than PE? Is it PE because these
are financial buyers rather than
strategic buyers? And where
does a long-term hold view
versus flipping fit in?
Contributing to this vagueness
was a dearth of pure private
deals as a consequence of strong
shipping markets and even
www.marinemoney.com
Conclusion
What this means is that not
only has Castle Harlan been
able to gradually sell off its
holding at an ever-increasing
premium, but that Horizon’s
public shareholders, from its
September 28, 2005, IPO date
higher valuations. This was no
time to buy-in on asset plays.
There are no clear answers but
more on this later.
The editors have taken the
strictly conservative view and
awarded the private equity
award to Cantor Fitzgerald,
CRT Capital Group and
Oppenheimer for Paragon
Shipping Inc. in what may have
been the only time last year a
private company issued equity
in a private placement. More
than just fitting expected
parameters, it is a structural
gem taking the best from a
Chinese menu of alternative
structures.
During November and
December, Paragon Shipping
Inc., a private 144A issuer,
issued 9,074,400 units
(including over allotment)
consisting of one Class ”A”
Common share and 1/5 of one
Warrant. The unit price was
$10.00 which raised a total of
$90,744,000 from private
equity sources and an addi-
tional $22,500,000 from an
to the close of 2006, have made
a total return of 175%! And
soon Horizon may even be able
to issue equity to fund its own
growth and modernization.
This is a true case of finding
value. Old private equity
investors looking to sell and
affiliate controlled by it’s
founder and CEO, Mr. Michael
Bodouroglou for a total capital
raise of $113,244,000. These
proceeds together with a senior
credit facility of $90.75 million
were used to acquire the identi-
fied initial fleet.
The investment bankers behind
the deal gave careful thought to
the structure by taking the “best
practices” or features of private
equity, SPACs and IPOs and
packaging them together in this
offering. From the SPAC struc-
ture, the deal is being sold as
units of a common share and
1/5 of a warrant. In this
manner, the company avoids
the large overhang of warrants
associated with a SPAC while
the original shareholders are
rewarded for taking the initial
risk when the exit strategy of an
IPO is implemented. This is no
blind pool. Borrowing from
public offerings and to avoid
SPAC voting requirements, all
the vessels were identified. Two
of the ships are identified as
being owned by affiliates of Mr.
Bodouroglou and are being
new public investors looking to
buy were both able to make
money, and the strength of the
company’s share price is better
than ever. It certainly merits the
consideration of anyone who
considers the market a zero sum
game.
purchased from them at the
price they paid ($69.5 million).
In addition, the other three
vessels are contracted under
MOAs, subject to the successful
completion of the offering, at a
price of $112 million. All the
vessels will be chartered for a
period of one to two years. The
defined use of proceeds and
vessel employment are derived
from public offerings. Mr.
Bodouroglou will be co-
investing alongside the private
equity with respect to the
Units, however, he is also
receiving Class “B” shares,
representing 15% of the F
Company for a nominal e
amount in line with similar b
features seen in SPACs. The r
u
latter are however subordinated
a
to the ”A” shares with respect to r
dividends and liquidation and y
carry no voting rights from /
issuance through the IPO. They M
are convertible into ”A” shares a
r
upon a successful IPO at which
c
time all accrued dividends are h
paid.
2
In terms of the business plan, 0
Paragon will be focusing on the 0
7
Marine Money 65
 dry bulk market with a partic-
ular emphasis on panamax and
handymax vessels initially.
Believing that second hand
vessels provide better returns
than newbuildings, they
acquired vessels whose average
age is 8.6 years and are targeting
vessels of between 5 and 15
years of age for future acquisi-
tion. The existing fleet consists
of two 1995 built handymax
and three 1999 built panamax
bulkcarriers that will be
acquired for a total cost of
$181.5 million. Using the full
payout dividend model, divi-
dends will be paid out of cash
flow after reserves established
by the board of directors. Based
upon projections, the company
expects to pay a dividend of
$0.4375 per share for the first
quarter. If annualized, the yield
on the shares is 17.5%, which
forms the basis of the valuation.
To provide stable earnings to
support the dividend, Paragon
has time chartered three vessels
for one year and two for two
years. These are on to first class
charterers including Morgan
Stanley, Klaveness, STX Pan
Ocean and Express Sea Trans-
F port. And finally, growth will
e come from acquisitions, which
b naturally will be accretive, and
r financed with the issuance of
u
new equity and new debt.
a
r But it is not only about ships,
y Like others before, Paragon has
/ opted to use an affiliate, Allseas,
M to provide both commercial
a and technical management.
r
Although this raises the poten-
c
h tial conflict of interest issue, it
would appear that the technical
2 management fee of $237,500
0 per vessel together with a
0
7
66 Marine Money
1.25% fee on freights and hire
and 1% on sale and purchase
are in line with third party
management fees. Moreover,
the company blunted potential
criticism by excluding the two
vessels purchased from the affil-
iate.
The senior credit facility of
$90.75 million is also carefully
structured, based upon age of
the fleet, with a loan to value of
50%, a 3.5 year term and a
balloon repayment. Interest is
floating with a margin above
LIBOR. Based upon the
assumed interest rate of 6.5%,
one might assume a margin of
about 1%.
Finally, unlike private equity in
general, the company has a
defined path to liquidity with
the requirement that the “A”
shares be registered within 180
days, after which they will trade
on the NASDAQ Bulletin
Board. With the sponsor clearly
incented by the subordination
provisions, an IPO should
follow shortly.
We commend Mr. Bodouroglou
on his perseverance and choice
of bankers. Clearly this deal was
worth the wait and deserving of
the award.
private equity interest is moving
into the marine services and
logistics industries as a natural
adjunct. Less volatility and
strong cash flows were the main
attraction. However strong
interest in this space has also
pushed these valuations to less
attractive levels. Before we
conclude then let’s take a look
at some other transactions that
caught our eye in 2006.
One of the more interesting
transactions was the acquisition
by J.F. Lehman & Co. of the
US shipyard Atlantic Marine
for $172 million. Atlantic
Marine is well known for its
work in marine maintenance,
repair, overhaul and conversion.
Founded in 1992, J.F. Lehman
& Company focuses exclusively
on buying middle market
defense, aerospace and
maritime companies as well as
their technologies. Paul Slater
of First International and
Davidson Capital advised
Atlantic. BNP Paribas and
CIBC World Markets arranged
a credit facility of $155 million
to support the purchase.
On the logistics side, we have
our deal of the year, the
DP/P&O ports transaction,
discussed in greater detail
earlier as well as AIG’s (another
financial buyer) opportunistic
acquisition of the US piece of
that deal sold separately for
security or political reasons
depending on your viewpoint.
OOIL’s sale of their US port
assets to the Ontario Teacher’s
Pension PlaN, another financial
buyer, captured the port busi-
ness’ cash flow as an ideal
match for the latter’s long-term
liabilities with the potential for
upside. The acquisition by
Morgan Stanley of Heidmar, an
asset light business, was a
natural complement to its
paper and physical commodi-
ties trading businesses. Finally,
Florens Container Holdings
www.marinemoney.com
limited, a wholly owned
subsidiary of COSCO Pacific
sold, but will continue to
manage, more than half its fleet
to “AD ACTA” 634 VermO-
gensverwaltungsgesellschaft
MBH, a German KG, believing
the asset light model will enable
it to improve its capital struc-
ture, increase its sources of
income, lower operational risk
and increase market share.
And finally at the end of the
year, the giant UK PE firm, 3i,
purchased Dockwise as a move
into the offshore support busi-
ness.
Although these transactions
were all funded privately, the
general consensus was that the
M&A character of these deals
gave them their import and
inclusion in the PE category,
although logical, was therefore
inappropriate. In fact, given the
number of deals in this
segment, as owners shift asset
risk to financial buyers, we may
need to add a category next
year.
Finally, as a cautionary note, we
mention ISEC’s rumored diffi-
culties in case anybody believes
investing in this space is a no-
brainer or that PE firms are
omniscient. Formed earlier this
year, ISEC invested in
container feeder vessels and
vegoil product tankers. Price
and technical issues were the
key problems for this company.
However, under the leadership
of Tony Gurnee, the company
can hopefully be re-structured
and find its way once again.
 "Fortis Bank advertised here in the hard copy this month and

reached the most influential readers of our industry, why don't you? Interested?

Please contact info@marinemoney.com, for more information!"

 The Year of the Lease
(Yes, again)
n late 2005, we
I
proclaimed that 2006 was
going to be “The Year of the
Lease” and, although it is not in
our institutional character to be
self-congratulatory, we will
indulge ourselves a little and say
two words – BINGO BABY!!!
Who would have thought vessel
leasing would ever be so fasci-
nating? But it is. What began in
2003 as a way for opportunistic
shipowners to extract
maximum valuation from
yield-starved investors has
ended up transforming leasing
from an irrelevant conference
topic into probably the most
interesting method to isolate
and price different layers of risk
in the capital structure of a
vessel.
As we sifted through all of the
issues of Freshly Minted that we
produced during 2006, trying
to refresh our memories so we
could write this annual Awards
issue, we were startled to find
that we actually wrote more
about vessel leasing during
2006 than we did any other
capital market structure,
including commercial bank
debt which comprises about
80% of the $100 billion of
capital that is formed for ship-
ping related deals annually.
The landscape of leasing deals
was so expansive this year thatit
was almost impossible to pick a
single winner. While we do,
and we want to heartily
congratulate our winner, we
only name them at the end
because we believe that those
transactions you must read
about before getting to our
winner deserve up front
mention as well.
OK, so our late 2005 predic-
tion was hardly a contrarian
one. In fact, vessel leasing has
been steadily maturing since
2003 when a spike in freight
rates and asset prices came
together with historically low
interest rates resulting in a
spontaneous conception of the
modern ship leasing industry.
This story is told Figure 1.
As the shipping markets
strengthened and interest rates
remained at historically low
levels throughout 2004,
demand for leasing products
continued to be strong.
Responding to this positive
supply and demand environ-
ment, new entrants started
popping up everywhere offering
new, or at least newly spruced
up, leasing products.
The dormant KS market sprang
back to life with renewed vigor.
German KG fundraisers broke
record after record, adding
more than Euro 2 billion of
equity per year for four consec-
utive years. With the help of
Jefferies & Company, Ship
Finance International became
the world’s first public vessel
leasing company using the
model pioneered by Marriott
Hotels whereby property
ownership and property
management were performed
by different companies with

