Havila Shipping to Take Ownership of 5 Platform Supply Vessels

- Havila Shipping to Take Ownership of 5 Platform Supply Vessels

Tuesday, June 28, 2011
Havila Shipping ASA

Havila Shipping has entered into an agreement with its controlling shareholder Havila AS and Havila AS' wholly-owned subsidiary Havvåg AS for the purpose of transferring Havila AS' indirect ownership interests in the five platform supply vessels MV Havila Fortune, MV Havila Aurora, MV Havila Borg, MV Havila Commander and MV Havila Crusader (the "PSVs") to the Company (the "Transaction").

The transfer of the ownership interest in the PSVs to the Company will be carried out through a transfer of the shares in subsidiaries of Havila AS and interests in Havila PSV DIS as contribution in kind against the issue of shares in the Company.

Havila AS' ownership interests in the PSVs are primarily held by private limited companies, wholly- or partly-owned subsidiaries of Havila AS, which in turn hold ownership interests in the partnerships owning the PSVs, provided, however, that Havila AS holds some interests directly in Havila PSV DIS (the "SPVs").

Following completion of the Agreement, the Company will, indirectly, be the owner of 40% in MV Havila Crusader and MV Havila Commander, 49% in MV Havila Borg and 50% in MV Havila Aurora and MV Havila Fortune. MV Havila Aurora, MV Havila Borg and MV Havila Fortune are currently managed by the Company (commercial and technical management), while MV Havila Commander and MV Havila Crusader are on 8-year bareboat charters to the Company. All PSVs are currently operational and on contracts of variable lengths, with remaining duration between two months and five years, offering a balanced market exposure.

The acquisition of a controlling stake in the two PSVs currently leased, MV Havila Commander and MV Havila Crusader is expected to improve earnings significantly through a reduction of net leasing costs, which is currently approximately NOK 100 million annually, and improving the overall financial structure of the Company through replacing leasing with traditional financing.

The acquisition of three additional PSVs, MV Havila Aurora, MV Havila Borg and MV Havila Fortune, is also considered favourable as the Company already operates all of these PSVs, with solid operating performance. These PSVs have remaining contract durations of approximately two months, one year and five years (plus options), respectively, providing Havila Shipping with growth at a favourable
entry point for expansion in the supply market, and at the same providing balanced contract mix.

The financing of all PSVs will be continued under new ownership.

As part of the transactions, the Company will cancel the Total Return Swap on approximately 1.05 million shares. The reason for this, is that the Company having such financial exposure to its own share price is outside the key business scope of the Company.

The SPVs and the PSVs

The Company's acquisition of ownership interests in the PSVs will be carried out through the transfer of Havila AS' shares and interests in the following companies:

• Havship I AS - MV Havila Fortune
  • The Company will acquire 100% of the shares of Havship I AS ("Havship I"), which in turn holds 50% of the outstanding ownership interests in P/R Havship DA, a Norwegian partnership with apportioned liability and business registration number 993 442 003 ("PR Havship I").
  • PR Havship I owns the PSV MV Havila Fortune. MV Havila Fortune is a PSV MT6009 MkII (3,205 dwt), which was built in 2008. It is on contract with Maritime Logistic Services AS until August 2011, and has an option for 3 further wells.
  • The board of directors of Havship I comprises Per Sævik as chairman and sole board member and Njål Sævik as deputy board member. Per Sævik is also the general manager. There are no employees in Havship I.
• Havila Aurora AS - MV Havila Aurora
  • The Company will acquire 100% of the shares of Havila Aurora AS ("Havila Aurora"), which in turn holds 50% of the outstanding ownership interests in P/R Havship II DA, a Norwegian partnership with apportioned liability and business registration number 894 084 782 ("PR Havship II").
  • PR Havship II owns the PSV MV Havila Aurora. MV Havila Aurora is a PSV MT6009 MkII (3,205 dwt), which was built in 2009. It is on contract with Total until March 2016, with an additional option for 2 years.
  • The board of directors of Havila Aurora consists of Per Sævik (chairman), Njål Sævik, Hege Sævik Rabben and Vegard Sævik. Per Sævik is also the general manager. There are no employees in Havila Aurora.
• Havila Borg AS - MV Havila Borg
  • The Company will acquire 100% of the shares of Havila Borg AS ("Havila Borg"), which in turn holds 49% of the outstanding ownership interest in P/R Havship III DA, a Norwegian partnership with apportioned liability and business registration number 994 760 890 ("PR Havship III").
  • PR Havship III owns the PSV MV Havila Borg. MV Havila Borg is a PSV Havyard 832 (4,000 dwt), which was built in 2009. It is on contract with Shell until July 2012 with a 1 year option.
  • The board of directors of Havila Borg consists of Per Sævik (chairman), Njål Sævik and Kjell Rabben. Njål Sævik is also the general manager. There are no employees in Havila Borg.
• Havila PSV AS and Havila PSV DIS - MV Havila Commander and MV Havila Crusader.
  • The Company will acquire 37%, and indirectly (through its wholly owned subsidiary Havila PSV AS ("HPSV AS")) an additional 3%, of the outstanding ownership interest in Havila PSV DIS, a Norwegian silent partnership ("HPSV").
  • HPSV controls the PSVs MV Havila Commander and MV Havila Crusader. MV Havila Commander and MV Havila Crusader are both PSV VS485 (4,900 dwt), which were built in 2010. MV Havila Commander is on contract with ConocoPhilips until mid July 2011, then three months with Maersk Oil & Gas and MV Havila Crusader is on contract with Talisman until November 2011 with two six-month options.
  • The boards of directors of HPSV AS and HPSV consist of Svein Sandvik (chairman), Njål Sævik and Richard Jansen. There are no employees in any of these companies.

