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Spring 2021

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VOLUME 37, NUMBER 1

Success with an Eye to the Future
Dealmakers of the Year  <8C F= K?< 2<8I N8I;JTransacTion

WinnerroLe

VTB Capital
Citi
Sberbank
J.P. Morgan
Bank of America
ING Bank

Joint Global Coordinator and Bookrunner
Joint Global Coordinator and Bookrunner
Joint Global Coordinator and Bookrunner
Joint Global Coordinator and Bookrunner
Joint Global Coordinator and Bookrunner
Co-Manager

THE IPO DEAL OF THE YEARPAO Sovcomflot $550 million Initial Public Offering

EQUITY FOLLOW-ON DEALS OF THE YEAR
Golar LNG $105 million Follow-onCiti
Clarksons Platou Securities
DNB
Arctic Securities
Seward & Kissel

Joint Lead Manager & Bookrunner
Joint Lead Manager & Bookrunner
Joint Lead Manager & Bookrunner
Joint Lead Manager & BookrunnerCounsel to Golar LNG

SEB Corporate Finance

Financial Advisor to J. Lauritzen

THE M&A DEAL OF THE YEAR
Merger of Epic Gas and Lauritzen Kosan

THE LEASING DEAL OF THE YEAR – WEST
CDBFL/Maersk Tankers $422 million Sale of 14 Product Tankers
China Development Bank Financial Leasing
Maersk Product Tankers
Gorrissen Federspiel
Mayer Brown

Owner/LessorChartererCounsel to Maersk Tankers
Counsel for CDBFL

THE LEASING DEAL OF THE YEAR – EASTICBCFL/CMES $140.2 million JOLCO for 2 x 325,000 VLOC Newbuildings
ICBC Financial Leasing
China Merchants Energy Shipping
National Australia Bank
E.Sun BankCTBC BankFPGFPG AIM
Watson Farley & Williams

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Joint Charterer
Joint Charterer
Mandated Lead Arranger
Mandated Lead Arranger
Mandated Lead Arranger
Equity Underwriter
JOLCO Arranger
Counsel to Lenders&8I@E< &FE<P,GI@E>

EASTTransaction: ICBCFL/CMES $140.2 million JOLCO for 2 x 325,000 DWT VLOC
Newbuildings
Winners:
ICBC Financial Leasing/China Merchants Energy Shipping (Charterer),National Australia Bank, E. Sun Bank, CTBC Bank (Mandated Lead Arrangers),
FPG (Equity Underwriter), FPG AIM (JOLCO Arranger)"UILDING UPON THE COMBINEDCOMPETITIVENESSOFBOTH*APANESE AND #HINESE LEASING
HOUSES THE WINNING TRANSACTIONFROM THE %AST STRETCHED THE
BOUNDARIES OF THE */,#/STRUCTURE TO INCORPORATE ANUMBER OF NOVEL FEATURES

WHICH ADDED ADDITIONAL LEVELSOFSTRUCTURALCOMPLEXITYINCLUDING A JOINT VENTURE CHARTERER AND AN UNDERLYING #O!

INSTEAD OF A CHARTER)N A TRANSACTION ARRANGED BY&0' A *APANESE 30# AS,GI@E>
NNN D8I@E<DFE<P :FD&8I@E< &FE<POWNERLESSOR ACQUIRED THROUGHA */,#/ STRUCTURE TWO $746,/#NEWBUILDINGS FOR A PRICE OF
 MILLION AND BAREBOATCHARTERED THEM TO A JOINTVENTURE OF #HINA -ERCHANTS%NERGY 3HIPPING h#-%3vAND )#"# &INANCIAL ,EASINGh)#"#&,v FOR A PERIOD OF YEARS DURING WHICH TIME THE
VESSELS WILL PERFORM A #O! WITH6ALE4O FINANCE THE VESSELS &0'UNDERWROTE THE ENTIRE EQUITYMINIMIZING EXECUTION RISK WITHTHE EXPECTATION OF SELLING DOWNITS POSITION TO *APANESEINVESTORS WHO WOULD BECOMESILENTLIMITED PARTNERS IN THE
LIMITED PARTNERSHIP */,#/EQUITY IS A TAX DRIVEN FIXED RATEPRODUCT AND ITS PRICING MECHANISM DOES NOT FOLLOW THE MOVEMENTS IN THE BROAD INTEREST RATEENVIRONMENT $ESPITE THE DRASTICALLY LOWER INTEREST RATES IN THE EQUITY PRICING WASKEPT COMPETITIVE EVEN WHEN
BENCHMARKED AGAINST YIELDS FORINVESTMENT GRADE BONDS OFSIMILAR AVERAGE LIFE