F
e
b
r
u
a
r
y
/
M
a
r
c
h

2
0
0
7
Source: Marsoft, the federal Reserve Figure 1

68 Marine Money www.marinemoney.com

totally different risk and return
parameters. First Ship Lease,
which was established by
industry giants like Mr.
Schoeller, HSH Nordbank and
HVB, did its first deal. The
Korean government passed the
Ship Investment Act to create
its own KG-like market. Even
shipowners were getting into
the leasing game with OSG
creating a sale/leaseback of four
vintage product tankers and
then marketing it to the finance
world, rather than just shipbro-
kers. US lessors jumped from
airplanes and railcars into
foreign flag ships with Icon
Capital buying one of the many
Zim sale/leasebacks that seem
to always be in the market.
Tufton set up an Islamic ship
leasing company and popped a
quick deal and Navigation
Finance continued to enjoy its
first mover advantage by closing
loads of deals.
Leasing’s momentum
continued through 2005 with
volumes at or near record levels
for most every market, except
the UK Tax Lease market which
registered a volume decline due
to the legislative changes that
trimmed the certainty of NPV
benefits. Arlington Tankers,
Double Hull Tankers and
Seaspan followed in the foot-
steps of Ship Finance Interna-
tional by raising more than $1
billion of capital on the New
York Stock Exchange - with
proceeds ostensibly to be used
for offering leasing services to
related and third parties that
now include, among others,
Frontline, COSCO, SeaDrill,
CP Ships, CSCL, Horizon
Lines, Mitsui OSK, Golden
www.marinemoney.com
Ocean Group, APL, Hyundai,
Maersk and CMA CGM.
Over a period of just a few
years, it seems that everything
about vessel leasing dramati-
cally changed; the people that
offer it, the people that use it,
the reasons for using it and the
economics and structures asso-
ciated with it. Once a rigid,
long-term type of financing
driven mostly by the net
present value benefits of accel-
erated tax depreciation, and
therefore appealing only to
onshore industrial companies
that had no desire to oppor-
tunistically buy and sell assets,
vessel leasing has evolved into a
vibrant, often tax neutral risk
management tool and invest-
ment vehicle that is being
considered, if not used, by
every shipping company with a
CFO worth his or her salt.
The Year
in Review
Pretty much all of the trends,
and all of the providers, that we
describe briefly in the para-
graphs above continued
throughout 2006, and some
Figure 2
new things developed as well.
The drive toward public leasing
companies continued with the
IPOs of Danaos, Pacific Ship-
ping Trust and Omega. As you
can see from Figure 3, the KG
market was down slightly,
which might indicate that
today’s more sober container-
ship market has owners
watching their pennies more
closely and wanting to control
operational costs by entering
into bareboat leases rather than
the German-managed time
charters required by the KG
market. Another factor maybe
the strength of the Euro, in
which KG investors are paid
their coupon, relative to the
dollar, in which freights are
collected. Whatever the case,
the Germans logged a very
respectable Euro 2.5 billion of
equity.
The Korean leasing market had
a big year in 2006. During its
three year history, the Korean
Ship Investment Company
(SIC) Act has seen 23 vessels
financed for a total of $1.2
billion, but it wasn’t until 2006
that a SIC transaction was done
for a non-Korean owner (Top
Tankers) and did not feature
the charterer having a purchase
obligation. Put another way, up
until the Top Tankers deal,
Korean investors have simply
been providing domestic
companies with very highly
leveraged debt.
Building on the success of their
first Islamic finance fund,
mentioned above, Tufton
Oceanic moved on to its second
fund in 2006 in which equity is
sourced from the Middle East
writing more than $100 million
in leases. Among others, Tufton
did a sale and 7-year leaseback F
of a newbuilding capesize bulk e
carrier to Geden Lines for $66 b
r
million and another transaction
u
for $48 million for the a
construction finance and 7-year r
lease to Marsol of two DP2 y
AHTS vessels for delivery in /
2008. Dubai Islamic Bank, M
a
which provided the funding for
r
the initial fund, packaged the c
mezzanine into investment h
units and sold it to investors
during the summer with a 2
projected yield of 8.5%. 0
0
7
Marine Money 69
 total equity raise of $73.5
million in committed capital,
$44.1 million of which will be
paid in and the balance of
which will be uncalled. Of the
$73.5 million, the Westfal-
Larsen Group underwrote
$25.7 million.

Based on the sale of all vessels

after eight years for $156
million, returns for the first
tranche of the offering, which is
liable for the full $29.4 million
of uncalled capital, are esti-
Figure 3
mated at 21% annually, while
Ship Finance, the bellwether insiders project market for The newly established company the other two tranches of the
public leasing company, smallish deals that were most used proceeds to acquire four offering, which are not liable
continued to evolve in 2006. competitive for vintage vessels, IMO II chemical tankers, two for uncalled capital, are antici-
The company acquired the the KS market has blossomed of which are newbuildings with pated to earn an IRR of 14%
jack-up rig Seadrill 3 for a into what we think is the most delivery in 2009 and two of per annum. It is worth noting
consideration of $210 million efficient (and reasonably which are double hull IMO that uncalled capital has not
and leased it back to the seller priced) equity market for ships II/III chemical/product tankers been called into a KS deal for
for 15 years. Seadrill is to make in the world. purchased from the Martinos many years. Debt providing
annual payments to Ship family of Greece at very firm heavyweight DnB NOR Bank
Finance of $41.1 million for There were more deals in 2006 prices. provided a $240 million first
the first three years, after which than we can possibly mention priority mortgage facility,
Seadrill has the option to repur- in these pages, so we’ll hit a few Westfal-Larsen Group, one of priced it at LIBOR + 75 and
chase the rig at $135.5 million. highlights, such as the largest the most blue chip shipping gave it a 14 year profile and
Assuming the repurchase is ever KS deal completed. In just companies in Norway, control eight year tenor to make the
declined, the subsequent four- 24 hours, DnB NOR Markets 35% of the company which IRRs work.
year period will see annual raised a whopping $293 million gave investors comfort. That
payments of $18.8 million, for Westfal-Larsen in the chem- deal will have typically high Figure 6 shows the fleet cost
with annual payments of $14.9 ical and product tanker sector. leverage of 85% equating to a and charter employment. Four
F million for the remaining eight
e years thereafter. It is note-
b worthy that the lease here
r essentially “amortizes” heavily
u
over the first three years,
a
r helping to burn off the
y premium of today’s high asset
/ prices.
M
a The Norwegian KS Market,
r
like everything involving
c
h money and maritime, func-
tioned extremely well in 2006
2 with record volumes and happy
0 customers. What was as
0 recently as a few years ago an
7
Figure 4

70 Marine Money www.marinemoney.com

 2006 KS/DIS Project Volume and Equity Contributions (Amounts in NOK)
Arranger Total Project Price Paid-in Equity Uncalled Capital Total Committed Capital
Fearnley Finans Prosjekt a.s. 3,148,522,650 583,529,500 372,325,000 955,854,500
Ness, Risan & Partners AS 3,156,222,500 726,132,500 594,950,000 1,321,082,500
Pareto Private Equity 5,550,000,000 1,130,392,000 452,650,000 1,583,042,000
R.S. Platou Finans a.s. 5,460,630,000 1,122,382,000 400,912,000 1,523,294,000
17,315,375,150 3,562,436,000 1,820,837,000 5,383,273,000
Source: Ness, Risan & Partners
Figure 5

of the vessels will be on fixed
rate bareboat charters to
Westfal-Larsen; two of these
have a 50/50 profit share agree-
ment on earnings above the
fixed rate. The remaining two
vessels will earn spot rates.
Figure 7 shows forecasts made
by Lorentzen-Stemoco that
were used in calculating the
economics of the deal.
There was a lot of talk in
market this year about investors
and promoters stretching on
their end-of-deal residual value
assumptions in order to make
the numbers work. One of the
deals that was the subject of
that conversation was a transac-
tion involving MISC subsidiary
AET’s sale of four double hull
aframax tankers: the 1993-built
102,352 dwt Eagle Auriga, the
1993-built 95,644 dwt Eagle
Corona, and the 1992-built
95,644 dwt Eagle Centaurus
Westfal-Larsen KS Vessels
Name Built / Delivery
Mauranger 1995
Moldanger 1997
Ravnanger 2000
Risanger 2000
Hull 2061 2009
Hull 2062 2009
and Eagle Carina. The vessels billion in 2005 to Euro 2.5
were reportedly sold at a price billion in 2006. The volume
of $42 million each to a was down, yes, but it was still
Norwegian KS involving Acta outstanding. There were
ASA and ABG Sundal Collier. plenty of KG deals done in
The deal included a five to 2006, too many to talk about,
eight year bareboat back at a but the real story was that KG
price between $15,000 and entrepreneurs like Tobias König
$16,000 per day. Assuming the and Torsten Teichert of Konig
eight-year bareboat of $16,000 & Co. and Lloyd Fonds, respec-
per day, and an 8% cost of tively, proved that they are
capital, the residual value is capable of adapting their prod-
about $14 million per vessel, ucts to survive in a market with
which many people we spoke changing needs and dynamics.
with thought was pretty aggres- As you can read elsewhere in
sive for a 22-year-old aframax this issue the KG market also
tankers considering the char- gave us two outstanding exam-
terer keeps all the excess cash- ples of innovation – Marenave
flow during the charter period. and Open Waters.
German KG New Names
Market Sags, Try Leasing
but Remains There is real momentum in the
Strong leasing market these days. As a
The German KG market regis- result of the increased number
tered a decline in equity of players offering an increased
fundraising from Euro 2.9 variety of products, the global
Type Size Price (USD millions) Yard
IMO II 40,845 $38.00 Minami Nippon
IMO II 39,200 $42.00 Minami Nippon
IMO II/III 46,270 $48.00 Minami Nippon
IMO II/III 46,270 $48.00 Minami Nippon
IMO II 46,000 $53.15 Minami Nippon
IMO II 46,000 $53.15 Minami Nippon
Figure 6
marketing effort for vessel leases
has never been greater. As a
result, we are very encouraged
to see lots of new names from
all over the world in just about
every asset class using leasing
products for the first time – for
different reasons. Take for
example the highly ambitious
West Asia Maritime (WAM),
which undertook a 12.5 year
bareboat with purchase options
on a 54,000 dwt bulk carrier
from Mitsui for $33.5 million.
Or Naftotrade Group, which
sold four of the group’s cement
carriers to Navigation Finance
Corporation, bareboat char-
tered them back for eight years
and applied the proceeds
toward its newbuilding
program. First Ship Lease
purchased two 19,900-dwt F
chemical tanker newbuildings e
with high specifications and 20 b
stainless steel containers from r
u
Berlian Laju Tankers for $90
a
r
y
/
M
Charter Employment a
$16,500 BB r
$16,500 BB c
Pool/Spot h
Pool/Spot
2
$14,500 BB + 50/50 profit
0
$14,500 BB + 50/50 profit 0
7

www.marinemoney.com Marine Money 71

 million and leased them back
for 12 years in advance of their
Singapore IPO.
Then there is Ezra Holdings of
Singapore, which liked leasing
with NFC so much that after
concluding a $78 million deal
in 2005, this year the company
entered into a $181 million
sale/leaseback on seven deep-
water anchor handling tug
supply vessels and two anchor
handling tugs with NFC to fuel
its aggressive expansion plans.
Bergshav Product KS teamed
Figure 7
up with Roxana Shipping of
Greece to do a deal on three
small MR tankers. What was
interesting about this deal was
that it was sold as having a 15-
year charter comprised of 10
years to Roxana and five more
years to be arranged in the
market at a future date in order
to make the math work.
Hong Kong listed handysize
bulk carrier operator Pacific
Basin continued to use leasing
aggressively in 2006, using
sale/leasebacks to free up cash
and invest it in larger more
modern vessels. After doing a

