IPO Report: Gener8 Maritime Inc. (GNRT)

Francis Gaskins |

Gener8 Maritime Inc. (GNRT) is Gener8 Maritime Inc., a leading U.S.-based provider of international seaborne crude oil transportation services, resulting from a transformative merger between General Maritime Corporation, a well-known tanker owner, and Navig8 Crude Tankers Inc., a company sponsored by the Navig8 Group, one of the largest independent vessel pool managers. It is based in  New York, NY.

Twelve other companies are scheduled for the week of June 22. The full IPO calendar is available at IPO Premium.

Conclusion

Neutral

Q1 rev -2%

Q1 net income +25% but yearly losses before

P/E of 10.3

Price to book of 1.1

No dividends

Expects to double fleet

SEC Documents

Manager, Joint-managers: Citigroup, UBS, Jefferies, Evercore ISI
Co-managers: DNB Markets, ABN AMRO, Pareto Securities, Axia

End of lockup (180 days): Tuesday, December 22, 2015
End of 25-day quiet period: Monday, July 20, 2015

GNRT scheduled a $218 million IPO with a market capitalization of $1.4 billion at a price range midpoint of $18 for Thursday, June 25, 2015 on NYSE.

Summary

GNRT is Gener8 Maritime Inc., a leading U.S.-based provider of international seaborne crude oil transportation services, resulting from a transformative merger between General Maritime Corporation, a well-known tanker owner, and Navig8 Crude Tankers Inc., a company sponsored by the Navig8 Group, one of the largest independent vessel pool managers.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Gener8 Maritime (GNRT)

$1,280

2.6

10.3

1.1

1.1

21%

             

Business

GNRT is Gener8 Maritime Inc., a leading U.S.-based provider of international seaborne crude oil transportation services, resulting from a transformative merger between General Maritime Corporation, a well-known tanker owner, and Navig8 Crude Tankers Inc., a company sponsored by the Navig8 Group, one of the largest independent vessel pool managers.

Fleet & New Buildings

GNRT owns a fleet of 46 tankers, including 25 vessels on the water, consisting of 7 VLCCs, 11 Suezmax vessels, 4 Aframax vessels, 2 Panamax vessels and 1 Handymax product carrier, with an aggregate carrying capacity of 4.5mm deadweight tons as of March 31, 2015, and 21 "eco" VLCC newbuildings equipped with advanced, fuel-saving technology, that are being constructed at highly reputable shipyards, with expected deliveries from August 2015 through February 2017.

New Buildings to Double the Fleet

These new buildings are expected to more than double GNRT’s fleet capacity to 10.8mm DWT, based on the contractually-guaranteed minimum DWT of newbuild vessels.

After the delivery of these vessels, GNRT believes that its VLCC fleet will be larger than any owned currently by a U.S. publicly-listed shipping company and will be one of the top five non-state owned VLCC fleets worldwide based on current estimated fleet sizes.

In addition to being one of the largest owners by deadweight tonnage of VLCC and Suezmax vessels, GNRT believes it will uniquely benefit from its strategic commercial management relationship with the Navig8 Group, the largest fully-integrated commercial management platform in its industry.

History

General Maritime was founded in 1997 by GNRT’s Chairman and Chief Executive Officer, Peter Georgiopoulos, and has been an active owner, operator and consolidator in the crude tanker sector.

 Mr. Georgiopoulos has overseen the purchase of more than 200 vessels across six companies, for an aggregate purchase price of over $7.5 billion. Navig8 was formed in 2013 by the Navig8 Group, as a crude tanker owning entity and has contracts for 14 "eco" VLCC newbuilding vessels.

Navig8 Group manages over 300 vessels across 15 vessel pools. In addition to the greater scale provided by its transformative transaction, GNRT brings to its merged organization the combined industry expertise of General Maritime's existing management team and former senior executives at Navig8 Crude, who are expected to serve as consultants to its Board of Directors and sit on its Strategic Management Committee.

GNRT believes that it will benefit from multiple commercial and operational advantages of Navig8 Group's VL8, Suez8 and V8 pools, in which GNRT intends to employ its spot VLCC, Suezmax and Aframax vessels, including enhanced scale and access to incremental market intelligence.

In addition, pursuant to the Navig8 non-binding term sheet and subject to reaching mutually agreeable terms, GNRT expects to receive the right to a 15% share of the revenue of the commercial manager of the Suez8 pool in respect of its Suez8 pool revenues and the right to at least a 10% (and as much as a 15%) share of the revenue of the commercial manager of the VL8 pool in respect of its VL8 pool revenues, in each case as a percentage of revenue remaining after deducting $150,000 per annum for each vessel time chartered by any party.

Intellectual Property

Nothing

Competition

International seaborne transportation of crude oil and other petroleum products is provided by two main types of operators: fleets owned by independent companies and fleets operated by oil companies (both private and state-owned).

Many oil companies and other oil trading companies, the primary charterers of the vessels GNRT owns, also operates its own vessels and transport oil for themselves and third-party charterers in direct competition with independent owners and operators.

Competition for charters is intense and is based upon price, vessel location, the size, age, condition and acceptability of the vessel, and the quality and reputation of the vessel's operator.

Other significant operators of vessels carrying crude oil and other petroleum products include American Eagle Tankers Inc. Limited, Frontline, Ltd., Overseas Shipholding Group, Inc., Teekay Shipping Corporation and Tsakos Energy Navigation. There are also numerous, smaller vessel operators.

Dividend Policy

None planned

5% Shareholders Pre-IPO

Certain funds managed by Oaktree        19.4%  

BlueMountain Capital Management, LLC   12.1%

Certain funds managed by Avenue Capital Group           11.1%

Certain funds affiliated with Aurora         9.6%    

BlackRock, Inc.             8.2%    

Monarch Alternative Capital LP    8.2%   

Navig8 Limited   5.5%

Steven D. Smith            9.6%                

Dividends

No dividends are planned.

Use of Proceeds

GNRT expects to receive $246 million from its IPO and use it for the following:

$87 million of the net proceeds from this offering to reduce the amounts owed under its senior secured credit facilities in connection with their expected refinancing. Following this reduction in the amounts owed under its senior secured credit facilities and their expected refinancing, there will be $570 million in aggregate principal amount under its Refinancing Facility outstanding.

for general corporate purposes which may include: vessel acquisitions; funding a portion of the $1.4 billion remaining installment payments, as of June 7, 2015, due under the shipbuilding contracts for GNRT’s 21 VLCC newbuildings.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
GNRT Gener8 Maritime Inc. 3.59 -0.24 -6.27 462,845

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