Investor Presentation • Feb 9, 2017
Investor Presentation
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Company Update
9 February 2017
This presentation dated 9 February 2017 (the "Presentation") has been prepared by Songa Bulk AS (the "Company") for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein.
To the best knowledge of the Company, its officers and directors, the information contained in this Presentation is in all material respect in accordance with the facts as of the date hereof and contains no material omissions likely to affect its importance. Please note that no representation or warranty (express or implied) is made as to, and no reliance should be placed on, any forward-looking statements, including projections, estimates, targets and opinions, contained herein. To the extent permitted by law, the Company, its parent or subsidiary undertakings and any such person's officers, directors, or employees disclaim all liability whatsoever arising directly or indirectly from the use of this Presentation.
This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances, not historical facts and are sometimes identified by the words "believes", expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Presentation (including assumptions, opinions and views of the Company or opinions cited from third party sources) are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company, any of its parent or subsidiary undertakings or any such person's officers, directors, or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors, nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments described herein.
The Presentation contains information obtained from third parties. Such information has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading in any material respect.
AN INVESTMENT IN THE COMPANY INVOLVES RISK. SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE PREDICTED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, BUT NOT LIMITED TO, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY'S BUSINESS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS AND, MORE GENERALLY, ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, THE ACTUAL RESULTS OF THE COMPANY MAY VARY MATERIALLY FROM THOSE FORECASTED IN THIS PRESENTATION.
By attending or receiving this Presentation recipients acknowledge that they will be solely responsible for their own assessment of the Company and that they will conduct their own analysis and be solely responsible for forming their own view of the potential future performance of the Company and its business.
The distribution of this Presentation may, in certain jurisdictions, be restricted by law. Persons in possession of this Presentation are required to inform themselves about and to observe any such restrictions. No action has been taken or will be taken in any jurisdiction by the Company that would permit the possession or distribution of any documents or any amendment or supplement thereto (including but not limited to this Presentation) in any country or jurisdiction where specific action for that purpose is required.
In relation to the United States and U.S. Persons, this Presentation is strictly confidential and may only be distributed to "qualified institutional buyers", as defined in Rule 144A under the U.S. Securities Act of 1933, as amended (the "US Securities Act"), or "QIBs". The recipient of this presentation is prohibited from copying, reproducing or redistributing the Presentation. The shares of the Company have not and will not be registered under the U.S. Securities Act or any state securities law and may not be offered or sold within the United States unless an exemption from the registration requirements of the U.S. Securities Act is available. Accordingly, any offer or sale of shares in the Company will only be made (i) to persons located in the United States, its territories or possessions that are QIBs in transactions meeting the requirements of Rule 144A under the U.S. Securities Act and (ii) outside the United States in "offshore transactions" in accordance with Regulations S of the U.S. Securities Act. Neither the U.S. Securities and Exchange Commission, nor any other U.S. authority, has approved this Presentation.
This Presentation is being communicated in the United Kingdom to persons who have professional experience, knowledge and expertise in matters relating to investments and who are "investment professionals" for the purposes of article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and only in circumstances where, in accordance with section 86(1) of the Financial and Services Markets Act 2000 ("FSMA"), the requirement to provide an approved prospectus in accordance with the requirement under section 85 FSMA does not apply.
The contents of this Presentation shall not be construed as legal, business, or tax advice. Recipients must conduct their own independent analysis and appraisal of the Company and the Shares and of the data contained or referred to herein and in other disclosed information, and risks related to an investment, and they must rely solely on their own judgement and that of their qualified advisors in evaluating the Company and the Company's business strategy.
This Presentation reflects the conditions and views as of the date set out on the front page of the Presentation. The information contained herein is subject to change, completion, or amendment without notice. In furnishing this Presentation, the Company undertake no obligation to provide the recipients with access to any additional information.
This Presentation shall be governed by Norwegian law. Any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of the Norwegian courts with the Oslo City Court as legal venue.
A dry bulk shipping investment vehicle founded by the Blystad Group and Herman Billung
Since inception in November 2016, Songa Bulk has acquired five attractive dry bulk carriers at a total cost of ~USD 66m
| Management team | The Blystad Group | ||
|---|---|---|---|
| • | Herman Billung CEO |
||
| – CEO of Golden Ocean, 2005 – 2016 |
REAL ESTATE | Portfolio of residential and commercial investments in Norway | |
| – Managing Director of Maritime Services, responsible for the Commercial management of the Torvald Klaveness Group's dry bulk pools, Bulkhandling and Baumarine, 1998 – 2005 |
and Scandinavia | ||
| – Managing Director of the dry bulk operating company, Frapaco Shipping |
SECURITIES | Manages an actively traded portfolio of securities and FFAs | |
| Ltd, 1994 – 1998 |
Investments based on utilizing deep industry knowledge | ||
| – The Torvald Klaveness Group, 1989 – 1994 |
|||
| – Royal Norwegian Navy, 1978 – 1989 |
SHIPPING | Currently owns and manages a fleet of 23 vessels within the chemical, product, dry, crude and heavy-lift segments |
|
| • | Per Kristian Aamlid COO |
||
| – Chartering Director, Arne Blystad AS, 2007 – present |
Introduction The Blystad Group, which is 100% owned by Mr. Arne Blystad and his immediate family, has a long history in international shipping. The Group has historically been active in the sale and purchase market. In the beginning of the previous decade, the Group actively took part in the upturn within the drybulk segment by buying and selling secondhand tonnage. Parts of these proceeds were reinvested in newbuilding contracts that were sold prior to the vessels being delivered. The Blystad Group had prior to its sale of its chemical fleet to Eitzen Chemical ASA in 2006 built up one of the world's largest chemical fleets. Following the sale in 2006, the Group has continued to redeploy and invest across the various shipping |
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| – Chartering Director of dry bulk and tankers (Consultancy), Arendals Dampskibselskab, 2015 – present |
|||
| – Chartering Director, headed up the Torvald Klaveness Group's dry bulk pools, Bulkhandling and Baumarine, 1991 – 2007 |
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| – Chartering Manager, Leif Höegh & Co AS 1978 – 1990 |
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| • | Management team with extensive experience from leading dry bulk companies |
segments with its opportunistic approach of taking advantage of the cycles.
Estimated cash break-even vs historical 1yr Panamax TC rates
*Estimate based on 5 vessels Source: Clarkson Research Services
Current risk/reward highly attractive
Source: Clarkson Research Services
Unlevered asset upside to implied pricing of listed peers and historical averages
10yr old Panamax unlevered cash yield at various rate scenarios
Assumptions: 10yr old Panamax acquisition cost of USD 9.5m, OPEX of USD 5,400/day, G&A of USD 800/day, 360 trading days per year, 365 cost days per year. Source: Clarkson Research Services
Supply growth tapering off – negative net fleet growth expected going forward
Nominal vs expected orderbook Deliveries coming to a halt
2015-2016 saw 5 consecutive months with earnings below OPEX, suggesting that dry bulk rates are unsustainably low
Actual deliveries, cancellation and "slippage" vs orderbook at beginning of the year – in million dwt
IRR vs 5yr old Panamax discount to NB parity and total bulker fleet growth Investment thesis and returns
Current discount to NB parity is 30%, historically investments at such a time has lead to positive IRRs in 95 out of 100 cases
Source: Company, Clarkson Research Services, Clarksons Platou Securities
Once 12 months time charter rates come up to 'double digit', values will see substantial upticks:
Source: Clarkson Research Services
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