R.S. Platou Finans 2006 Shipping Transactions

Fund Month Amount Comments
Norwegian Shipping II DIS Jan-06 USD 8.000.000 Fund arranged for investment in 7 different shipping projects
SBS Typhoon KS Jan-06 NOK 167.050.000 Purchase of a Plattform Supply Vessel on 7.5 years BB charter to
European charterers
Japan Offshore DIS Apr-06 USD 37.150.000 Purchase of three AHTS vessels with 7 year BB charters back to back
against a 10 year TC to Asian Charterers
Ugelstad Supply II KS Apr-06 NOK 155.000.000 Purchase of a Platform Supply Vessel on 2 year BB charters to
European Charterers
European Venture DIS Apr-06 USD 46.325.000 Purchase of two AHTS vessels with 5 year BB charters to European
Charterers
NFC Offshore DIS Apr-06 USD 74.500.000 Purchase of four newbuilding Offshore Supply Vessels
Oceanlink Offshore DIS May-06 USD 13.250.000 Purchase of a 1984 built AHTS vessel with 5 year BB charters to
European Charterers
Panda Chemical Oil DIS Jun-06 USD 19.545.000 Purchase of a 2004 built IMO II/III chemical tanker with a 5 year BB
charter to European Charterers
F Western Chemical KS Jul-06 EUR 32.775.000 Purchase of three Chemical Tankers with 4-5 year BB charters to
e European Charterers
b Singapore Offshore DIS Aug-06 USD 128.500.000 Purchase of five newbuilding AHTS vessels with 8 year BB charters to
r Asian Charterers
u Oceanlink Offshore II DIS Aug-06 USD 12.000.000 Purchase of a 1983 built AHTS vessel with a 5 year BB charter to
a European Charterers
r Japan Offshore II DIS Sep-06 USD 39.075.000 Purchase of three AHTS vessels with 10 year BB charters back to back
y against a 10 year TC to Asian Charterers
/ NFC Offshore III DIS Oct-06 USD 42.046.000 Purchase of two newbuilding offshore supply vessels
M
Japan Offshore III DIS Oct-06 USD 47.340.000 Purchase of two offshore supply vessels with 10 year BB charters back
a
to back against a 10 year TC Asian Charterers
r
Oceanlink Offshore III DIS Oct-06 USD 28.500.000 Purchase of two 1983 built AHTS vessels with 5 year BB charters to
c
h European Charterers
Northern Offshore DIS Nov-06 USD 39.200.000 Purchase of two resale Anchor Handling Supply vessels
2 Agder Ocean Reefer II DIS Nov-06 USD 19.500.000 Purchase of two reefer vessels with 6 year BB charters to US charterers
0 Norwegian Chemical Oil DIS Nov-06 USD 32.890.000 Purchase of two Chemical tankers with 8 year BB charters to European
0 Charterers
7 Source: R.S. Platou Finans
Figure 8

72 Marine Money www.marinemoney.com

 Ness, Risan & Partners 2006 Shipping Deals
Project Name Equity Ship Price Uncalled Vessels Segment Lessee Comment
(USD) (USD) Capital
(USD)
Beta DIS 3,000,000 7,615,385 1,538,462 1 Offshore Buksèr & Berging AS
Eastern Reefer DIS 5,500,000 32,000,000 5,000,000 8 Reefer Boyang Group
E-Tanker DIS 3,150,000 20,000,000 3,700,000 1 Chemical E-Ship
Inter Carib II DIS 3,065,000 14,265,000 2,500,000 2 Bulk Inter Caribbean Maritime Ltd
NRP Fleetfinance III 23,076,923 18,461,538 Fund
Peg Chemical Carrier DIS 1,400,000 6,500,000 5,250,000 1 Chemical Bryggen, Shipping & Trading AS
Rem Forza DIS 14,769,231 64,000,000 10,000,000 1 Offshore Asset play
Rem Norway DIS 14,769,231 53,538,462 7,692,308 2 Offshore Asset play
Rem Odin DIS 11,076,923 47,000,000 6,923,077 1 Offshore Asset play
Rem Provider DIS 5,230,769 23,461,538 3,076,923 1 Offshore Asset play
Rem Songa DIS 14,461,538 63,692,308 10,000,000 1 Offshore Asset play
Ross Container II DIS 2,000,000 9,000,000 2,000,000 1 Container Oceanlink Ltd
Shipbond DIS 14,000,000 56,000,000 19,600,000 Bonds
Swetank II DIS 2,400,000 20,000,000 3,000,000 1 Chemical Svithoid AB
Swetank III DIS 1,750,000 11,500,000 2,250,000 1 Chemical Svithoid AB
Thor Dahl Containership III DIS 15,140,000 57,000,000 9,000,000 3 Container COSCON
Sum 2006 134,789,615 485,572,692 109,992,308 25
Source: Ness, Risan & Partners

suite of ships with Royal Bank
of Scotland in the past, this year
PacBasin circulated a sale/lease-
back on the 1995-built 27,860
dwt bulker Patagonia and the
1994-built 28,429 dwt bulker
Figure 9
Ocean Logger. The deals ended
up going to Danish K/S
Danskib 55 and K/S Danskib
54 for a total consideration of
$40.8 million with a charter
back for 3.5 years.
The sources and uses of
proceeds of this deal are typical
of why owners enter into such
transactions; about $8.2
million of the proceeds were
used to repay debt associated
with the vessels while about
$9.7 million was kept for
working capital. The remaining
$22.2 million will be used for
expansion as it is earmarked to
cover 40% of the purchase price

Pareto Private Equity 2006 Shipping Project Overview

Date Company Type Number of MUSD Years Charterparty Charterer Comments
Name Vessels
January BCT III Chemical 1 26.5 NA Pool Eitzen City Class New Project - syndicated in '06
F
Chemcial Pool
e
February BCT III Chemical 1 26.5 NA Pool Eitzen City Class New Project - syndicated in '07
b
Chemcial Pool
r
April OC I Container 2 73.2 5 BB UK Interests New Project - syndicated in '08
u
April PT III Tank 5 264.7 7 BB Top Tankers Inc. New Project - syndicated in '09
a
April BCT IV Chemical 1 26.5 NA Pool Eitzen City Class New Project - syndicated in '10
r
Chemcial Pool
y
November OC II Container 2 62.1 5 BB UK Interests New Project - syndicated in '11
/
November BD Offshore/Rig 1 56.0 1+3 TC Marathon/Statoil New Project - syndicated in '12
M
November AO Offshore/AHTS 4 65.3 10 BB Asian Interests New Project - syndicated in '13
a
December TO Offshore/MPSV 1 60.7 NA Asset play NA New Project - syndicated in '14
r
December M&C Offshore/Seismic 2 108.1 7 TC Wavefield Insesis ASA New Project - syndicated in '15
c
December ST Tank/Product 10 110.1 10 BB Asian Interests New Project - syndicated in '16
h
November BT Tank/Product 5 85.0 NA Asset play NA New Project - syndicated in '17
December TR VI Reefer 1 13.0 3 TC Eastwind sale of 100% of KS Shares
2
December CC Container 2 24.0 3 BB Schoeller sale of 100% of KS Shares
0
Total 35 1,001.7
0
Source: Pareto Private Equity
7
Figure 10

