Americas News
Private Equity Funds Set to Take a Larger Ownership Stake in Shipping
The purchasing of distressed debt by private equity funds is set to become a more prominent feature of the shipping market in 2015, ShippingWatch reports.
According to the report, private equity investors are seeking to buy distressed debt as a path to acquiring equity in the company and ultimately become the owners.
Traditionally such investors have preferred to own ships which provide more direct control over their assets as opposed to buying shipping debt which has been seen as overpriced.
Eitzen Chemical is understood to have negotiated a long term agreement with a group of U.S.-based funds including Angelo Gordon, while Torm's restructuring negotiations are ongoing with Oaktree Capital.
"The novelty in the distressed shipping market in 2014 was that distressed debt traded in large scale in cases such as Eitzen and Torm, and was followed by plans to take control of the company through debt for equity swaps," said market intelligence service Debtwire.
The debt restructuring plans can leave the companies' ownership completely changed, with Torm's settlement expected to leave only one or two percent of its original owners in the line up.
"Given that distressed shipping debt is no more an uncharted territory, we expect investors to try this option more in 2015," said Debtwire.
"However, this will of course depend on the performance of the various sectors of the shipping industry and frequency of distressed situations available in the market."
Last year, German shipbrokers Frachtcontor Junge said private equity was "ruining" the shipping market.
