REG - Taylor Maritime - Launch of Initial Public Offering
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PLEASE SEE THE SECTION ENTITLED "IMPORTANT LEGAL INFORMATION" TOWARDS THE END OF THIS ANNOUNCEMENT.
This announcement is an advertisement for the purposes of the Prospectus Regulation Rules of the UK Financial Conduct Authority ("FCA") and is not a prospectus. This announcement does not constitute or form part of, and should not be construed as, an offer for sale or subscription of, or solicitation of any offer to subscribe for or to acquire, any ordinary shares in any jurisdiction, including in or into the United States, Canada, Australia, the Republic of South Africa or Japan. Investors should not subscribe for or purchase any ordinary shares referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") to be published by the Company in connection with the proposed admission of its ordinary shares to the London Stock Exchange ("Admission"). A copy of the Prospectus will, following publication, be available for inspection from the Company's registered office and made available for viewing at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
7 May 2021
Taylor Maritime Investments Limited (the "Company")
Launch of Initial Public Offering
Initial Placing, Offer for Subscription and issue of Consideration Shares for a target issue of approximately 250 million Ordinary Shares at $1.00 per Ordinary Share
Taylor Maritime Investments Limited today announces the launch of its initial public offering ("IPO") on the Premium Segment of the Main Market of the London Stock Exchange, by way of an Initial Placing, Offer for Subscription and issue of Consideration Shares for a target issue of approximately 250 million ordinary shares (the "Ordinary Shares") at an initial issue price of US$1.00 per Ordinary Share (or the Sterling equivalent) (the "Issue Price") (the "Initial Issue"). This announcement follows the Company's Intention to Float announcement dated 29 April 2021.
The Company is an internally managed investment company with an Executive Team led by Edward Buttery. The Executive Team has to date worked closely together for the Commercial Manager, Taylor Maritime. Established in 2014 by Edward Buttery, Taylor Maritime is a privately owned ship-owning and management business with a seasoned team that includes the founders of dry bulk shipping company Pacific Basin Shipping (listed in Hong Kong 2343.HK) and gas shipping company BW Epic Kosan (formerly Epic Shipping) (listed in Oslo BWEK:NO). Taylor Maritime's team of experienced industry professionals is based in Hong Kong and London. Taylor Maritime's principals have been some of the most active buyers of Handysize and Supramax dry bulk ships having made over US$1.3 billion of asset purchases and sales since 1987.
The Company has conditionally agreed to acquire an initial portfolio comprising 23 Seed Assets each of which are Geared Ships with their own loading capabilities (Handysize and Supramax types) (the "Seed Portfolio"). The aggregate consideration payable for the Seed Portfolio (assuming completion of the acquisition of all of the Seed Assets) is US$264.1 million of which US$157.1 million will be satisfied in cash and US$107.0 million is expected to be satisfied by the issue of Consideration Shares (assuming the target number of Ordinary Shares (being 150 million) are issued under the Initial Placing and Offer for Subscription). Further details of the Seed Portfolio are provided below.
The Company will initially target an annual dividend yield of 7% (on the initial Issue Price) paid quarterly with the potential for further growth over the long term[1]. The Company expects to declare its first dividend of 1.75 cents (or the Sterling equivalent) per Ordinary Share for the initial period ended 30 September 2021 in October 2021. Once the Company is fully invested, the Company will target a Total NAV Return of 10-12% per annum (net of expenses and fees) over the medium to long term2.
Jefferies International Limited ("Jefferies") is acting as Sole Sponsor, Global Coordinator and Bookrunner in relation to the IPO.
The Seed Portfolio
17 of the 23 Seed Assets are already under the commercial management of Taylor Maritime and as such the Executive Team is familiar with the assets, with the remainder sourced from vendors who are well known to the Executive Team and Taylor Maritime. The Seed Assets have an average age of 11 years and an estimated average remaining life of 17 years. No single vessel will comprise more than 10% of the gross assets of the Company. The continuing management of these assets, under the oversight of the Executive Team, is expected to bring attractive benefits to the Company, in particular substantial savings on the typical transaction costs and delays involved with taking over vessels from third parties.
