Tanker owner Gener8 Maritime has begun trading on the New York Stock Exchange under the ticker symbol ‘GNRT’ after pricing its initial public offering (IPO) at a sizeable discount.
The Peter Georgiopoulos-led company priced its IPO of 15 million shares at USD14/share, 22% below the midpoint of its USD17-19/share target range. Gross proceeds will be USD210 million, USD60 million less than hoped. If underwriters exercise the over-allotment in full, gross proceeds will rise to USD241.5 million.
After expenses, net proceeds will be approximately USD190 million (USD228 million with the full underwriter option). Gener8 expects to use USD87 million of net proceeds to repay senior credit facilities in connection with a refinancing plan. The remainder could be used for newbuild payments or vessel acquisitions. The company, which was created through the merger of General Maritime and Navig8 Crude, has 25 tankers on the water (7 VLCCs, 11 Suezmaxes, 4 Aframaxes, 2 Panamaxes and 1 Handymax), plus 21 ‘eco’ VLCC newbuilds scheduled for deliveries in 3Q15-1Q17.
Related news:Gener8 sets IPO target price
The Gener8 IPO was closing watched and widely viewed as a bellwether for Wall Street interest in the crude tanker sector. The low pricing implies that investors remain cautious, which could have negative implications for other tanker companies hoping to go public by year-end.
The Gener8 roadshow, during which it marketed its thesis to prospective investors, took place on 15-24 June. The company’s pitch partially hinged on the premise that crude tanker asset values will rise. However, the roadshow coincided with a period when prices of new VLCC assets were actually falling.