www.marinemoney.com Marine Money 73

 of the 2000-built 32,800
bulkers Aries Forest and Ocean
Melody.
Public
Companies
If leasing can be used create
valuation arbitrage, then it is no
surprise that public companies
played a large role in vessel
leasing activity. New players on
the scene include Danaos Hold-
ings, listed in New York, Pacific
Shipping Trust, listed in Singa-
pore, and Omega Navigation,
listed in both of those places.
These companies raised nearly
$1 billion of capital to be used
to provide tonnage to third
parties on a bareboat and a time
charter basis.
Danaos Lists –
KG Market Faces
Competition
In November, a deal that some
thought would further threaten
the near monopoly that the
German KG market has had on
providing operating lease
financing for the global
container industry, Danaos
Corporation’s IPO to raise
$205-$226 million through the
F sale of 10,250,000 shares at a
e target price range of $20-$22
b per share was completed.
r itself to be acutely interested in
u
The competition that exists
a
r between the KG houses and
y private owners surfaced in
/ public forums, such as the
M Marine Money’s Ship Finance
a Forum in Hamburg last
r
February, when Danaos CEO
c
h John Coustas playfully
remarked to owners including
2 Rickmers that he was a “real
0 shipowner because I have my
0 own money at risk,” as opposed
7
74 Marine Money
to German KG funds that are
simply promoters paid for
creating deals. Although
Danaos made it first invest-
ment in shipping in 1963, Dr.
Coustas took the company
from the rather humble fleet of
three multipurpose ships with
2,395 TEU in 1993 to a fleet of
27 ships with 116,115 TEU
today – a CAGR of about 35%
over a period of time that saw
both booms and busts. The
company has another 16 ships
and 84,704TEU on order that
will be financing through this
deal, implying a guaranteed
growth rate of 73%. It is today
a billion dollar company built
in 20 years. Serious, smart and
aggressive.
Capital
Resources
for Shipping
Like Ship Finance and Seaspan,
transactions such as Danaos
show these companies to be
capable of using their access to
public equity to serve as a
capital resource for the shipping
industry. AP Moller-Maersk in
October completed a sale and
five-year leaseback of four
containerships to Seaspan, at an
identical rate of $23,450 per
vessel per day and is showing
the combined availability of
capital and containership oper-
ating capabilities that both
Seaspan and Danaos have
demonstrated.
Seaspan announced that it had
agreed to acquire four vessels
for $160 million en bloc and
time charter them back to
Maersk for five years at
$24,450 per ship per day plus
four years of additional options.
Following the charters, Maersk
will have two consecutive one-
year options to re-charter each
ship for $22,400 per day for the
first year and $21,400 per day
for the second year with a
further option at $20,400 per
day for two additional years.
The thing that we found partic-
ularly exciting about this deal is
that it shows that container
lines, or at least Seaspan, are
able to locate and execute deals
that are accretive to earnings
and build shareholder value.
In March, Seaspan announced
the signing of a contract to
build four new 2500 TEU
vessels from Jiangsu Yangzijiang
Shipbuilding in China. This
order will bring the total
number of vessels in Seaspan’s
fleet to 29. The four new vessels
will be delivered between
September 2008 and March
2009 and will cost approxi-
mately $44.5 million per vessel.
In keeping with its strategy,
Seaspan simultaneously
announced twelve-year charter
arrangements for all four vessels
to China Shipping Container
Lines. CSCL Asia, a subsidiary
of CSCL, will pay Seaspan an
initial rate of $16,750 per day,
increasing to $16,900 per day
after six years. China Shipping
Container Lines is the world’s
sixth largest liner company.
In April we saw the role of
leasing, and earnings manage-
ment, in the specter of corpo-
rate M&A when BW Gas
acquire the 10 vessel ammonia
fleet of Yara International for
$347 million and then leased
the vessels back to Yara for an
www.marinemoney.com
average of 11 years. BW Gas
paid 8X 2008 EBITDA for the
10 year old fleet. For Yara, the
world’s leading player in the
ammonia business, the deal was
a way to lock in a gain and
move away from the non-core
business of ownership while
maintaining commercial
control over the vessels.
Risk Shifting
The most dramatic example of
the risk shifting potential of sale
and leasing back came in March
when Top Tankers sold 13
vessels to the Korea Maritime
Fund (KOMARF) and Norwe-
gian KS market for a total of
$550 million and took them
back on charters ranging from
5-7 years. Although many
owners use the proceeds from
sale/leasebacks and loan refi-
nancing as a tool to grow, Top
used it as way to shrink. Top
used $210 million of the $240
million of net proceeds to pay a
dividend of up to $7.50 on
each of its 29 million
outstanding shares – a yield of
about 50% for shareholders,
based on the price before the
announcement and a $25
million divvy for CEO Evan-
gelos Pistiolis-related Kingdom
Holdings.
There was also a dark side to
the financial engineering that is
so inseparable with leasing.
Just nine months after
announcing the sale and lease-
back of 13 vessels, Top Tankers
announced the resignation of
their auditors, Ernst & Young,
as a consequence of disagree-
ments over the accounting
treatment of the “seller’s credit”
related to that transaction.
 MPC 2006 KG Investments
Funds Ship Name Delivery Capacity Date of Equity Total Purchace Price (net)
TEU Placement Mio. Euro Mio. Euro
MS "RIO ARDECHE" (Containership)
MS "RIO ARDECHE" 11/06 2,490 14.02.2006 20.53 43.36
MPC "Offen Flotte" (Containerships)
MS "SANTA BALBINA" 10/06 2,824 31.03.2006 12.65 39.18
MS "SANTA BELINA" 11/06 2,824 31.03.2006 12.65 39.13
MS "SANTA BETTINA" 11/07 2,824 31.03.2006 12.65 39.18
MS "SANTA BIANCA" 02/08 2,824 31.03.2006 12.65 38.84
MS "SANTA BRUNELLA" 04/08 2,824 31.03.2006 12.65 38.84
MS "SAN ALBANO" 08/07 1,819 31.03.2006 12.65 34.55
MS "SAN ALBERTO" 09/07 1,819 31.03.2006 12.65 34.56
MS "SAN ALLESSANDRO" 11/07 1,819 31.03.2006 12.65 34.71
MS "SAN ALFONSO" 12/07 1,819 31.03.2006 12.65 34.67
MS "SAN ALFREDO" 12/07 1,819 31.03.2006 12.65 34.61
MS "SAN ALVARO" 01/08 1,819 31.03.2006 12.65 34.29
MS "SAN AMERIGO" 02/08 1,819 31.03.2006 12.65 34.35
MS "SAN ANDRES" 02/08 1,819 31.03.2006 12.65 34.32
MS "SAN ANTONIO" 03/08 1,819 31.03.2006 12.65 34.35
MPC "Reefer Flotte" (Reefers)
MS "Lombok Strait" 2002 626.011 cbft. 19.04.2006 10.27 32.78
MS "Luzon Strait" 2002 626.011 cbft. 19.04.2006 10.27 32.78
MS "Comores Stream" 2000 580.754 cbft. 19.04.2006 10.27 27.22
MS "Polarstream" 1999 564.280 cbft. 19.04.2006 10.27 26.80
MS "Polarlight" 1998 564.280 cbft. 19.04.2006 10.27 24.33
MS "Elsebeth" 1998 549.326 cbft. 19.04.2006 10.27 24.33
MS "Emerald" 2000 548.718 cbft. 19.04.2006 10.27 27.42
MS "Elvira" 2000 548.666 cbft. 19.04.2006 10.27 27.42
MS "Esmaralda" 1999 548.643 cbft. 19.04.2006 10.27 29.07
MS "Timor Stream" 1998 535.109 cbft. 19.04.2006 10.27 20.41
MS "Southern Bay" 1997 535.109 cbft. 19.04.2006 10.27 20.41
MS "Eastern Bay" 1997 533.898 cbft. 19.04.2006 10.27 26.60
MS "Santa Maria" 1999 463.963 cbft. 19.04.2006 10.27 25.16 F
e
MS "Santa Lucia" 1999 463.652 cbft. 19.04.2006 10.27 26.39
b
MT "Rio Genoa" (Tanker) r
MT "Rio Genoa" 10/07 179.000 m_ 04.09.2006 23.98 56.05 u
MPC "LPG Tanker Flotte" (LPG Tanker) a
MT "Auteuil" PP 2007 3.516 m_ 13.12.2006 2.06 6.60 r
MT "Deauville" PP 2007 3.516 m_ 13.12.2006 2.06 6.60 y
/
MT "Coniston" PP 2007 4.002 m_ 13.12.2006 2.06 6.60
M
MT "Cheltenham" PP 2007 3.208 m_ 13.12.2006 2.06 6.60 a
MT "Longchamp" PP 2007 3.206 m_ 13.12.2006 2.06 6.60 r
MT "Malvem" PP 2007 3.205 m_ 13.12.2006 2.06 6.60 c
MS "MERKUR SKY" II (via Austria) (Containership) h
MS "MERKUR SKY" II (via Austria) 09/97 08.11.2006 3.60 36.15
2
Total Shipfunds 381.35 1,051.84
0
Source: MPC Münchmeyer Petersen Capital Vermittlung GmbH 0
7
Figure 11

www.marinemoney.com Marine Money 75

 Liquidity in
“Seasoned” Deals
As primary markets develop, it
is not unusual to see secondary
markets develop as well, and
that is exactly what has been
happening in the world of
vessel leasing. In 2006 we saw
more examples of the trading of
so-called “seasoned”, or
existing, leasing deals. This is
not surprising and such transac-
tions comprise a cottage
industry in the mature leasing
markets where investors buy
and sell leases regularly. One of
the main reasons why financial
institutions sell performing
leases, or ones where the Fair
Market Value (FMV) purchase
option will be substantially in
excess of the balloon payment
due at the end of the lease, is to
“lock-in” their gain and use the
capital gain to produce desired
earnings. This action involved a
broad range of participants
from industry players trading
deals amongst themselves to
purely financial buyers with a
view on the future residual
values.
In June, US publicly traded
F equipment fund ICON Capital
e reemerged onto the shipping
b scene with a binge when it
r been an active investor for over
purchased from Oceanbulk
u
Maritime four product tankers:
a
r Spotless, Doubtless, Faithful
y and Vanguard, all of which are
/ on bareboat charters to Top
M Tankers with February 2011
a mately $93.3 million of non-
expiration.
r
c
h The four product tankers,
which were originally sold by
2 Top Tankers in a deal arranged
0 by Fortis this past March, were
0 edness in favor of ZIM Inte-
financed in part through a loan
7
76 Marine Money
agreement between ICON
Fund Eleven and Fortis that
provides for an $80 million
non-recourse term loan
maturing in June 2011 secured
by a first priority mortgage of
the vessels. ICON also assumed
$10 million of non-recourse
indebtedness secured by a
second priority mortgage over
the vessels in favor of the char-
terer. The remaining $22.7
million of the purchase price
will be paid in cash, reflecting
an equity contribution of
around 20%.
Shortly thereafter, ICON
acquired all of the issued and
outstanding shares of European
Container AS and European
Container II AS, as well as
limited partnership interests in
European Container II KS,
resulting in the acquisition of
four container vessels: ZIM
Japan, ZIM America, ZIM
Israel and ZIM Hong Kong.
These are currently subject to
bareboat charters with ZIM
Integrated Shipping Services
that expire in November 2010
and February 2011. These four
vessels are sister ships to three
containerships another ICON
fund took from ZIM in 2004
for $71 million.
By acquiring the shares in the
KS company, rather than the
assets themselves, ICON was
able to leave the charters in
place and assume approxi-
recourse indebtedness secured
by a first and second priority
mortgage in favor of HSH
Nordbank, approximately $12
million of non-recourse indebt-
grated Shipping Services, and a
circa 25% equity contribution
of $35.9 million in cash. Other
maritime investments of ICON
currently include the above-
mentioned ZIM containerships
as well as three car-carriers
purchased from Wallenius
Wilhelmsen for $75.6 million.
Cypress Leasing
Cypress Financial Corporation,
which has historically been
involved in a number of Jones
Act transactions, identified the
foreign flag vessel market as a
growth opportunity in 2006
and made their move into the
business in the fourth quarter
when they bought all the shares
of a KS company that owned
two feeder container vessels: the
M/V IBN Battotah and the
M/V Cape Arago. The vessels
were built in Germany in 1993
and 1992 respectively and have
a nominal cargo capacity of
1,066 TEU.
The investors in Cape
Container KS originated the
transaction in the first quarter
of 2004, having entered into a
sale-leaseback transaction with
Schoeller Holdings Ltd who
agreed to bareboat charter them
back for five years. Cypress has
20 years and manages 14 equip-
ment leasing funds that invest
in multiple transportation,
industrial and energy asset
classes, including shipping
investments. Key to its invest-
ment profile is structural flexi-
bility and a willingness to look
at complex transactions. Specif-
ically, they manage pools of
individual investors' capital
whose requirements are flexible.
www.marinemoney.com
For example, they are indif-
ferent to book earnings and
current income. This makes
possible highly leveraged trans-
actions, including call option
transactions, whose returns are
residual dependent.
It wasn’t just financial engineers
that bought and sold deals in
2006. A R.S. Platou Finans
formed fund controlled by the
NFC Fund ordered four PSVs
with options for four more for
delivery in 2008-9. Within four
months of the date of acquisi-
tion of the contracts, this
company sold the contracts for
the vessels to a German KG
controlled by a publicly traded
Emissionshaus, HCI, Peter
Dohle and a Greek shipowner,
Basil Papachristidis. The KS
earned a profit of approxi-
mately $15 million in that
short period while retaining
control of the optioned vessels.
The KG, in turn, fixed the
vessels on 10-year charters, also
doing a good deal.
And the grand master of ship-
ping deals, John Fredriksen
paid Torben Jensen $38 million
in cash to take over the Clipper
Group’s bareboat agreement on
five panamax bulkers currently
owned by an unnamed third
party. Fredriksen’s Golden
Ocean will pay to the third
party an aggregate bareboat hire
of $28,000/day for the five
vessels for a 5-year term. At the
end of the term Golden Ocean
will have the option to purchase
the vessels at $6.4 million each
from the third party.
The Winner: Ship Finance
International for Horizon Lines

