Marine Money’s 15th Annual Ship Finance Forum at New York’s Plaza Hotel yesterday covered a wide swath of topics focused largely at international shipping — with a hefty Norwegian component.
In spite of the bluewater emphasis, certain observations and trends are readily applicable to the workboat and inland sectors. Charles Fabrikant, CEO of Seacor, unfortunately under a gag order from company lawyers regarding Jones Act issues, did offer that energy companies “have throttled back on spending” with low oil prices, after noting that capital budgets were already under pressure even before the oil price slide. Fabrikant and other panelists did, however, acknowledge that low fuel prices were beneficial for vessel operators.
A session on debt alternatives included some mentions of the Term Loan B structure, which has been applied in the workboat and offshore sector by companies including Harvey Gulf Marine. Jefferies & Company’s Jeff Pribor said secured bank debt could be divided into a portion held by the issuing bank and the “B” tranche, which is sold on to institutional investors (who might otherwise be investing in high yield bonds).
Another structure not yet seen in the workboat sector is the “Baby Bond,” which explained Chris Weyers from Stifel, can supplement company capital structures with money raises of between $50 million to $75 million drawn from a retail investor base. A handful of bluewater issuers have tapped the community of U.S. investors seeking to add bonds, in lot sizes up to around $20,000 to their portfolio.
DNBbond expert Dan Hochstadt, in his lecture on the Norwegian high yield bond market, noted that issuers no longer need to have a connection to Norwegian shipping activities (though offshore companies have been big issuers).