Houston based Genesis is offering 4m common units in a move that could raise $180m, with an additional ‘greenshoe’ option to underwriters to purchase a further 600,000 units potentially raising the total to $203m.
Genesis splashed out $157m to buy the 49,000-dwt Jones Act tanker American Phoenix (built 2012) from MidOcean Tanker in October to add to a substantial fleet of inland waterway and coastal tugs of up to 6,140hp and tank barges of up to 20,000-dwt.
The purpose of the offering was not clear from Genesis’ filing which spoke only of the proceeds being used for general partnership purposes including funding acquisitions or repayment of debt.
But Arctic Securities suggests further investment in Jones Act tonnage may be on the horizon although it admits this view is speculative.
Arctic analyst, Erik Nikolai Stavseth, notes that assuming 70% leverage on modern tonnage delivering in 2015-2017 Genesis could acquire $600m of tonnage which based on the American Phoenix valuation might be four ships.
“Disregarding what Genesis has in sight, we remain optimistic on the Jones Act market as export volumes out of Corpus Christi remains firm and an increase in gasoline demand in US could provide additional support for blue water transportation,” says an Arctic Securities report.
Oslo based Arctic sees the Genesis move as implying a “solid upside” for other Jones Act plays such as American Shipping Company (AMSC), Aker Philadelphia Shipyard (AKPS) and Philly Tankers.
New York stock exchange quoted Genesis Energy is a midstream master limited partnership with a diverse portfolio of interests in refining, pipelines, storage tanks, terminals, and shipping both by water and on tarmac.
Wells Fargo Securities, BofA Merrill Lynch, Citigroup, Deutsche Bank Securities, RBC Capital Markets, Credit Suisse, Raymond James and UBS Investment Bank are acting as joint book-running managers for the offering.
Baird, BMO Capital Markets and Janney Montgomery Scott are acting as co-managers.