When market rumors of this
deal came across our desk in
March, the first thing we did
was scratch our heads and say,
“huh?”
An international tanker
financing vehicle, Ship Finance
International, had apparently
acquired five Korean
newbuilding containership
resales from Germans, Rick-
mers, and Greeks, Tsakos, and
put them on 12 year bareboat
charters with a three year exten-
sion at charters’ option, to a
Jones Act operator, Horizon
Lines.
Que va? We wondered. But as
we peeled back the onion, what
emerged was what we think
makes our marketplace so beau-
tiful – ideal transaction partners
are not always obvious and with
creativity and a keen under-
standing of what the various
players are trying to achieve,
financiers can put together
deals that are both economi-
cally sensible, but also really
interesting. Although everyone
may “know everyone” in inter-
national ship finance, there are
www.marinemoney.com
Figure 12
an exponential number of ways
the pieces can be put together
and the winner of this year’s
Deal of the Year Award in the
leasing category exemplifies
that.
The framework of this deal
began to come together in late
2005 when Horizon Lines was
out in the market looking to
expand and rejuvenate its
controlled fleet to upgrade its
services. As readers may recall,
Horizon Lines had to chop its
2005 IPO in half due to slack
demand, so its no surprise that
the company turned to the
leasing market. Horizon hired
Jones Act finance guru Martin
Gottlieb of the San Francisco-
based Argent Group as an
advisor, and he set to work
putting together an auction
process for the financing of the
desired vessels. AMA was
brought in to help source the
equity with the help of Peter
Shaerf, with his containership
background, and Paul Leand,
who sits on the board of Ship
Finance International. AMA
quickly drew up a list of poten-
tials that included SFL, Seaspan
(which just narrowly missed
winning the deal), GATX, and
AIG, with First Ship Lease and
Northern Navigation also as
potentials. Fortis provided the
debt on the deal.
The timing proved ideal for
SFL, which had recently
announced the purchase and
30-year lease back of the
drilling rig Safe Concordia to
Consafe Offshore and was keen
to let the market know that it
could buy more than
Fredriksen assets and it could
buy more than oil tankers.
Why We
Picked It
The criteria for all of the
Marine Money Deal of the Year
Awards is the same – recognize
deals that, through the excep-
tional work of financial advi-
sors, deliver superior results to
the clients and this deal was a
pure winner for Horizon. First
of all, it allowed the company
to bring down the average age
of its 29-year-old fleet by a
third – and do it without the
use of cash equity. Having been
forced to cut its 2005 IPO by
about 50%, there was not a lot
of cash in the kitty for this
single B credit to fund fleet
renewal. Of the deal, the CEO
Chuck Raymond said,
“"Horizon Lines is focused on
using capital efficient methods
to enhance our service capabili-
ties in our Jones Act markets
while at the same time
upgrading our service to Guam
and Asia with assets that are
more appropriate for those
trades. This initiative is consis-
tent with our tested strategy of
obtaining new tonnage at
appropriate costs for the trades
we serve.”
What Mr. Raymond is referring
to is the cascading effect that
this deal has on the entire busi-
ness. As the newly leased
newbuildings move into the US
flag/non-Jones Act Guam
Trade, which should also
involve a profitable return
voyage from Asia under charter
with Maersk, the Jones Act
vessels currently in that trade
will be able to shift onto
Horizon’s other Jones Act
routes, allowing the company
to either improve service on
these routes, retire older vessels, F
or more likely some combina- e
tion of the two. If all goes as b
hoped, Goldman Sachs analyst r
u
Jon Shapiro said at the time
a
that he expected the ships could r
add 10-15% to the company’s y
current EBITDA level (fore- /
casted at $160.9 million for M
2006E) - and Figure 12 indi- a
r
cates that the stock market, the
c
ultimate arbiter of whether a h
deal is good or bade – demon-
strated strong approval. 2
0
0
7
Marine Money 77
 Selected 2006 Lease Transactions

Lessee Lessor(s)/Advisor(s) Amount (US$ M) Structure / Pricing / Comments Month

OOIL HSH Nordbank $480.0 Sale and leaseback of 8 x containerships to SPCs funded by Dec-06
OOIL, HSH, ING
Schoeller Holdings Cypress Financial Not disclosed Purchase of Cape Container KS, which owns 2 x early Dec-06
1990s vessels of 1,066 TEU
Norient Product Pool Marenave Schiffharts AG $47.5 Purchase of 2005 37,300 dwt product and chemicals tanker Dec-06
from Interorient Navigation w/ continued pool deployment
Marine Logistics Alislami Oceanic Shipping $48.0 Construction finance and 7-yr lease of 2 x DP2 AHTS Nov-06
Solutions (Marsol) Company II Limited (managed vessels for delivery in 2008
by Tufton Oceanic)
Geden Lines Alislami Oceanic Shipping $66.0 Sale and 7-yr leaseback of newbuilding capesize bulk carrier Nov-06
Company II Limited (managed
by Tufton Oceanic)
Clipper Group Lloyd Fond KG $100.0 4 x 1996-98 built handysize bulk carriers Nov-06
Westfal-Larsen DnB NOR Markets $293.0 Largest KS deal ever on 2 x product tankers, 2 x product Nov-06
tanker newbuildings, and 2 x chemical tankers
AP Moller-Maersk Danaos Corporation $126.5 Nov-06
AET (MISC) ABG Sundal Collier KS funds $165.0 Sale and 7-yr bareboat back of 4 x 90s-blt double hull Nov-06
aframax tankers at $15,000 per ship per day
AET (MISC) Polar Marine $20.0 Sale and 3-yr TC back Nov-06
MC Shipping MPC Capital KG $52.0 Sale and 4-year leaseback of 6 x LPG carriers Nov-06
Allocean Pareto $61.0 Sale and 5-yr bareboat back of 2 x 1999-blt 1,733 teu Oct-06
container vessels at $9,650
HMM Dr. Peters $190.0 Sale and charter back of 2 x 1997-blt 301,000 dwt tankers Oct-06
Euronav Danish $86.0 Sale of 290,927 dwt 1993-blt tanker with 5-yr bareboat Oct-06
back and repurchase options
Naftotrade Group NFC / Eurofin $60.0 Sale & Leaseback of 4 x specialised cement carrier vessels Oct-06
F (advisor to Naftotrade)
e Maersk Seaspan $160.0 Sale and 5-yr leaseback of 4 x 4,800 TEU vessels at Oct-06
b
r $23,450 per vessel per day
u ESL Shipping SEB Leasing $32.0 1 x 18,800 bulker to be delivered 2008 w/ Sep-06
a 10-yr bareboat back
r
y Pacific Basin K/S Danskib 55 & 54 $40.8 Sale and 3.5-year charterback on 2 x 90s built handysize Sep-06
/ bulk carriers
M CMA CGM KG $102.0 Sale of 8,200 TEU newbuilding with 9-year TC at $35,000 Aug-06
a
r Roxana Shipping Union Marine Finance $130.8 3 x 35,000 dwt modern product tankers w/ bareboat Aug-06
c (Berghshav) back at $13,250/day
h Seatrans RS Platou Finans KS $41.0 3 x 4,700-5,800 dwt stainless steel chemical carriers on Aug-06

2 3-5 year bareboat back at E3,500-E4,550 per day

0
0
7

78 Marine Money www.marinemoney.com

 Selected 2006 Lease Transactions continued

Lessee Lessor(s)/Advisor(s) Amount (US$ M) Structure / Pricing / Comments Month

Pacific Star Dr. Peters $115.3 Sale and 11.4-yr leaseback of 305,000 dwt VLCC to Aug-06
Ghandour co at circa $49,480 per day
Mitsui OSK Lines Seaspan $334.0 Sale and 12-yr leaseback at $28,880/day of 4 x 5,100 teu Aug-06
ships to be delivered in 2009
Berlian Laju Tankers First Ship Lease $45.0 12-year sale/leaseback of 19,900 dwt Jul-06
chemical tanker newbuilding
Ezra Holdings Navigation Finance Corp $181.3 Sale/leaseback of 7 x anchor-handling supply ships and Jul-06
2 x anchor-handling tugs
Seadrill Ship Finance International $210.0 15-yr sale/leaseback of jack-up rig w/ annual lease payments Jul-06
ranging from $14.9m-$41.1m
Golden Ocean Group Ship Finance International $28.4 GOGL purchase of 1997 panamax w/ simultaneous sale to Jul-06
SFL & 10-yr bareboat back at $8,250-$10,000/day w/
$10.4m/$12.5m put/call option
Golden Ocean Group NFC $30.0 10-year lease w/ bareboat back at $9,300 day of 1999-blt Jun-06
panamax and put/call options at $12.2m/$14.2m
ZIM ICON Capital $141.2 4 x containerships purchased from Old course Investors Jun-06
with bareboat to ZIM until 2010-2011
Top Tankers ICON Capital $112.7 4 x product tankers purchased from Oceanbulk on Jun-06
bareboat to Top until 2011
Cosmos Shipping Fearnley Finans $22.5 2 x 25-year-old handymax bulkers purchased from Jun-06
Panker Maritime on bareboat for 4.5 years at $8,300
Berlian Laju Tankers First Ship Lease $90.0 2 x 19,900 dwt chemical tanker newbuildings + Jun-06
20 x stainless steel containers w/ 12-year charterback
Perseveranza di V. Ships $32.0 Rumor; 1 x 40,000 dwt products tanker w/ 7-yr bareboat May-06
Navigazione back at $10,750
Evergreen Technomar $98.0 2 x 4,229 TEU containerships with 10-year May-06
bareboat back at $16,100 F
Horizon Lines Ship Finance International as $280.0 5 x US flag 2800 TEU container newbuildings on Mar-06 e
b
lessor; AMA as advisors 12-year charter
r
OMI $89.0 Sale and bareboat back of 2 x 2003 panamax product tankers Mar-06 u
Top Tankers Fortis as arrangers, Circa $300.0 5-year sale and bareboat back of 4 x suezmaxes and Mar-06 a
r
KOMARF as buyers 4 x product tankers
y
Top Tankers Pareto Circa $250.0 7-year sale and bareboat back of 5 x 1990s suezmaxes Mar-06 /
Torvald Klaveness Ness, Risan & Partners $20.0 Sale & 8-year bareboat charterback of 8,600 dwt Mar-06 M
a
as manager chemical tanker at $6,500/day
r
Zodiac Dr. Peters $400.0 5 containerships; 5.5 years t/c back at $30,750 Feb-06 c
Consafe Offshore Ship Finance International $185.0 Sale & 30-year leaseback of rig "Safe Concordia" Jan-06 h
w/ profit sharing options - WITHDRAWN
2
Nanjing Tanker Corp Great Eastern Shipping $134.0 Sale & charterback of 2 x aframaxes at $24,500/day Jan-06 0
0
7