PR Havship I, PR Havship II, PR Havship III and HPSV are jointly referred to as the "Partnerships".

Further, the Company intends to increase its ownership in the PSVs to 100% of MV Havila Fortune, Havila Aurora and Havila Borg and 74% of the ownership interests in Havila PSV DIS (MV Havila Commander and MV Havila Crusader) through an acquisition from the third party owners of Partnerships against cash consideration, provided, however, that Mavi VX shall transfer its shares in the partnerships owning MV Havila Aurora, MV Havila Borg and MV Havila Fortune to Havila Shipping as contribution-in-kind against shares in Havila Shipping. The calculation in these acquisitions shall be calculated on the same basis as the consideration in this Transaction.

[No agreements have been, or will be, entered into in connection with the Agreement for the benefit of the parties' board members or management.]

The consideration and settlement

The consideration in the Transaction comprises the aggregate value of the shares transferred to Havila Shipping, which for each of the SPVs is calculated on the basis of (i) the market value of the PSVs as of December 31, 2010 (based on shipbroker valuations as of March 31, 2011, and for MV Havila Commander and MV Havila Crusader also reflecting the Company's purchase options starting in
2012), (ii) value adjusted equity related to the other assets and liabilities in the relevant Partnerships as of December 31, 2010, and (iii) the net profit excluding depreciations of the relevant Partnership in the period from January 1, 2011 to July 19, 2011. The purchase price will comprise the total value of each Partnership adjusted for the percentage of ownership interests not transferred to Havila Shipping.

Based on the above and an agreed total value for the 5 PSVs in the amount of NOK 1,503 million on a 100% basis, the aggregate value of the shares transferred to Havila Shipping is expected to amount to NOK 149.7 million, which is subject to adjustments for the actual net profit in the period up to July 19, 2011.

The subscription price for each share issued to Havila AS against contribution in kind will be equal to the subscription price in the Company's contemplated private placement announced on June 27, 2011. The indicative price range in the private placement is between NOK 52.50 and NOK 57.50, and the final subscription price will be determined by the Board of Directors after completion of the book-building period, expected to end on July 1, 2011.

The number of shares to be issued to Havila AS as consideration for the contribution-in-kind with an aggregate value of NOK 149.7 million and a subscription price at the mid-point of the price range (i.e. NOK 55), is 2,721,203 shares.

The shares will be issued by the Board of Directors pursuant to its authorization to increase the share capital of the Company granted by the general meeting held on April 28, 2011.

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Farstad Shipping to Build 2 New Vessels

- Farstad Shipping to Build 2 New Vessels

Wednesday, June 22, 2011
Farstad Shipping ASA

Farstad Shipping has reached an agreement with STX OSV AS to build 2 Anchor Handling / Offshore Service vessels (AHTS) of the type UT 731 CD. Contract value is approx. NOK 1.2 billion.

