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More shipowners have come to Wall Street than have been left in the past half-decade. Still, most of the newcomers were micro-cap stocks and some of the starts were big names.
On Monday, liquefied natural gas (LNG) transportation giant GasLog Ltd. (NYSE: GLOG) has announced plans to go private.
GasLog’s delisting follows the January agreement to fold Navios Containers (NYSE: NMCI) into Navios Partners (NMM), the announcement of the December “take private” by Seacor (NYSE: CKH) and the privatization from DryShips in October 2019.
GasLog founder, shipping tycoon Peter Livanos, said the deal would “unlock growth capital currently absent from public stock markets.”
It is certainly not a vote of confidence in the value of a mailing list.
GasLog sells 45% of its outstanding shares to BlackRock (NYSE: BLK) for $ 248 million. If shareholders approve the deal, BlackRock’s Global Energy & Power Infrastructure division would pay $ 5.80 per share, a 17% premium at Friday’s close, and the stock would be delisted.
Livanos and the Onassis Foundation would retain their 55% stake and GasLog Ltd.’s sister company, GasLog Partners (NYSE: GLOP), would remain public.
The share price jumps
The share price of GasLog Ltd. jumped 19% Monday on BlackRock news.
“This is a surprising development but nevertheless underlines the positive long-term outlook for the LNG industry given this new investment from BlackRock,” Omar Nokta, analyst at Clarksons Platou Securities, said in a research note.
According to Fearnleys Securities, “The context here is in our opinion a funding gap with $ 315 million of [debt] due next year and limited possibility of filling this with cash flow from ships. This is probably the best thing the shareholders of GasLog could have hoped for. “
Stifel’s shipping analyst Ben Nolan said in a customer note that he doesn’t expect a competing offer to drive the price up. “BlackRock is buying a minority stake and will not have control. If a new candidate were to materialize, it should be financial – not strategic – because we believe they are relinquishing control. [for a strategic buyer] is off the cards. However, most [investors] are not interested in controlling minorities. “
Public versus private?
Do the four write-offs or write-offs proposed over the past two years indicate a trend or are they simply a confluence of company-specific decisions?
Jefferies analyst Randy Giveans told American Shipper, “There’s always been this tussle between the costs and benefits of being a publicly traded company. There are certainly pros and cons, but the vast majority of shipowners who are public want to stay public.
“That said, for companies that usually trade at a discount to the net asset value [net asset value] or at a substantial discount from its peers, it certainly makes sense to unlock value through a private takeover / merger / roll-up transaction, ”said Giveans.
An analyst speaking to American Shipper on condition of anonymity highlighted Livanos’ statement about the lack of access to growth capital.
“The fact that they viewed public stock markets as closed to new capital speaks volumes about the decision as well as the place of shipping in these markets,” he said.
The analyst also pointed out that an infrastructure fund had concluded Operation GasLog. “There is a lot of private equity money in infrastructure looking for housing, and a less volatile end market with long-term contracts could meet a lot of their parameters,” he said, noting that “the tanker exposed to spot, dry bulk, container names are much less likely to be targets.” “
Different justifications for different transactions
The DryShips private takeover agreement was different from the Seacor and GasLog Ltd. agreements. The founder of DryShips, George Economou, bought back the outstanding shares. The transaction follows a period when a series of dilutive offers strongly impacted the value of the shares. Economou had been the target of multiple shareholder lawsuits throughout the history of DryShips.
In the case of Navios Containers, the sale to Navios Partners – which owns dry bulk carriers as well as container ships – is expected to close in the first half of this year.
Aristides Pittas, CEO of container lessor Euroseas (NASDAQ: ESEA) and dry bulk owner Eurodry ((NASDAQ: EDRY), commented on the Navios deal during a Capital Link virtual forum in January.
He felt that the delisting of Navios Containers “was initiated when the dry bulk market was poor” and that “the containers were doing extremely well and they decided to merge them to help the parent company. [dry bulk-centric Navios Partners]. Now that dry bulk is healthier, Pittas wonders if “they might regret this decision.”
“I am convinced that the market does not want mixed fleets,” said Pittas. He said the combined market capitalization of Euroseas and Eurodry was 50% higher than when container ships and bulk carriers were both under the Euroseas banner.
Assessment of LNG carriers’ benefits
The Blackstone deal overshadowed the earnings news, but GasLog Ltd. and GasLog Partners released their quarterly results on Monday.
GasLog Ltd. reported fourth quarter 2020 net income of $ 45.9 million, compared with a fourth quarter 2019 net loss of $ 119.9 million and adjusted earnings per share of 24 cents, just above forecast by analysts 23 cents.
GasLog Partners also released its results on Monday. It posted a net profit of $ 22.6 million for the fourth quarter of 2020, compared to a net loss of $ 106.4 million for the same period the previous year. Adjusted earnings per share of 38 cents exceeded the consensus forecast of 31 cents.
During the conference call, Paul Wogan, CEO of GasLog Ltd. and GasLog Partners, said it sees potential for improvement in spot rates for LNG shipping this year.
In 2020, the fallout from the coronavirus reduced US LNG exports to Asia in Q2 and Q3. “If the global economy continues to recover, we expect LNG tanker spot rates to improve in 2021 compared to 2020, as far less US cargo would be stranded during the summer months,” he said. said Wogan. Click for more articles on FreightWaves / American Shipper by Greg Miller
MORE ON LNG SHIPPING: New world record for shipping rates: $ 350,000 per day: see the story here. Expedition titan Peter Livanos outlines his vision for the future of LNG: see the story here. Flex LNG, backed by John Fredriksen, debuts on the NYSE in Spotify style: see the story here.
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