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Diamond S Shipping merges with Capital Product Partners of Evangelos Marinakis for $ 1.65 billion, creating one of the largest oil companies in the world and meeting Diamond's long-standing goal of to become a public owner.
The companies have jointly announced the all-share transaction tonight, stating that the combined entity will retain the Diamond S name and allow managing director Craig H Stevenson Jr to remain chief executive, with his management team occupying executive positions .
The operation is a classic example of what the bankers have called "the new IPO". In other words, given that the initial public offerings in the United States have been closed to shipping for three years, more private companies will become public by merging with a publicly traded counterpart.
Diamond will contribute to the new company with 43 tanker trucks – 31 medium tanker trucks (MR) and 12 Suezmax tankers.
Capital will bring 21 MRs, three suezmax and one tank truck aframax / product.
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The transaction will create the world's third largest listed product fleet and one of the largest mixed fleets, the two companies said.
Capital shareholders will initially own approximately 33% of the new Diamond, Diamond's current shareholders controlling approximately 67%.
Current holders of capital proceeds will receive a distribution of one Diamond S Share for every 10.19149 Capital Units held.
Boxships kept
Capital will retain ownership of 10 container ships and a solid bulk carrier as part of its Master LP structure, and will promptly close a split of 1 to 5 reverse shares at the end of the term. transaction.
In addition, Diamond pays Capital a premium of $ 23 million, corresponding to an additional participation of approximately 3%, to facilitate the transaction. The payment represents a premium of approximately 10% over the net asset value (NAV) of Capital.
The new company will be listed on the New York Stock Exchange and based in Greenwich, Connecticut, where Diamond is currently located.
Diamond's attempts to find a business cluster that would lead to a public listing were one of the industry's least well-kept secrets. In July, TradeWinds announced it hired consulting firm Moelis & Co to evaluate the options.
TradeWinds also reported in August that Capital Product Partners was a new name among Diamond's potential dance partners, a name that might well agree to take both its crude and clean tankers given the Marinakis history with both types of tonnage.
Neither side would make any comment at that time, but both parties welcomed the deal in a joint announcement.
"This transaction will occur at an appropriate point in the cycle and will create one of the largest and best quality fleets and the best-capitalized public transport companies in the market," said Stevenson.
"We are confident that this unique combination will create meaningful shareholder value throughout the cycle by utilizing our cash flow to invest in the company through acquisitions and by repaying capital to our shareholders."
Jerry Kalogiratos, managing director of Capital's general partner, also welcomed the agreement.
"We are delighted with this transaction, which is a strategic step to generate value for our unitholders, as we expect the sum of the parties resulting from this transaction to exceed the current valuation of CPLP's shares," he said. he declared.
"Very attractive"
J Mintzmyer, principal researcher at Value Investor's Edge, said, "First of all, this sounds like a very interesting transaction for CPLP shareholders.
"The shares have been traded for a long time at a very low price relative to the net asset value, without the company being rewarded for its impressive backlog.
"This transaction creates a world-class fleet of petroleum products and also allows shareholders to participate in a significantly improved revenue vehicle, and I want to point out that we have not seen the financial data yet, so I reserve the right to right to follow up later. "
Norden confirms the advance of Diamond S MR tankers
Diamond S sold two RMs to Norden this week.
Stevenson is the former CEO of OMI Corp. which, like Diamond, used a mixed fleet strategy consisting of suezmax tankers for the transportation of crude and products, on the side of the own companies.
The owner is also known to be the first investment vehicle of venture capital legend, Wilbur L Ross Jr., who has since renounced his participation in Diamond as part of his new role as Secretary of Commerce with President Donald Trump.
Although Ross has separated from his namesake investment vehicle, WL Ross & Co, the latter remains a major player in diamonds and will control approximately 24% of the new company. The foundation stone of Stevenson in Diamond, the US-based First Reserve, will control about 20%.
Capital Maritime and Trading, sponsor of Capital Product, will hold approximately 5%.
DSS will initially appoint three board members: Nadim Qureshi, who will serve as chair; Hal Malone and long-time John Fredriksen partner Kate Blankenship. The CPLP will appoint two board members, Kalogiratos and Gerry Ventouris. Stevenson and longtime banker Bart Veldhuizen will also be on the board.
Evercore and Stifel act as financial advisors and Sullivan & Cromwell LLP as CPLP counsel. DVB Capital Markets LLC acts as financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP serves as legal advisor to the CPLP Special Committee.
Moelis is the financial advisor and Jones Day is the legal advisor for DSS. Clarksons Platou is acting as an industry advisor in the transaction.
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