The vessels are designed by Rolls Royce Marine with a total length of 87.4 meters and breadth of 21.0 meters. Bollard pull will be approx. 260 tons and installed power is approx. 24 000 BHP. The vessels will be built according to DNV's strictest environmental class - "Clean Design" - and will be arranged for safe and efficient deepwater operations. The newbuilds are of the same design as Langsten has previously delivered four of to Farstad during 2009-2010.

The steel hulls will be built in Romania and outfitting yard will be STX OSV Langsten in Tomrefjord. Delivery of the vessels will be April and June 2013 respectively.

These newbuilds are part of Farstad's fleet renewal and focus on the segment for deepwater activities.

With this latest order Farstad will have 8 vessels under construction at a contract value of NOK 3.2 billion.

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Farstad Shipping Snags 6 Contract Renewals from Woodside

- Farstad Shipping Snags 6 Contract Renewals from Woodside

Friday, June 10, 2011
Farstad Shipping ASA

Farstad Shipping has been awarded the following charter contracts:

AHTS Far Strait, AHTS Lady Caroline, PSV Far Spirit and PSV Lady Grace have all been extended for 365 days while AHTS Far Stream and PSV Far Swan have been extended for 180 days. All vessels are on charter with Woodside in Australia in support of their drilling and/or production operations.

In addition Esso Australia has exercised another 3 month option for PSV Lady Kari-Ann. The vessel will remain supporting Esso's offshore production operations in Bass Strait.

Total value of the contracts is approximately NOK 380 million.

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Farstad Shipping Orders 2 Platform Supply Vessels

- Farstad Shipping Orders 2 Platform Supply Vessels

Friday, May 20, 2011
Farstad Shipping ASA

Farstad Sipping ASA has declared their options for building 2 platform supply vessels (PSV) at STX OSV. One of the vessels will be built at the STX Yard in Vietnam and one at the STX Yard in Tomrefjord, Norway (Langsten).

The newbuilds are part of Farstad Shipping's continuous fleet renewal and represent an investment of approx. NOK 600 mill. Delivery of the vessels will take place during first half of 2013.

The vessels ordered are of the STX PSV 08 CD design, identical to three of the vessels ordered in November 2010. This design is a newly developed, medium sized, diesel electric PSV with a net deck area of approx. 800 m².

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[Oil and Gas Post] - Gasoline Shipping Profit Seen Rising 24% After Earthquake: Freight Markets

Gasoline Shipping Profit Seen Rising 24% After Earthquake: Freight Markets

By Alaric Nightingale and Ann Koh - Mar 22, 2011 4:28 PM GMT+0700

Profit from shipping gasoline to the U.S. from Europe in the second quarter will rise 24 percent as disruptions to Japanese imports divert cargoes across the Atlantic, increasing demand for vessels.

Forward freight agreements, traded by brokers and used to hedge or bet on future transport rates, will rise to $14,000 a day on the route, from $11,252 yesterday, said Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo. His recommendations on stocks of shipping lines returned 24 percent in the past six months, data compiled by Bloomberg show.

The March 11 earthquake and tsunami that battered Japan closed petrochemical plants that buy European naphtha, an oil product than can be converted into gasoline or used to make plastics. European refiners will need to find alternative markets while those plants remain shut, increasing demand and profit for vessels in the Atlantic Ocean at a time when earnings in most shipping markets are slumping.

“It’s highly likely that a surplus of gasoline or naphtha or both will develop in Europe,” Harry Tchilinguirian, the head of commodity markets strategy at BNP Paribas SA in London, said by e-mail March 18. “Refiners will want to export as much of that as possible to the U.S. to support domestic margins.”

Japanese petrochemical plants use naphtha to make ethylene, a material for plastics, and about 22 percent of capacity was curbed by the March 11 disaster, according to Purvin & Gertz Inc., an energy consultant based in Houston. Japan is the second-biggest ethylene producer in Asia after China, data compiled by Bloomberg show. European naphtha shipments to Asia will probably slump by 78 percent to 100,000 metric tons this month, a Bloomberg survey of five traders showed.

Energy Consultant

“The outlook for naphtha is very bearish as six petchem plants are offline and much of the manufacturing activity at Sony, Toyota, Toshiba, etc., has been halted,” Richard Gorry, a director at Vienna-based JBC Energy GmbH, a consultant and researcher, said by phone March 18.