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4HE BALANCE OF THE PURCHASE
PRICE WAS FUNDED THROUGH A
LIMITED RECOURSE LOAN TO THE
30# OWNER WHO IN TURNENTERED INTO A */,#/ BAREBOATCHARTER AGREEMENT WITH THE
CHARTERER 4HE THREE BANKSPROVIDED VERY COMPETITIVE*/,#/ DEBT WHICH IS AN
ACHIEVEMENT FOR VESSELS OF THISTYPE -ANY BANKS HAVE LIMITEDAPPETITE FOR 6,/#S WHICH AREPERCEIVED AS LESS LIQUID OR ALTERNATIVELY DEMAND PREMIUM
PRICING OVER THE FINANCING OF
MORE LIQUID ASSET TYPES FOR THE
SAME OBLIGOR #OVENANTS ANDRECOURSE TO THE CHARTERER AREESTABLISHED BY THE LENDERS VIAPASS THROUGH PROVISIONS IN THE*/,#/ BAREBOAT CHARTER 4HE
COMBINED DEBT AND EQUITY
REPRESENT  FINANCING !
DIAGRAM OF THE STRUCTURE IS
SHOWN ON THE PREVIOUS PAGE
&OR )#"# ,EASING AND #-%3THE TRANSACTION PROVIDED AIRCRAFT
4HE TRANSACTION WAS SUCCESSFULIN PUSHING BOTH INVESTORS AND
LENDERS RISK BOUNDARIES 4HEFINANCING OF JOINT VENTURESINVOLVES GREATER RISK ASSESSMENTTHAN THAT REQUIRED FOR THEFINANCING OF ITS SHAREHOLDERSSEPARATELY DUE TO POTENTIALDISPUTES BETWEEN THE PARTNERS-OREOVER */,#/ EQUITYINVESTORS ARE RETICENT TO LOOK ATDEALS INVOLVING JOINT VENTURES
BECAUSE OF CONCERNS ABOUT THEEXERCISE OF THE PURCHASE OBLIGATION WHICH IS A CRITICAL FEATURE OFTHE STRUCTURE )N ADDITION A KEYASPECT OF SHIPPING */,#/STRUCTURES HAS BEEN THE CHARFor ICBC Leasing and CMES, thetransaction provided 100% financingat a competitive cost, and established theirpresence in the JOLCO market, which
is highly selective as to both counterparties
and assets.
FINANCING AT A COMPETITIVE COSTAND ESTABLISHED THEIR PRESENCE
IN THE */,#/ MARKET WHICH IS
HIGHLY SELECTIVE AS TO BOTH COUNTERPARTIES AND ASSETS 4HIS TRANSACTION MARKS #-%3 ENTRY INTOTHE */,#/ MARKET AND THE
FIRST SHIPPING */,#/ FOR)#"#&, WHOSE PREVIOUS EXPERIENCE WITH THIS TYPE OF
FINANCING WAS LIMITED TOTERING OF THE VESSELS DIRECTLY TOCREDITWORTHY OPERATORS OR TOTONNAGEPROVIDERSLEASINGCOMPANIES WHO IN TURN SUBCHARTER THE VESSELS 4HE CHOICEOF A #O! REQUIRED ADDITIONALSTRUCTURAL COMPLEXITY DESIGNEDAND INCORPORATED TO ADDRESSBOTH THE SECURITY AND *APANESETAX CONSIDERATIONS TO MAKE IT*/,#/ COMPLIANT)T GOES WITHOUT SAYING THAT THE
CLOSING OF A SIX PARTY TRANSACTION DURING THE PANDEMIC WASNO EASY TASK !MONG THE CHALLENGES WAS THE LIQUIDITY SHOCK
IN THE BANKING MARKET IN-ARCH WHICH WAS FOLLOWED BYTHE DECLARATION OF A NATIONALEMERGENCY IN *APAN WHICH NOTONLY IMPACTED EQUITY DEMANDBUT ALSO PUT PRESSURE ON THEEQUITY UNDERWRITER AS THERE WASVERY LOW MARKET VISIBILITY FORDISTRIBUTION OF A PROJECT WITHMULTIPLE NOVEL FEATURES AND TWONEW SHIPPING NAMES ,ASTLY*/,#/S FOR NEWBUILDINGS HAVESTRICT TIMING REQUIREMENTS FORCLOSING WHICH MUST BE ATDELIVERY FROM THE SHIPYARD
3UCH PRECISION WAS DIFFICULT DUETO DELAYS AT THE SHIPYARD DUE TOLOCKDOWNS AND OTHER LOGISTICALISSUES INCLUDING THE DOCUMENTATION PROCESS WHICH INVOLVEDSIX PARTIES IN SEVEN GEOGRAPHICALLOCATIONS AND MULTIPLE TIMEZONES ALL CONDUCTED VIRTUALLY4HIS DEAL DEMONSTRATES THE FULL
COMMITMENT OF ALL THE TRANSACTION PARTIES IN TIMES OF CRISISTHE FIRM UNDERWRITING POSITIONS
OF THE LENDERS AND &0' THE
STRONG RECOGNITION OF )#"#&,AND #-%3 AND MORE IMPORTANTLY THE RESILIENCE OF THE SHIPPING AND SHIP FINANCE INDUSTRY
THROUGH MARKET CYCLES AND
GLOBAL EVENTS

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