Completion of the acquisition of the Seed Assets is expected to take place at or shortly after Admission subject to satisfaction of customary closing conditions, although as regards six of the vessels, the completion of the acquisition of such vessels is expected to take place following Admission, with the expected closing date for the last vessel expected to be by 28 February 2022 (in each case at valuations agreed at or around the date of the Prospectus). The Company therefore expects the net proceeds of the IPO to be fully committed shortly after Admission with all ships fully operational, and generating income, from acquisition.
In addition to the Seed Assets, the Executive Team has invested significant time to source a pipeline of attractive target assets, comprising primarily Handysize and Supramax vessels. The Company estimates that the current pipeline, if executable, represents an estimated total deal value of approximately US$500 million.
Alignment of interests
As an internally managed investment company, the Company will not bear any external fund management fees, performance fees or acquisition fees. Furthermore, the principals of Taylor Maritime will hold their entire interest in the Seed Assets, of approximately US$23 million, in Consideration Shares. In addition, the independent Directors, including the Chairman, intend to subscribe for at least US$580,000 of Ordinary Shares in the Initial Issue in aggregate.
On-going annual expenses
Ongoing annual expenses will be borne by the Company including fees paid to the Directors, the salaries of the Executive Team and the cost of leasing office premises and equipment. The annual costs of the above (excluding any bonus, DBP and LTIP awards) are not expected to exceed approximately 1.2% of the Net Asset Value per annum (with the potential to decrease as the Company grows).
The Investment Opportunity
· Shipping is the pillar of global trade and remains the most efficient mode of transportation for bulk commodities
According to the International Chamber of Shipping, around 90% of the world's trade volume is seaborne[2]. Shipping continues to be the most cost-effective and efficient means of transportation given distances and essential commodities volumes[3].
· Demand is resilient and diversified
· Geared Ships can carry a wide range of cargoes which support basic human needs, being food, agriculture and infrastructure. Minor bulk commodities are the principal cargoes for Handysize vessels alongside smaller cargoes of major commodities, principally grain.
· Demand has rebounded significantly since the first half of 2020 which was dominated by the COVID-19 Pandemic. Spot charter rates have increased significantly since May 2020 whilst consensus forecasts predict strong 2021 and 2022 growth of 4% and 3% respectively in minor bulks[4].
· Geared Ships have on-board cranes to self-load/discharge and have shallow drafts to access a far greater number of ports than larger ships. They are exposed to diversified geographical trades and protected by draft and length limitations from encroachment by larger ships (which carry fewer cargo types and are less flexible).
· Supply growth at historically low levels
The supply of the Handysize fleet is forecast to grow by only 1.3% in 2021. According to Clarksons Research, new orders for these types of vessels stand at only 3.3% of the current fleet (by dwt) of which two thirds is scheduled for delivery by end 2021. It is the oldest sector of the dry bulk fleet, with 6% of the fleet over 25 years of age[5].
· Second-hand ships undervalued
Second-hand values are currently approximately 30% below newbuild parity/replacement cost[6]. This affords the Company opportunities to acquire vessels at attractive valuations.
· Environmental regulations reducing supply and discouraging fresh ship ordering
Less efficient ships, including those of lower build quality and some older ships are more likely to be scrapped. Further, operating speeds are believed to have to decrease to conform with expected emissions controls (both reducing fuel costs and effectively reducing vessel supply). Uncertainty over future ship design restrains new orders[7].
Issue Statistics
Initial Issue Price per Ordinary Share
US$1.00
Number of Ordinary Shares to be issued by the Company pursuant to the Initial Issue*
243.7 million
Initial Gross Proceeds of the Initial Placing and Offer for Subscription**
US$150 million
Estimated net proceeds of the Initial Placing and Offer for Subscription**
US$147 million
Minimum Net Asset Value per Share at Admission*
US$0.98
*Including the maximum number of Consideration Shares (93.7 million Ordinary Shares) which will be issued at or around Admission pursuant to the Initial Seed Asset Acquisition Agreements comprising 17 vessels (assuming that the target number of Ordinary Shares (being 150 million such shares) are issued in the Initial Placing and Offer for Subscription). A further 13.3 million Consideration Shares are contracted to be issued in connection with the Remaining Seed Asset Acquisition Agreements comprising 6 vessels.
