USA: Diamond S Shipping Acquires 30 Medium-Range Refined Product Carriers

Diamond S Shipping announced today that it has entered into a definitive agreement to acquire 30 medium-range refined product carriers to add to its fleet of ten tankers under construction in Korean shipyards. The 30 product carriers and related charters are being purchased from Cido Tanker Holding Co. under a definitive agreement which is scheduled to close, subject to customary conditions, in this calendar quarter. The ten newbuild tankers, eight Suezmax tankers and two LR2 tankers, are being constructed by Hyundai Heavy Industries and Samsung Heavy Industries, with the first delivery scheduled for January, 2012.

Founding Diamond S investor First Reserve Corporation (Greenwich, CT) is being joined by a group of investors led by WL Ross & Co. (New York), China Investment Corporation (Beijing), Fairfax Financial Holdings Limited (Canada), Morgan Creek Capital Management (Chapel Hill, N.C.) and PPM America Capital Partners (Chicago), which firms have committed to invest over $600 million in Diamond S in connection with the Cido product tanker acquisition. The balance of the product tanker purchase price will be provided by debt financing committed by Nordea Bank Finland and DnB Nor Bank ASA. Funding for the newbuilds had previously been arranged.

London-based Clarksons conducted a competitive global sales process on behalf of Cido Shipping.

“We have been looking for the right opportunity in the shipping industry for some time,” said Wilbur Ross​, Jr., Chairman of WL Ross & Co. “Diamond S has a proven management team led by shipping industry veteran Craig Stevenson and provides an outstanding platform to build a leading global shipping business at what we see as an excellent time to invest in the industry,” Ross said.

William E. Macaulay, Chairman and CEO of First Reserve Corporation, said, “Craig has well positioned Diamond S to benefit from the growth and attractive supply demand trends in the Eastern Hemisphere. We are pleased to welcome this premier group of international investors to advance Diamond S to the next level.”

The Cido transaction was structured as the purchase of stock in companies that own the 30 product carriers in order to assume a smooth transaction of existing charters, third-party management contracts, flags and classifications of the ships.

Diamond S was advised in the Cido Shipping transaction by the global law firm Jones Day; Cido was represented by Mayer Brown JSM.

About Diamond S:

Diamond S Shipping is a global shipping group founded in 2007 by First Reserve Corporation and Craig H. Stevenson, Jr. to create an energy-focused shipping company. Prior to forming Diamond S, Stevenson led OMI Corporation, which had 45 ships at the time of its sale for $2.2 billion in 2007. Under Stevenson’s leadership, OMI achieved a compound annual growth rate of 36% in revenue and 32% in EBITDA, and outperformed its peers by 200% from 2001 to 2007.

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Source: Diamond S Shipping,August 1, 2011.