IPO Preview: Stalwart Tankers

Apr.10.14 | About: Stalwart Tankers (STST)

Summary

Recently organized under the laws of the Republic of the Marshall Islands to own and operate a fleet of mid-size stainless steel chemical tankers.

Will initially operate a fleet of five stainless steel chemical tankers.

The IPO market is not too receptive to yet another start-up tanker company.

Based in Athens, Greece, Stalwart Tankers (Pending:STST) scheduled a $150 million IPO on the NYSE with a market capitalization of $188 million at a price range midpoint of $12 for Thursday, April 10, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: Jefferies, Wells Fargo Securities, Global Hunter Securities

Co-Managers: Pareto Securities, UniCredit Capital Markets

Summary
STST is Stalwart Tankers Inc., a company recently organized under the laws of the Republic of the Marshall Islands to own and operate a fleet of mid-size stainless steel chemical tankers.

Valuation

Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Stalwart Tankers

$188

7.2

-1395.6

1.2

1.2

80%

Click to enlarge

Conclusion
Avoid, the IPO market is not receptive to yet another startup tanker company.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business

STST's provide marine transportation services to chemical companies, oil majors, national oil companies, and oil and chemical traders. STST's vessels are used in the global transportation of organic and inorganic chemical commodities, vegetable oils and animal fats, and a range of other specialty liquid products.

Within the global chemical industry, the chemical tanker sector plays an increasingly prominent role by helping to balance chemical production and consumption on both a global and regional scale according to Drewry.

STST will initially operate a fleet of five stainless steel chemical tankers. STST refers to these five operating vessels as its initial fleet.

In addition, STST has signed a letter of intent with a Korean shipyard for an initial four eco-design newbuilding mid-size stainless steel chemical tankers with scheduled delivery dates expected to begin in 2016, and the option to acquire an additional two eco-design newbuilding mid-size stainless steel chemical tankers with potential delivery dates during 2017.

STST is also currently pursuing the acquisition of up to five mid-size secondhand stainless steel tankers from unaffiliated third parties, built at various times between 2002 and 2010 and each with approximately 20,000 to 25,000 Dwt of capacity.

Although STST has not yet executed definitive documentation, it believes it has agreed in principle to terms that will provide it the right, subject to certain conditions, to acquire three of these secondhand stainless steel chemical tankers, or the negotiated secondhand vessels, and are in advanced negotiations for the purchase of two additional such vessels.

STST refers to the negotiated secondhand vessels together with the two additional secondhand vessels as the identified secondhand vessels. STST refers to the four initial newbuildings, the two optional newbuildings and the identified secondhand vessels as its proposed expansion fleet.

Dividend Policy

STST intends to pay regular quarterly dividends to holders of its common shares.

STST anticipates that its initial quarterly dividend will be set at $0.01 per share, or $0.04 per share on an annualized basis, and that STST will pay its quarterly dividend at its initial level for at least the first four fiscal quarters that STST is a public company.

Or .3% annualized at the price range mid-point.

5% stockholders

Ekaterini Lanara, 35%

Dimitrios J. Souravlas, 32.3%

Maria Lanara, 16.8%

Konstantinos Sarantopoulos, 10.6%

Use of proceeds

STST expects to net $135 million from its IPO. Proceeds are allocated as follows:

To repay in full the $29.7 million of the indebtedness secured by first priority mortgages on the five operating vessels included in its initial fleet, to fund the initial 20% installment of $34.8 million for its four initial newbuildings and the remainder, together with cash on hand and borrowings under a $75.0 million senior secured revolving credit facility for which STST has received non-binding indicative terms from one of its existing lenders, to fund its total acquisition costs for the identified secondhand vessels, which STST estimates to be between $120 million and $130 million, and for working capital and general corporate purposes.

Disclaimer: This STST IPO report is based on a reading and analysis of STST's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.