For European refineries, that means a glut of naphtha and one way of dealing with the surplus is to blend it into gasoline and then ship it to the U.S., the largest fuel market, according to Tchilinguirian.

Gasoline at New York Harbor cost as much as 6 percent more than in Europe yesterday, according to data compiled by Bloomberg. The spread is wide enough to allow traders to ship the fuel profitably across the Atlantic Ocean, according to RS Platou Markets AS and Pareto Securities AS, both Norwegian investment banks.

More Cargoes

More cargoes means more demand for the 590-foot tankers used on the route, operated by companies including Copenhagen- based Torm A/S, Europe’s biggest publicly traded oil-products shipping line. Mitsui O.S.K. Lines Ltd., based in Tokyo, and A.P. Moeller-Maersk A/S, headquartered in Copenhagen, also own the vessels, known as medium-range tankers.

Traders of freight forwards are already anticipating the surge in demand in the Atlantic, with second-quarter contracts jumping 8.8 percent on March 18, according to Imarex ASA, an Oslo-based broker of the derivatives.

Rental income on the route jumped 79 percent this year as demand strengthened, according to the Baltic Exchange in London, which publishes rates for more than 50 maritime routes. That beat the 6.6 percent advance in the Baltic Clean Tanker Index, a gauge of six different routes. Returns in the spot, or single voyage, market rose 1.1 percent to $14,607 a day yesterday, Baltic Exchange data show.

Volatile Rates

Rates are volatile, moving 10 percent or more in all but six of the last 31 months. They doubled in four of those months.
The improving returns on medium-range tankers contrasts with a decline for other parts of the merchant fleet. Income on capesizes, used to haul coal and iron ore, slumped 54 percent this year while returns for supertankers carrying crude fell 18 percent, Baltic Exchange data show. Container shipping costs climbed 26 percent, according to a gauge from the Hamburg Shipbrokers’ Association.
Naphtha and gasoline are part of the so-called light-end products derived from crude, accounting for about 35 percent of the total depending on the type of crude and the refinery used to process it, according to data compiled by Bloomberg.
Refineries produce naphtha when they process crude oil. This in turn is split into heavy and light naphtha. While the light variety is more commonly used by the petrochemicals industry, it can be blended into gasoline, said Mike Lazer, vice president of KBC Market Services, an adviser to the energy industry based in Walton-on-Thames, England. Heavy naphtha can be made into gasoline with the addition of high octane components that make it more combustible, he said.

Premium Demanded

As refineries and factories in Japan shut down this month, the premium demanded for naphtha in Asia relative to Europe fell to $13.97 a barrel so far this month from $15.21 last month, according to data from PVM Oil Associates Ltd., a London-based broker. The premium allows traders in Europe to pay for shipping costs and profit from sending cargoes to Asian customers.
European refiners are losing about $8 for each barrel of naphtha they make and earn about $5 for every barrel of gasoline, according to data compiled by Bloomberg.
More gasoline cargoes to the U.S. may mean more business for Torm, a company founded in 1889 that now operates a fleet of about 130 product tankers of various sizes, carrying everything from jet fuel to diesel. The shares slumped 21 percent this year and the company said March 10 it would probably report a third consecutive annual loss in 2011. Just three of the 12 analysts covering the company and tracked by Bloomberg rate it a “buy.”

Head of Tankers

Tina Revsbech, head of tankers at Torm, said it was too soon to say whether transatlantic cargoes would increase as a result of the events in Japan.
Global shipments of oil products, including naphtha, will advance 3 percent this year, according to data from Clarkson Research Services Ltd., part of the world’s largest shipbroker. The fleet will expand 9 percent to 114.9 million deadweight tons, a measure of carrying capacity, Clarkson estimates.
The prospects for earnings on at least one route may be better than that ratio suggests.
“The product tanker market is expected to move higher in the wake of the Japanese earthquake,” said Stavseth of Arctic Securities. “When Japan stops importing there’s an excess and it really shifts the trade volumes.”
To contact the reporters on this story: Alaric Nightingale in London at Anightingal1@bloomberg.net; Ann Koh in Singapore at akoh15@bloomberg.net

Link
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