www.marinemoney.com Marine Money 79

 I can get it for you wholesale -
Award for Innovation
here is no limit to the
T creativity of people in this
industry. From the time when
bilaterals ruled to today’s
emphasis on capital markets,
there is seemingly an endless
toolbox of financial structures
to provide capital to the
industry. It was therefore very
difficult to choose a transaction
that epitomized the concept of
innovation or, by definition, a
new idea, method or device.
Nonetheless, our attention was
drawn to Germany, which
historically was able to deliver
what appeared to be infinite
amounts of equity to the KG
system with or without tax
benefits.
In the orderly world of
Germany, competitive forces
have wrought change in one of
the most successful ship
financing models extant.
Pressed to compete effectively
with the leasing companies or
F operating lessors such as
e Seaspan and Danaos, the KG
b market had to find a way to
r reduce the front-end sales costs
u
that burdened their transac-
a
r tions. Even the low equity
y return requirement could not
/ offset the impact of the higher
M capitalized cost on cash flow
a resulting in less attractive
r
returns. To combat this
c
h problem, new asset classes,
including reefers and OSVs,
2 that were less price sensitive
0 were considered. A focus on
0 newbuildings helped by mini-
7
80 Marine Money
mizing maintenance require-
ments in the early years.
Utilizing unhedged yen
financing for part of the debt
also kept expenses down
thereby allowing more cash to
flow to investors. However,
these were mere band-aids on
the problem. The solution was
to attract a new type of investor
at a lower cost, hence the need
for an innovative solution.
Institutions were an obvious
target, but there were barriers to
their investment in this
industry.
König & Cie. and Lloyd Fonds
approached the problem in
different ways and, in response,
created respectively Marenave
Schiffahrts AG (“Marenave”)
and LP Open Waters OP
(“Open Waters”). Both have
targeted institutional investors
with products that provide an
option to invest in what Lloyd
Fonds terms “floating growth
companies” as well as a means
to diversify their portfolios
from a risk perspective. It was
also a means for the KG spon-
sors to tap into the extraordi-
nary liquidity in the market-
place. Both transactions are
truly innovative, but one, in
our mind, broke more new
ground taking the award by the
slightest of margins.
The sponsors’ key focus was on
developing an attractive ship-
ping investment vehicle for
institutions. The two key
requirements for institutions
are an ability to get in and out
of the investment on a daily
basis and an ability to evaluate
the investment also on a daily
basis. In the historic KG model,
the projects were long-term and
an investor’s capital was tied up
for its duration, although a
secondary market has recently
developed creating some
liquidity in the shares. In addi-
tion, once the investment was
made it was impossible to value
it. The answer clearly lies in the
public markets.
Marenave
Together with HSH Nordbank
and HSH Gudme Corporate
Finance, König & Cie. created
and sold Marenave, which is
the first listed ship investment
company in Germany. Shares of
Marenave trade on the
Hamburg Stock Exchange.
With the stated purpose being
the acquisition and develop-
ment of a ship portfolio
through limited shipping part-
nerships, König raised Euro150
million, against an original
target of Euro 250 million, in
equity through the sale of
shares to various institutions.
Although in certain respects
similar to the typical KG
project, the business model
resembles a SPAC (i.e. blind
pool) with definition and
provides for the acquisition and
operation of oceangoing vessels,
which will be chartered out to
other shipping companies. Like
www.marinemoney.com
traditional KG funds, Mare-
nave will take advantage of the
tonnage tax scheme. Initially,
they intend to focus on
container ships of 2,700 TEU
as well as panamax and suezmax
tankers. Although its initial
acquisitions were two MR
product carriers, it subse-
quently acquired two LR2
product tankers.
Open Waters
Combining worldwide ship-
ping and banking expertise,
Lloyd Fonds AG together with
Oppenheim Pramerica formed
the first open-ended shipping
fund in the world called LF
Open Waters OP (“Open
Waters”) at the end of last year.
Resident in Luxemburg, Open
Waters takes the form of a
Société d’Investissement à
Capital Variable (“SICAV”), a
structure which makes the fund
open-ended and allows the
return of shares to the fund to
allow investors to realize their
gains. With a SICAV, the
purchase and redemption of
shares leads to a “breathing”
equity or a “constant IPO”
structure, which means that the
equity accounts will increase or
decrease depending on the net
trading activity. In short, the
fund is fully flexible and
designed for day-to-day
trading. To accommodate the
structure and to service any
major share redemptions, the
fund will keep a liquidity
reserve of 20 % relating to its
 "CIC advertised here in the hard copy this month and

reached the most influential readers of our industry, why don't you? Interested?

Please contact info@marinemoney.com, for more information!"

 equity, either by means of
liquid assets or an unclaimed
debt facility.
Although the fund is being
marketed to both individual
and institutional investors, the
sponsors’ key focus was on
developing an attractive ship-
ping investment vehicle for
institutional investors. As
mentioned previously, the two
key requirements for institu-
tions are liquidity and daily
pricing. In the KG model, for
example, the projects are long-
term and usually an investor’s
capital is tied up for its duration
although a growing secondary
market has recently developed
creating more liquidity in the
shares. In addition, once the
investment is made, there is no
method to value it.
Open Waters meets these two
requirements through its
SICAV structure and the calcu-
lation of a daily price. The latter
is not a ”market price” but is
instead calculated daily in
accordance with the fund’s
NAV by using a valuation
method that combines the
F vessels’ market value with a
e DCF-calculation. The latter
b imputes value to charter
r employment for time-chartered
u
vessels as well as future market
a
r prospects. Unlike most stocks,
y Open Waters’ shares cannot
/ trade below NAV. The fund
M does not pay dividends but
a retains profits instead like a
r
growth company. From a cost
c
h perspective, the fund charges
no upfront soft costs making it
2 a competitive investment solu-
0 tion. All in all, for institutional
0 investors, Open Waters opens
7
82 Marine Money
up the opportunity to invest in
the shipping markets with the
prospect of excellent returns as
well as a means of diversifying
their portfolios from a risk
perspective.
The fund is aiming for a widely
diversified shipping portfolio
by investing in ships of varying
sizes and classes. The preferred
investments are mid-sized
container vessels, bulkcarriers
and tankers. Unlike any other
fund, Open Waters follows an
asset play strategy. Reflecting
one of the original concepts of
shipping in which owners earn
more from buying and selling
rather than from trading
vessels, the fund’s explicit
strategy is to sell ships after
holding them for some three to
four years. As a consequence,
active fund management and
the allocation of profitable
investments are essential to the
success of the fund. Lloyd
Fonds AG in its role as invest-
ment advisors to the fund
provides investment consulta-
tion services accordingly.
Structurally, Open Waters is a
holding company domiciled in
Luxemburg. It, in turn, owns
the single purpose ship owning
companies in Singapore where
technical and commercial oper-
ations are based. The Singapore
location optimizes taxes for the
investors in the fund through
tax exemption of the single
purpose ship owning compa-
nies. The holding company is a
self managed SICAV with
Lloyd Fonds AG being the
fund’s investment advisors and
the corporate work overseen by
Oppenheim Pramerica Asset
Management S.a.r.l. A Lloyd
Fonds AG subsidiary, Lloyd
Fonds Singapore Pte Ltd,
handles commercial and tech-
nical management of the
vessels, which also distinguishes
this product from the standard
KG fund, which is required to
use ship management based in
Germany.
For investment purposes the
fund has agreed a debt facility
with HSH Nordbank of up to
50 % of the total investment
volume.
Open Waters’ first acquisition
were 4 x 29,500 DWT open-
hatch, box-shaped conbulkers,
the so-called Clipper Fantasy
class, which are presently time-
chartered to third parties on
periods ranging from six
months to three years.
And the
Winner…
The winner by a nose is Open
Waters. Although both Mare-
nave and Open Waters met the
institutions need for liquidity
and pricing, Open Waters
accomplished it with an inno-
vative structure and an unusual
pricing methodology while
broadening the potential
investor base beyond Germany.
Through a direct investment in
the vessels rather than in a KG,
Open Waters is able to value
the vessels directly based upon
NAV and discounted cash flow.
In effect, it takes market senti-
ment out of the equation for
better or worse. And finally
given its asset play strategy a
shareholder benefits from the
trading side of the shipping
investment equation.
www.marinemoney.com
We have provided further
details of these transaction in
the comparative “Guts of the
Deals” as shown in Figure 1.
We congratulate both Mare-
nave and Open Waters for their
respective creative solutions to a
vexing problem. As these
companies grow, the landscape
of German financing should
broaden further extending the
life of this market.
Teekay Offshore
However, we would be utterly
remiss if we did not give a very
strong honorable mention to
Teekay Offshore Partner L.P.
(“TOO”) led by Citigroup and
Merrill Lynch for the innova-
tive structure that opened up
MLPs to institutional buyers
thereby expanding the investor
pool. Like the KG, the MLP is
largely a retail product. The
MLP is particularly attractive in
these frothy markets given the
long-term contracted revenues
with full distribution of cash to
shareholders. Unfortunately,
given the fact that these are
partnerships, the income is
taxable to the shareholder, who
receives a K-1 form, which is
filed with his individual return.
Institutions were not willing to
deal with K-1s and hence
would, generally, not consider
investing in these vehicles. This
is where the ingenious invest-
ment bankers stepped in.
Instead of being a partnership
for both legal and tax purposes,
TOO chose to be a partnership
for legal purposes and a “C”
corporation (taxed at the corpo-
rate level) for tax purposes. So,
instead of getting a K-1,
investors receive a Form 1099,
 Guts of the Deal
Marenave Schiffahrts AG LF Open Waters OP
Number of Shares Up to 250,000 Unlimited (breathing equity)
Maximum Offering Price € 1,000 Net Asset Value
Deal Size € 250,000,000 Unlimited
Number of Vessels First Investments: Two MR and two First Investments: Four Second-Hand Open-Hatch,
LR2 product carriers Box-Shaped Conbulkers acquired, more vessels to follow.
Average Age of Fleet TBD Generally not older then 15 years at the
time of acquisition.
Dividend Policy Annual. Determined by Supervisory Board Profits to be retained
Management Company Konig & Cie. Self managed SICAV / Adviser: Lloyd Fonds AG /
Ship Management by Lloyd Fonds Singapore
Credit Facility 50 % of investments will be provided as
credit via the bank
Commercial Banks HSH Nordbank HSH Nordbank and/or others
Primary Shares All Two classes: institutional + retail
Secondary Shares None None
Selling Shareholder Konig & Cie. n/a
% Retained 0.40% n/a
Use of Proceeds Acquisition and development of a ship portfolio Acquisition and development of a ship portfolio through
through limited shipping partnerships. Initial focus limited partnerships, second hand tonnage of all segments
will be on container ships (2,700 teu) & tankers of the shipping market.
(Panamax & Suezmax)
Annual EBITDA $80,000,000 TBD
Investment Banks HSH Nordbank, HSH Gudme Corporate Finance, Sal. Oppenheim Luxemburg
Konig & Cie.
Accountants Ernst & Young AG Ernst & Young AG
Incorporation Germany SICAV in Luxemburg, limited partnerships in Singapore
Industry Information Prof. Dr. Berthold Volk & Clarksons Research Clarksons Research, R.S. Platou Shipbrokers a.s,
Maersk Broker
Exchange Hamburg Stock Exchange n/a
Ticker M5S n/a

which reports dividends paid
and is much easier to deal with.
In fact, as a consequence, the
increased institutional share of
the offering was 12 times over-
subscribed.
In addition, the transaction
incorporates for the first time a
“drop-down” structure, which
gives investors the opportunity
to increase their investment.
Currently, the MLP and TK
Figure 1
F
e
own 26% and 74% respectively in utilizing the MLP structure Although creative, we did not b
of “OPCO” which owns all the to develop a niche business and believe that the impact was as r
u
assets. TK has agreed to offer then sell it to investors while significant to the market as the
a
exclusively to TOO holders the retaining a significant interest German transaction, but r
74% it owns accretively over and upside as well as shifting nonetheless it is certainly note- y
time enabling them to increase the risk. It will likely be a more worthy today and the future /
their investment up to three important vehicle for shifting beckons. We congratulate all M
times. risk in the future and it would involved. a
r
be no surprise, for example, to
c
Together these changes may find these same bankers selling h
pave the way for greater utiliza- the concept to Morten Arntzen
tion of the MLP structure in at OSG for his post-Maritrans 2
the future. TK has led the way US fleet. 0
0
7

