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BETWEEN VISION AND REALITY
The quest for alternative funding
HANSA FORUM
Simon Madej
Hamburg, 20 November 2014
HSH-NORDBANK.COM
My goal today
My purpose of talking with you today is to discuss
Alternative Funding sources for your firm
2
The outcomes that I am seeking
► Size
matters in shipping
► Ensure
that you understand the benefits of
consolidation
► Answer any
questions you may have at this time
3
Past vs. Present
Assets
Corporates
KG funding
Alternative funding
► Non-recourse
► Recourse
► Vessel focus
► “Shipping”
► Private
► Institutional
investors /
limited in size
focus
money
4
Alternative Funding
Public debt (Bonds)
 Pros
► You
get money from people you do not know
► You
pay a fixed interest rate
► You
have a bullet payment at maturity
5
Alternative Funding
Public debt (Bonds)
 Cons
► Is
your cash flow good enough?
► Requires
► Rating
a detailed look into your financials
/ external scrutiny
6
Alternative Funding
Private Equity
 Pros
► Lets you
► You
get money from people you just met
do not have regular payments
► Enables you
► Lets you
to obtain other forms of financing
buy new vessels / companies etc.
7
Alternative Funding
Private Equity
 Cons
► High
return expectations
► Transparency
► Loss of
level
(some) control
► Partnership
on time
8
Alternative Funding
Public Equity (IPO)
 Pros
► Lots
of money from investors you do not know
► You
can use shares to grow & build your firm
► Increased
visibility
9
Alternative Funding
Public Equity (IPO)
 Cons
► Risk
of loss of control
► Success
/ failure is market driven
► Short-term
thinking / perspectives
10
10
Between vision…
5
-
2007
Global issue volume (€bn)
25
2008
2010
Bond Volume
Lehman
collapse
20
2009
2011
2012
Public Equity
15
10
5
-
2007
2008
2009
2010
Bond Volume
2011
2012
2013
2014
Public Equity
Institutional money has been used for years by
shipping groups worldwide…
Source: Capital IQ
11
10
… and reality
5
-
No. of global issues since '07
180
2007
2008
2009
2010
Bond Volume
2011
2012
Public Equity
150
120
90
60
30
-
… but has up to now
had limited
importance for
Public Equity
Bonds
German ship funding activities
Source: Capital IQ
12
German shipping bonds
Issue Date
2012
2013
2010, 2010, 2013
Maturity
2017
2018
2015, 2017, 2018
Volume
€60m
€ 275m
€480m, $250m,
€400m
Coupon
6.875%
8.875%
9.00%, 9.75%,
7.75%
Yield to
Maturity
96.67%
(act. price: €18)
14.04%
5.02%, 8.71%, 7.41%
Ranking
Senior secured
Senior unsecured
Senior unsecured
Issuer rating
@ Issue: A
(now insolvent)
@ Issue: BB
Actual: CCC
S&P: B+
Moody’s: B2
Source: Corporate information, OnVista
13
Listed German shipping groups
Asset class
Containers
Container, dry and liquid bulk
Founders
HCI, Hammonia Reederei
König & Cie., HSH Nordbank
Fleet
13 vessels (2,500 to 7,800 TEU)
13 vessels (6 tankers, 4 bulkers,
2 containers, 1 car carrier)
IPO
2007
2006
Market cap.
€3.4m (Price: €25.0)
€7.5m (Price: €5.0)
Ownership
Institutional Investors: 90.5%
Free Float: 9.5%
Institutional Investors: 97%
Free Float: <3%
Source: Corporate information, Finanztreff
14
The way forward for German
shipping companies
► The
right organizational set-up
► Scale
of owned assets
► Critical
mass of vessels under management
15
Where do you see yourself?
Focus of German
shipping companies
Ship
owning
Ship
management
Logistics /
access
to freight
16
Questions?
► Based
on you own experience, what questions
do you have for me at this time?
► 1.
► 2.
► 3.
► 4.
► 5.
17
Thank you for your attention.
Contact details:
Simon Madej
Executive Director
HSH Nordbank AG
Corporate Finance, M&A
+ 49 (0)40 3333 15768
simon.madej@hsh-nordbank.com
HSH-NORDBANK.COM
Disclaimer
This document has been prepared by HSH Nordbank AG (hereinafter referred as „HSH“ or „HSH Nordbank“) for information purposes only. The information provided herein is based
on data and documentation provided by HSH or the current vessel owners. The explanations, opinions and estimates in this document reflect current circumstances and are subject to
change over time and are preliminary and tentative only.
HSH considers the information in this document to be reliable, but neither they nor any other third party have conducted a thorough examination or any investigation necessary to insure
that it is correct and complete. Therefore, neither HSH or its executive bodies, senior staff nor employees accept any legal liability in connection with this document or any information
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related thereto, if and to the extent legally possible.
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Nothing in this is, or should be relied on as a legal, tax, or economic advice or recommendation . Each recipient of this document is recommended to make his own legal, tax, or economic
assessment of the matters contained herein through internal or external counsel. This document does not constitute an obligation to enter into a purchase agreement and does neither
from any offer or invitation for an offer nor shall it provide the basis of any investment or disinvestment decision. Each recipient of this document is recommended to make his own
independent investigation , inquiry and assessment prior to investment decision.
By accepting this document you agree to bound by the above conditions and limitations.
HSH Nordbank AG
Corporate Finance, M&A
Rosenstraße 11
20095 Hamburg
Phone: +49 40 3333 15700