Eitzen Maritime Services ASA. Acquisition of Seven Seas Shipchandlers LLC MUSD 50 Private Placement. June 2008. Disclaimer.
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Acquisition of Seven Seas Shipchandlers LLC
MUSD 50 Private Placement
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Eitzen Maritime Services ASA (EMS) to acquire Seven Seas Shipchandlers LLC (Seven Seas)
Seven Seas is the leading Middle East ship supplier
MUSD 193 in 2007 turnover, EBITDA of MUSD 14.9
Gross acquisition price of MUSD 115
No interest bearing debt
Large, modern warehouse with prime location in Dubai included in transaction
Financing guarantee in place
Private placement of MUSD 50 fully underwritten by
Camillo Eitzen & Co. ASA
Senior bank debt of MUSD 50 provided by a consortium
led by Nordea and Kauthing at LIBOR + 3.25%
Two year seller’s credit of MUSD 20 (non-interest bearing)
Subsequent offering for EMS shareholders not invited to
participate in the private placement
EMS has an option to pay up to MUSD 5 of the gross
acquisition price in shares
* Pre transaction costs
Capital requirement of approximately MUSD 115 in total,
whereof MUSD 50 funded by bank debt and MUSD 20 by
Private placement and documentation
Fully underwritten by Camillo Eitzen & Co. ASA at NOK 3.0 per New Share
65% of the private placement is intended for existing shareholders of which Camillo Eitzen & Co. ASA will subscribe for its pro-rata share
Minimum subscription/allotment NOK equivalent to EUR 50,000
Documentation: Investor presentation, term sheet and terms of
Eitzen Maritime Services ASA
Shares sold in private placement
Shares prior to private placement 140.5 million
New Shares*: 75.7- 85.8 million
Price range (NOK): 3.0-3.4
Shares after private placement*: 216.2-226.3 million
Pre offering at NOK 3.2/share (mid-range): MNOK 450
Post offering at NOK 3.2/share (mid-range): MNOK 707
* Numbers can change. Calculations based on a NOK/USD as of 11th June 2008 of 5.15
EMS Ship Management
Revenue split (2007P)
Obtaining a global footprint and creating economies of scale and synergies
=> Improved profitability, growth, balance sheet and stock market attractiveness
* EMS 2007 figures is proforma incl. full-year of Provimar earnings. 2007 EBITDA include non-recurring restructuring charges of MNOK 27.9
Economies of scale
Synchronizing product portfolios, stocking and sourcing
Creating the leading global ship supplier company
Acquisition will result in a sales growth close to 100% within EMS’ ship supply division
Closes an important geographical gap for EMS
Seven Seas is the dominant Middle East ship supplier
Reputed Dubai based company in a fast growing shipping and logistics hub
Started in 1986 by Mr. Freddy Sidhwa, age 63
Impressive logistics operation built in a high growth area
Management, organization and IT systems in place
Prime location of high standard premises with major expansion potential
Strong corporate structure with focus on details/ precision
Revenue of MUSD 193 in 2007
Approx. 70% of revenues generated from food supplies
UAE accounting for around 60% of revenues
60/40 split between military and commercial revenue
Strong and competent management with track record
Committed to continue after the transaction
Dubai facilities (93.000 m2 land, 32.000 m2 buildings)
The world’s largest airport under construction (120 mill passengers)
Military sales mix (MNOK 751 in 2007)
Civilian sales mix (MNOK 377 in 2007)
Increased presence - key account and cross region selling
Navy and military
IT and operations
Increased procurement power and reduced cost of goods
Underlying growth driven by expansion of merchant and offshore fleets
New segments opening in navy and fishery
Transparent markets with easy access to different ship suppliers’ prices & terms
Creates need for efficiency, purchasing power and optimal logistics& sourcing – supported by a fully integrated IT system
Increased focus on “global supplier”
Global presence important to serve shipping companies better
Key account approach
Consolidation likely to continue
EMS incl. Seven Seas largest player with 4-5%
Global ship supplier market estimated to be BUSD 10-15
4-5% market share
Fundamentals in place to support 10%+ market growth annually
EMS has become the definite leader in ship supply
Acquisition gives strong presence in one of the world’s most dynamic and fast growing shipping regions
Major leap towards the strategic goal of a global footprint
Margins and earning boosted by the acquisition
Favourable acquisition price
Ship Supply EBITDA margin target has been 5% for EMS. Management will aim to lift total ship supply margins towards 7% as seen for Seven Seas recently.
Organic growth expected around 10% annually
Ship Management EBITDA margin target of 20%
Become 1 of 3 largest players within the ship management market
POTENTIAL RISK FACTORS chandlers- including but not limited to;
Main shareholders and share price performance
EMS corporate management chandlers