Bloomberg News

Wilbur Ross Plans Shipping Expansion as Industry Distress Grows

March 30, 2012

Chairman and Founder of WL Ross & Co. Wilbur Ross. Photographer: Scott Eells/Bloomberg

Chairman and Founder of WL Ross & Co. Wilbur Ross. Photographer: Scott Eells/Bloomberg

Billionaire Wilbur Ross said he’s considering further investments in shipping as financial distress within the maritime industry intensifies.

The chairman and founder of WL Ross & Co., who manages about $10 billion, is evaluating further purchases of oil- product tankers after last year participating in the acquisition of 30 of the vessels through Greenwich, Connecticut-based Diamond S Shipping. He’s also considering liquefied natural gas and liquefied petroleum gas carriers, he said by e-mail yesterday.

“The number of distressed shipping deals grows daily, mostly from individual owners of small numbers of ships,” Ross said. “We do expect further opportunities over the next 12 months. You never know where the exact bottom is until after the recovery has begun, but it is clear that we are already much closer to the bottom than the top.”

The combined market value of the world’s 80 biggest publicly traded shipping companies plunged by $101.7 billion in the four years to March 23, figures compiled by Bloomberg show. A glut of vessels cut earnings below levels that cover operating costs, triggering bankruptcies and loan breaches.

Ross and six investors who spent $900 million to buy the product carriers last year may deploy about $300 million more, Diamond S Chief Executive Officer Craig Stevenson Jr. said in interviews over the past 10 days. China Investment Corp., the nation’s sovereign-wealth fund, also backed that transaction.

Only Forced Sales

“The only sales around at the moment are forced sales,” said Stevenson, who headed OMI Corp. when the oil-tanker operator was bought for $2.2 billion including debt by Teekay Corp. and Torm A/S (TORM) in 2007. Banks that financed vessels are selling them at lower prices to get rid of them because owners are unable to pay, Stevenson said.

Any purchase of oil tankers would exclude the biggest, known as very large crude carriers, and the company isn’t seeking to buy ships that haul dry-bulk raw materials, according to Stevenson.

Vessels that haul liquefied gases may be attractive because fewer have been built, said Ross. Day rates for shorter-duration LNG-carrier (VSMVVLAN) charters rose above $150,000 this year, contrasting with slumps for oil tankers and dry-bulk carriers.

Stevenson said he’s studying new transactions daily and examined 50 deals over three years before buying the 30 product tankers from Hong Kong-based Cido Tanker Holding Co.

Share Sale

The CEO started Diamond S in October 2007 with private- equity firm First Reserve Corp., and the companies’ offices are less than a mile apart in Greenwich. While Stevenson would like to see Diamond S go public eventually, there is no schedule for a share sale, he said.

Stevenson said he was introduced to Ross by Robert Profusek, a partner at New York-based law firm Jones Day specializing in mergers and acquisitions who had both men as clients. After a presentation to the billionaire’s staff regarding last year’s transaction, proceedings went into “high gear,” the CEO said.

“Before you know it, we’ve got Wilbur in and literally a who’s who of the private-equity world as investors in Diamond S,” he said.

To contact the reporter on this story: Michelle Wiese Bockmann in London at mwiesebockma@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net


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