Beal Bank of Texas has just completed its largest ship-lending deal with a $306m facility to Nordic American Tankers — but it will not be the last one if executives have their way.
Beal managers spoke with TradeWinds this week about the background of the loan to Herbjorn Hansson-led NAT and their hopes to find other opportunities — perhaps even larger ones.
Shipping is a great fit for us — it’s one of the sectors that we like a lot. The vessels we’ve financed for Nordic American are durable, valuable assets that we think are run by a great company
Patrick Cook, senior managing director with CSG Investments
Patrick Cook, a senior managing director with Beal affiliate CSG Investments, said from his office in the Dallas suburb of Plano that the deal fits his bank’s preferred criteria.
“We're a senior secured lender and we focus on the longer-term portion of the balance sheet, looking for tangible, durable long-term assets,” Cook said.
“Shipping is a great fit for us — it’s one of the sectors that we like a lot. The vessels we’ve financed for Nordic American are durable, valuable assets that we think are run by a great company.”
Cook, a former executive at JP Morgan, works closely with director of shipping Andy Longhurst, who was a former London-based ship-finance man at Lloyds Banking Group from 1996 to 2008.
"I focus almost exclusively on maritime assets — anything that floats, really,” Longhurst said this week. “We like assets that are pretty liquid, and a fleet of suezmax tankers is something that we can quite easily attach value to.”
While NAT is Beal/CSG’s biggest shipping loan yet, it is not the first one.
Some transactions have been in the the secondary market — a purchase of existing debt.
Longhurst said the bank extended a $51m revolving credit facility to Oslo-listed MPC Container Ships last May. This was also a bilateral lending.
Bank ambitions
The larger size of the NAT facility is likely representative of the bank’s ambitions, executives say.
“When you ask about our future appetite, we’re a little unique in that we look for larger deals,” Cook said. “So $50m is a minimum and we can go up to about $700m.
"And we’re buying whole, we’re not looking to subject anything to syndication or market-flex terms. This is truly a bilateral situation.
"We like to put a significant amount of money to work — and we do. When we find something we like, we prefer to fund as much as we can, and so are comfortable with bigger loan sizes.”
The managers would not talk about details of the NAT facility because of confidentiality terms, including the much speculated pricing, which has been estimated in the 8% to 8.5% range.
“I would say everything is custom and specific to the situation," Cook said. "We look at the various characteristics versus the value of the collateral, but we don’t have a predetermined pricing grid.”
'On our radar'
Longhurst did say that NAT had been “on our radar for some time", thanks largely to an introduction from Norwegian house Arctic Securities, which served as an advisor to Hansson’s outfit.
Longhurst said Beal had come to know Arctic Securities through previous transactions.
“In general, I would say that we really structure things around the vessels themselves, rather than relying on a corporate balance sheet or credit rating to support the deal," Longhurst said.
"We also don't necessarily need a fixed cash flow to do a deal — we’re comfortable lending to the spot market.”
While Beal would not talk terms, MPC Container Ships has said in a public filing that last year's long came at Libor plus 475 basis points. That would be about 7.5% on current terms but likely about 6.5% at the time of the deal last year.
