Investors including First Reserve Corp., WL Ross & Co., China Investment Corporation, Fairfax Financial Holdings, Morgan Creek Capital Management and PPM America Capital Partners are putting more than $600 million in equity into Diamond S Shipping, the company announced Monday. Additional debt funding will come from Nordea Bank Finland and DnB Nor Bank ASA. The money is being used to fund the acquisition of 30 medium-range refined product carriers to add to the company’s fleet of ten tankers under construction in Korean shipyards.
Diamond S Shipping announced today that it has entered into a definitive agreement to acquire 30 medium-range refined product carriers to add to its fleet of ten tankers under construction in Korean shipyards. The 30 product carriers and related charters are being purchased from Cido Tanker Holding Co. under a definitive agreement which is scheduled to close, subject to customary conditions, in this calendar quarter. The ten newbuild tankers, eight Suezmax tankers and two LR2 tankers, are being constructed by Hyundai Heavy Industries and Samsung Heavy Industries, with the first delivery scheduled for January, 2012.
Founding Diamond S investor First Reserve Corporation (Greenwich, CT) is being joined by a group of investors led by WL Ross & Co. (New York),China Investment Corporation (Beijing), Fairfax Financial Holdings Limited (Canada), Morgan Creek Capital Management (Chapel Hill, N.C.) and PPM America Capital Partners (Chicago), which firms have committed to invest over $600 million inDiamond S in connection with the Cido product tanker acquisition. The balance of the product tanker purchase price will be provided by debt financing committed by Nordea Bank Finland and DnB Nor Bank ASA. Funding for the newbuilds had previously been arranged.
London-based Clarksons conducted a competitive global sales process on behalf of Cido Shipping.
“We have been looking for the right opportunity in the shipping industry for some time,” said Wilbur Ross, Jr., Chairman of WL Ross & Co. “Diamond S has a proven management team led by shipping industry veteran Craig Stevenson and provides an outstanding platform to build a leading global shipping business at what we see as an excellent time to invest in the industry,” Ross said.
William E. Macaulay, Chairman and CEO of First Reserve Corporation, said, “Craig has well positioned Diamond S to benefit from the growth and attractive supply demand trends in the Eastern Hemisphere. We are pleased to welcome this premier group of international investors to advance Diamond S to the next level.”
The Cido transaction was structured as the purchase of stock in companies that own the 30 product carriers in order to assume a smooth transaction of existing charters, third-party management contracts, flags and classifications of the ships.
Diamond S was advised in the Cido Shipping transaction by the global law firm JonesDay; Cido was represented by Mayer Brown JSM.
About Diamond S:
Diamond S Shipping is a global shipping group founded in 2007 by First Reserve Corporation and Craig H. Stevenson, Jr. to create an energy-focused shipping company. Prior to forming Diamond S, Stevenson led OMI Corporation, which had 45 ships at the time of its sale for $2.2 billion in 2007. Under Stevenson’s leadership, OMI achieved a compound annual growth rate of 36% in revenue and 32% in EBITDA, and outperformed its peers by 200% from 2001 to 2007.
About First Reserve Corporation:
First Reserve is a leading private investment firm in the energy and natural resource industries, making both private equity and infrastructure investments throughout the energy value chain. For 28 years, it has invested solely in the global energy industry, and has developed a preeminent franchise, utilizing its broad base of specialized energy industry knowledge as a competitive advantage. The firm is currentlyinvesting its most recent private equity fund, which closed in 2009 at approximately US $9 billion and its most recent infrastructure fund which closed in 2011 at approximately US $1.2 billion. First Reserve invests strategically across awide range of energy industry sectors, developing a portfolio that is diversified across the energy value chain, backing talented management teams and building value by building companies. Further information is available at www.firstreserve.com.
About WL Ross & Co.:
Founded by legendary investor Wilbur Ross, Jr., WL Ross & Co. is an investment management company for a series of funds and has sponsored private equity funds, co-investment vehicles and hedge funds which have invested in the railcar, steel, textile, coal, automotive, financial and other industries in the U.S., Ireland, U.K., France, Germany, China, Japan, Korea, Vietnam, India, Brazil and Bermuda. WL Ross currently has approximately $9 billion under management for a “Who’s Who” of institutional investors who share a long-term investment horizon.