www.marinemoney.com Marine Money 83

 Editor’s Choice: Nakilat
Brings Back Project Finance
n 1997, when the Govern- and QFLEX sized vessels to be has entered into construction year Treasury, which was only 8
I
ment of Qatar established built at Daewoo, Hyundai and contracts. The total size of the basis points wide of the
Qatar Gas Transport Corp. to Samsung and delivered between financing was approximately RasGasII/3 2027 bonds,
coordinate all of the transporta- 2008 and 2010. Nakilat then $4.7 billion, consisting of (i) despite an increase of four years
tion requirements for Qatar entered into fixed priced, date $850 million of Senior Bonds in the average life of the bonds
Petroleum, it was clear that certain shipbuilding contracts and $300 million of subordi- relative to RasGasII/3 and
there was going to be a mother with these shipyards backed by nated bonds with a 27 year final being a new issue. The bonds
lode of financing and transac- refund guarantees provided by maturity sold in a 144A tightened only 3 basis points on
tional activity associated with Korean Government supported offering (24% of total the break, demonstrating near
the project – about $68 billion’s banks KEXIM and KDB. financing); (ii) $2.4 billion perfect pricing of the offering;
worth between QP and its part- Simultaneous with signing the bank facility with a final matu- (iii) the Subordinated Bonds,
ners at ExxonMobil and Cono- construction contract, Nakilat rity of 19 years (51%); (iii) which were rated A1/A-/A-,
coPhillips as they sought to entered into back-to-back 25- $725 million of Korean Export were priced only 20 basis points
produce $15 billion per year in year timecharter contracts with Credit Agency financing wide of the Senior Bonds,
revenue by 2010 by developing the Qatargas LNG trains. provided by KEXIM and KEIC which is the tightest spread ever
a 77 MTA LNG supply chain. (15%); and (iv) $474 million of for a Senior / Subordinated
When QGTC then formed a The financing involved here is equity (10%). All of the Senior bond project finance deal.
100% subsidiary called Nakilat one of the most complex we Debt is pari passu.
to undertake the construction, have ever seen, comprising a Barclays Capital, BNP Paribas,
ownership and operation of up collection of senior bonds, There were loads of interesting DnB NOR, and Gulf Interna-
to 27 state of the art junior bonds and export credit. features about every tranche of tional Bank worked as
newbuilding LNG vessels the The $4.7 billion financing, this massive project/ship bookrunners on the $2,615
deals were close at hand. completed in December 2006, financing. First off, kudos go to million commercial tranche.
will be used to fund the Lehman Brothers who acted as Export credit agencies KEIC
As the first step in this process, construction of the first 16 Nakilat's sole Ratings Agency and KEXIM together provided
QG ordered a series of QMAX LNG vessels for which Nakilat advisor and Joint-Bookrunner around $725 million in addi-
Left / Deal Quarterback for the tional debt.
Nakilat Inc. Bond Offering. Lehman helped
F Nakilat successfully land a Features
Purchaser’s guarantee Deeds of guarantee
e Qatar Gas Transport Aa3/A+ rating (the highest There are a variety of reasons in
b Co. Ltd. (parent)
possible rating based on Qatar’s addition to its sheer size that we
r Qatar Gas Transportation Co. Ltd.
Undertaking and subordination agreement
STASCO
sovereign rating) from Moody’s considered this transaction
(international
u manager)
and S&P despite the high worthy of our Editor’s Choice
a Master services
Master services agreement
r
Finance
Nakilat Inc. agreement leverage and limited recourse by award. For one thing its
parties
y (issuer) Qatar Gas
positioning the company as a complex structure alone defies
/ Transport Co. Ltd. critical component of QP and categorization. The deal repre-
intercompany loan (shipping com-
M agreement pany manager) the State of Qatar's efforts to sents the first time in the
Refund
a Refund guarantors Vessel owners
develop its 77 mta LNG history of LNG shipping a
guarantors (subsidiary
r guarantors) Vessel-management
agreements program, rather than a tradi- where program approach has
c
h tional shipping company. This been employed to finance the
Shipping Contracts Time Charterers always helps pricing. acquisition of vessels as
2 opposed to debt being raised on
Shipbuilders Charterers
0 As for the bonds, they priced at a vessel- by-vessel basis. This is
0 145 basis points above the 30- also the first LNG shipping
7
Figure 1

84 Marine Money www.marinemoney.com

transaction of which we are
aware to integrate debt from
commercial banks, ECAs and
capital markets – together
comprising 90% of the project
cost with a tenor of up to 27
years. Eighty percent of the
debt is senior. The transaction
also marks the first instance of
an LNG shipping transaction
having raised funding from the
bond market. Figure 1 shows
how Nakilat’s structure works.
Needless to say, the successful
closure of a deal like this
requires a host of committed
and talented bankers and advi-
sors. SMBC served as overall
financial advisors, while Credit
Suisse First Boston and Lehman
Brothers led the bond issue.
Barclays Capital, BNP Paribas,
DnB NOR and Gulf Interna-
tional Bank worked as
bookrunners on the commer-
cial debt tranche, and KEIC
and KEXIM provided export
credit. Latham & Watkins
advised the sponsor on legal
matters while Skadden, Arps,
Slate, Meagher & Flom advised
the lender. Independent
consultants on the deal
included Lloyd’s Register
EMEA, Drewery Shipping
Consultants, Marsh Ltd, and
Stone & Webster Consultants.

Dealmaker of the Year:

Axel Eitzen
S ince the day Camillo
Eitzen (CECO) went
public in Oslo in 2004 after its
split from Tschudi & Eitzen,
Axel Eitzen’s aspirations to be a
consolidator were on the table.
Raising just $40 million in its
IPO, his multi-sector operator
quickly began to use its shares
as currency in the acquisitions
of Naviera Quimica and a
holding in Sigloo Gas. Not
afraid to start small, Axel Eitzen
has grown the company steadily
over the past few years with a
host of acquisitions as can be
seen in Figure 1.
The company also did not
strictly limit itself by sector,
having listed with a bulk fleet
Mr. Eitzen went on to acquire
anything from gas and chemical
tankers to an insurance broker.
By 2006 he had built up a
formidable operation and could
afford to think bigger. In
January he moved to acquire
the remaining 50% of the
Sigloo Gas KS for $100
million. Then he began to hone
in on the chemical tanker
segment, an important growth
area in advance of the revisions
to MARPOL Annex II and the
IBC Code that would come
into effect on January 1, 2007.
In the spring Camillo Eitzen
signed a letter of intent for the
$276 million acquisition of
French chemical tanker
company Fouquet Sacop. The
modern fleet included 12
chemical tankers ranging in size
from 3,900 to 19,000 DWT
with an average age of just 2.5
years. The transaction, executed
with the help of AMA Capital
Partners, brought CECO’s
owned or controlled chemical
fleet to 37 vessels and spurred
rumors of a pending chemical
tanker IPO. Had Mr. Eitzen
chosen to go down this path in
the spring, it most likely would

Camillo Eitzen's Exponential Growth F

e
2003 Camillo Eitzen & Co AS is re-established following the de-merger of Tschudi & Eitzen Holding AS b
2004 Purchase of Bergesen's Igloo gas fleet and establishment of Sigloo Gas KS r
Camillo Eitzen & CO ASA lists on the Oslo Stock Exchange u
Acquisition of Naveale Francaise SA in France a
Acquisition of Naviera Quimica SA r
y
2005 Acquisition of Gibson Gas Tankers Ltd in Scotland
/
Acquisition of remaining 50% of TESMA AS M
Purchase of Polaris Insurance Brokers AS in Oslo a
Acquisition of remaining 49.25% of Sigloo Gas KS r
2006 Establishment of Eitzen Maritime Services ASA (EMS) through reversed takeover of Stromme ASA c
Acquisition of Fouqet Sacop in France h
Acquisition of remaining 50% of Sigas Kosan A/S in Denmark
2
Acquisition of Songa Shipholding 0
Formation of Eitzen Chemical and listing on Oslo Stock Exchange 0
Source: Company website 7
Figure 1

www.marinemoney.com Marine Money 85

 The Eitzen Group
Eitzen Bulk
Eitzen Gas
Eitzen OBO
Eitzen Tank
80.9%
Eitzen Maritime Services ASA
100%
TESMA
Stromme
Polaris
Source: Company Website
have been a very good deal,
unlocking value from shares
trading at a discount to NAV.
But he was not content with
that.
In August, CECO announced
an acquisition that would
nearly double the size of its
owned or controlled chemical
fleet (including newbuildings)
by taking control of Arne
Blystad-controlled Songa
Shipholding AS for a price of
$1,280 million. The fleet
included 49 chemical tanker
F vessels and newbuilding
e contracts, ranging from 8,750
b dwt to 40,000 dwt. It also
r included Songa’s commercial
u Shipholding. This facility
and technical operations, with
a
r offices in Glasgow and West-
y port, CT. Carnegie and Pareto
/ Securities acted as advisors to
M CECO, while Nordea Corpo-
a rate Finance acted as advisor to
r capital structure ahead of being
the owners of Songa.
c
h Shortly after the new company
Analysts at ABG Sundal Collier
2 estimated that at that time
0 Camillo Eitzen’s chemical fleet
0 was worth around $740 million
7
86 Marine Money
Eitzen Holding AS
Shipping
52.7%
Camillo Eitzen & Co ASA
44.7%
Eitzen Chemical ASA
100%
Eitzen Chemical (Denmark)
Eitzen Chemical (Singapore)
Eitzen Chemical (Spain)
Fouquet Sacop
Navale Francaise
Figure 2
and that its shares were trading
at a discount to NAV of about
35%. So clearly some financial
engineering would be required
to make the deal work. But Axel
Eitzen certainly understands
how to access Norwegian
capital, and with the help of
some talented bankers, he and
his group of companies
completed one elegantly inter-
linked transaction after another
Mr. Eitzen was clear in his
intention to spin off Eitzen
Chemical as a separate
company based on the premise
that the company’s clear chem-
ical tanker focus would allow it
to trade at a better valuation,
and shares in the new company
were used to fund part of the
acquisition price. Carnegie and
Pareto then brought in other
investors, raising approximately
$302 million with an equity
placement for Eitzen Chemical.
was listed separately on the
Oslo Børs, in conjunction with
which Carnegie and Pareto
placed an additional $20
Non-shipping
100%
Eitzen & Invest AS
100%
Camillo Industry
Camillo Energy
Camillo Marine
Camillo Trading
Camillo Real Estate
Camillo Art
million in equity. Pareto and
Nordea put together a bond
issue for ECHEM that raised
approximately $100 million
altogether. The issue comprised
a NOK 520 million tranche
priced at 3-month NIBOR +
3.5% and a $25 million tranche
priced at 3-month LIBOR +
3.5%.
That left the bank debt compo-
nent of the financing, a key role
in the transaction played by
Nordea. Nordea, as advisor to
Songa, had actually come into
the deal prior to its being final-
ized by providing a $510
million credit facility for Songa
consolidated all of the indebt-
edness for the company while
providing long-term financing
for its significant newbuilding
program and streamlining its
acquired. Nordea also provided
to Eitzen Chemical a $265
million 7-year secured facility
as well as a $75 million bridge
loan.
www.marinemoney.com
By the end of the year, Axel
Eitzen had worked with no
fewer than 25 financial institu-
tions to grow the world’s largest
chemical tanker company virtu-
ally overnight while continuing
to develop a formidable ship-
ping and investment empire as
shown in Figure 2.
Sometimes it is tempting to pay
most attention to whoever
moves around the greatest
amount of money. But in truth
the most interesting and most
telling time in the history of a
company is when it takes that
leap from being a modest oper-
ator to being a major global
player. It is there where leader-
ship and every capability, from
creative financial engineering to
maintaining quality manage-
ment over a fleet that is growing
by orders of magnitude, is
tested. And it is there where the
future world market leaders are
created. While it is too early too
tell where Mr. Eitzen’s empire
will go in the future, we have
been privileged to watch him
build up an impressive group of
companies over a broad range
of sectors in the space of only a
few years. And we watched with
excitement in 2006 as he
created one of the largest and
most modern chemical tanker
fleets in the world even while
growing the other areas of his
business, all with a distinct
smoothness of execution and
clarity of purpose. And, even
while so many around him
flocked to the oil production
and services sectors, Mr. Eitzen
remained committed to ship-
ping.
Deal of the Year –
DP World and P&O Ports
o deal during 2006 gener-
N
ated more copy, more hot
air or more political posturing
than the DP World and P&O
Ports transactions. We intend to
continue the process by giving
that deal from start to finish
our Deal of the Year Award.
Not in fact because of all the hot
air and political caterwauling,
but because in its entirety it
reflects value creation, strong
management, investment
banking skill, strategic investor
confidence and perseverance.
Taken as a whole this enormous
deal broke new ground for
which every participant and
deserves recognition.
As a marine finance journal and
for the sake of the Award, we
recognized that no deal was
more public, bigger, politically
sensitive and therefore more
challenging than DP World's
acquisition of P&O and subse-
quent announcement of the
pending sale of P&O Ports
North America to AIG Global
Investment Group.
As part of these two deals, we
first salute Deutsche Bank,
which represented the buyer
and Citigroup for its job repre-
senting the seller on DP World’s
acquisition of P&O for GBP
5.2 billion. On the DP World /
P&O portion of the transac-
tion, we specifically acknowl-
edge the hard work of Deutsche
Bank's Iain Macleod and his
www.marinemoney.com
European based infrastructure
team and Michael Borch and
his team at Citigroup. Second,
we salute Deutsche Bank’s Craig
Fuehrer and his North Amer-
ican based infrastructure team
and Brian Moon and his M&A
team who, under Iain Macleod’s
DP World relationship leader-
ship, handled the sensitive sale
of P&O Ports North America to
AIG, which was advised by
Lehman Brothers.
Of course, these two deals were
only possible because of those
who built the P&O franchise
that was acquired and the
strategic vision and foresight of
Sultan Ahmed Bin Sulayem, DP
World’s Chairman and
Mohammed Sharaf, DP World’s
CEO, so with all due respect we
also congratulate the two
companies involved in the trans-
action, P&O and DP World.
Through its acquisition of
P&O, DP World became the
acquirer of one of the most
respected and long-standing
companies operating in the
port sector and a Top 3 global
ports operator. The transaction
not only accelerated DP
World’s growth but also gave it
more than 70 million of TEU
capacity by 2010. Equally
important it puts DP World in
a strong position as a consol-
idator adding significant
capacity in key growth markets
to service its liner shipping
customer base, which is also
undergoing a consolidation multiples that those involved
wave itself. with just pure steel based vessel
operating companies. Lazard
Before getting to some of the who advised Heidmar on the
more interesting details about transaction delivered the
the two DP World and P&O multiple and Morgan Stanley
related deals, it is important to stands perched on the edge of
recognize that in 2006 there redefining shipping and
were many worthy deals that commodity trading. No doubt a
might in another year have deal worthy of mention.
taken top honors. Morgan
Stanley's acquisition of Heidmar Or one could look at the sale by
created a stir for the rumored OOIL of a portion of their
price paid for the Pool business Ports business to the Ontario
created by Per Heidenreich, his Teachers Pension Plan, another
talented team in Connecticut enormous deal. In this case a
along with the owners who saw private equity pool saw long
the value of the idea. But really term value in the port business
for Morgan Stanley the price and paid $2.41 billion for assets
paid reflected a value multiple in that it believes are well in synch
complete synch with that firm’s with their long term pension
commodity, freight, jet fuel liabilities. In this deal UBS
supply and energy trading prac- representing the sellers and
tices. As we and the investment HSBC representing the buyers
banking community have did a splendid job of finding
argued from time to time, that match. The Ontario
service companies, or at least Teachers Pension Plan found
those service companies that can the stable cash flows, loyal
claim some title to logistics, have customer base, long leases, F
been able to command higher container trade projections, e
b
2005 r
• A subsidiary of Babcock & Brown acquires PD Ports for GBP 566 million or
u
12.4x EBITDA
a
• Dubai Ports buys CSX World Terminals from CSX Corp for $1.35 billion or
approximately 15x EBITDA
r
2006 y
• DP World buys P&O in 2006 for GBP 5.2 billion or approximately 15x 2006 /
EBITDA M
• A consortium of Goldman Sachs International, Borealis Infrastructure and a
GIC Special Investments Pte Ltd purchases Associated British Ports for GBP r
3.4 billion or almost 17x EBITDA c
• Singapore's PSA International bought 20% stake in Ports Unit of HK's h
Hutchison Whampoa in 2006 for $4.39 billion or an implied multiple of 17x
EBITDA
2
• Ontario Teachers' Pension Plan purchases four North American terminals
0
from OOIL for $2.41 billion or 22x EBITDA
0
• AIG Global Investment Group bought DP World's US port assets in 2006 for
an undisclosed price 7
Marine Money 87
 importance of Vancouver a port
and finite property element
which makes many infrastruc-
ture assets unique, the sort of
value worthy a purchase price
of approximately 22x EBITDA.
We find the marriage of long
term private equity with long-
lived infrastructure worthy of
special commendation.
Teekay, the Fredriksen group,
OSG, Horizon Lines, Norway
Inc. and its Bond market are all
extraordinary examples of
creativity on behalf of the
industry, investors and share-
holders.
But the simple fact is that no
deal was more public, bigger
and therefore more challenging
than DP World's acquisition of
P&O and subsequent
announced sale of P&O Ports
North America to AIG.
Advised by Citigroup and
Rothschilds, P&O initially
announced a recommended sale
to DP World on November 29,
2005. A counter bid by PSA
resulted in the GBP 5.2 billion
sale to DP World which closed
F on March 9, 2006. The final
e price represented a 71%
b premium to the pre-speculation
r share price. The deal would
u
prove to be the largest ports
a
r sector transaction to date.
y perceived to have deep pockets,
/ Citigroup had a compelling
M story with P&O, whom they
a had been advising for some time
r
on transactions such as the
c
h merger of P&O Princess with
Carnival in 2003, the sale of a
2 25% stake in P&O Nedlloyd to
0 Royal Nedlloyd in 2004, and
0 later the sale of the remaining
7
88 Marine Money
25% stake in P&O Nedlloyd to
A.P. Moller Maersk in 2005.
The long-term relationship
meant Citigroup readily under-
stood the strengths of P&O - a
leading ports operator with 29
container terminals and logistics
operations in over 100 ports
and a presence in 18 countries.
P&O’s core ports business had
half its port assets located in the
fastest growing Asian markets,
with terminals in key countries
such as India and China. Prior
to the initial announcement of
the sale, P&O Ports had some
1.3 billion pounds invested in a
portfolio of ports through its
regional offices in Mumbai,
Sydney, Newark, New Jersey,
Manila and Antwerp.
Over at DP World where
Deutsche Bank acted as sole
buyside M&A advisor and joint
acquisition financier, the
opportunity was clear but the
path contested. It is worth
mentioning that DP World
(previously DPA and DPI) was
just six years old at the time of
its offer and had only
completed the $1.35 billion
acquisition of CSX World
Terminals some nine months
earlier, again advised and
financed by Deutsche Bank.
While the support of the Dubai
Government meant it was
it was only in the swift and
effective management of the
bid tactics that DP World
finally came out victorious.
DP World initially announced
a recommended cash offer of
443 pence - a 46% premium to
pre-speculation price. Then on
January 26, 2006 PSA, one of
DP World’s principal port
competitors, offered 470 pence,
a 55% premium. This bid
though was trumped on the
same day by DP World's revised
offer of 520 pence, which repre-
sented a 71% premium. It was
clear that DP World's decisive
and swift response to PSA's
counter bid ensured strong
backing from both the P&O
Board and its shareholders.
All seemed fine at the time for
DP World and P&O. However,
prior to closing its GBP 5.2
billion acquisition, the deal
became the subject of a front
page media surge and political
fire storm that raised significant
US security concerns about an
Arab state-owned company
seemingly taking over key US
ports.
Connecticut Congressman
Christopher Shays told Marine
Money at a special dinner of
maritime executives that even if
he understood the safeguards
and actual working ways of the
US port system, it was much too
complicated to explain to Ma
and Pa Smith on Main Street
America. Far easier for Congress
to cry out in dismay and threaten
to block the acquisition.
That part of the story is well
known, and we will not belabor
it here. Suffice it to say that DP
World, showing a diplomatic
and pragmatic understanding
of the situation in Washington
DC, acted graciously and opted
to divest itself of the US
portion of the acquisition
which included port operating
assets in key markets such as
www.marinemoney.com
New York / New Jersey, Balti-
more, Philadelphia, Tampa,
Miami and New Orleans. This
decision led to the Deutsche
managed auction process for
P&O Ports North America.
The P&O Ports North America
auction process commenced in
March 2006 with ultimately
over 100 expressions of interest
from interested buyers. The
process concluded in December
2006 with the announcement
of the pending sale to AIG
Global Investment Group.
While a specific price was not
disclosed for the P&O Ports
North America business, it is
keenly interesting to note that
while DP World paid a 15- 16x
EBITDA for P&O in March
2006, in December, DP World
received a price that it deemed
to be consistent with other
recent transactions in the ports
sector. In the end it was AIG
Global Investment Group,
advised by Lehman Brothers,
which won the highly contested
auction and topped other
rumored bidders such as The
Carlyle Group and Morgan
Stanley, which was rumored to
have teamed up with CMA-
CGM on formulating a bid.
So we come to the end of a
great year of value creation in
the port infrastructure world.
We tip our hats to both
Deutsche Bank and Citigroup
for their professional skills and
committed presence in this
most dynamic maritime related
sector and to Deutsche Bank
for professionally handling the
politically charged North
American ports divestiture.