**The Company is targeting Initial Gross Proceeds under the Initial Placing and Offer for Subscription of US$150 million subject to a maximum of US$250 million. The Minimum Gross Proceeds are US$125 million (or such lesser amount as the Company and Jefferies may agree). The number of Ordinary Shares issued and to be issued pursuant to the Initial Placing and Offer for Subscription, and therefore the Initial Gross Proceeds and the net proceeds of the Initial Issue, is not known as at the date of this document but will be notified by the Company via a Regulatory Information Service prior to Admission. The Initial Issue will not proceed if the Minimum Gross Proceeds (or such lesser amount as the Company and Jefferies may agree) are not raised. If the Initial Issue does not proceed, subscription monies received will be returned without interest at the risk of the applicant.
Initial Issue - Expected Timetable
Initial Placing and Offer for Subscription opens
7 May 2021
Latest time and date for applications under the Offer for Subscription
11.00 a.m. on 21 May 2021
Latest time and date for commitments under the Initial Placing
3.00 p.m. on 21 May 2021
Announcement of the results of the Initial Issue
24 May 2021
Admission and dealings in the Ordinary Shares commence
8.00 a.m. on 27 May 2021
Closing of Initial Seed Asset Acquisition Agreements
On or around 27 May 2021
Crediting of CREST stock accounts in respect of the Shares
27 May 2021
The dates and times specified are subject to change without further notice. All references to times in this document are to London time unless otherwise stated.
Dealing codes
The dealing codes for the Ordinary Shares will be as follows:
ISIN
GG00BP2NJT37
SEDOL (in respect of Ordinary Shares traded in US Dollars)
BP2NJT3
SEDOL (in respect of Ordinary Shares traded in Sterling)
BP2NJW6
Ticker symbol of the Ordinary Shares traded in US Dollars
TMI
Ticker symbol of the Ordinary Shares traded in Sterling
TMIP
Further details of the IPO will be set out in the Prospectus, which, once approved by the FCA is expected to be made available for viewing at the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website https://taylormaritimeinvestments.com/. The Company will release a further announcement upon the publication of the Prospectus. The Initial Issue is being conducted in accordance with the terms and conditions to be set out in the Prospectus. Any capitalised terms used but not otherwise defined in this announcement have the meaning set out in the Prospectus.
LEI: 213800FELXGYTYJBBG50
For further information, please contact:
Taylor Maritime Investments Limited
Ed Buttery
Alexander Slee
+852 2252 3882
Jefferies International Limited
Stuart Klein
Gaudi Le Roux
+44 20 7029 8000
Buchanan
Charles Ryland
Henry Wilson
Hannah Ratcliff
+44 20 7466 5107
+44 20 7466 5111
+44 20 7466 5102
Disclaimers
This announcement is a financial promotion and is not intended to be investment advice. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description or a recommendation regarding the issue or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase shares in the Company.
Investors could lose all or part of their investment. The value of the Ordinary Shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested.
This announcement which has been prepared by, and is the sole responsibility of, the Directors of the Company, has been approved for the purposes of section 21 of the Financial Services and Markets Act 2000 by Jefferies International Limited, which is authorised and regulated by the FCA.
The target returns and dividends set out in this announcement are targets only and are not profit forecasts. There can be no assurance that these targets can or will be met and they should not be seen as an indication of the Company's expected or actual results or returns. The Company's ability to distribute dividends will be determined by the existence of sufficient distributable reserves, legislative requirements and available cash reserves. Accordingly, investors should not place any reliance on these targets in deciding whether to invest in Ordinary Shares or assume that the Company will make any distributions at all.
Recipients of this announcement who are considering acquiring Ordinary Shares following publication of the Prospectus are reminded that any such acquisition must be made only on the basis of the information contained in the Prospectus. A subscription for Ordinary Shares is subject to specific legal or regulatory restrictions in certain jurisdictions. Persons distributing this announcement must satisfy themselves that it is lawful to do so. The Company assumes no responsibility in the event that there is a violation by any person of such restrictions.
Potential investors should not base their financial decision on this announcement. Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. Persons considering making investments should consult an authorised person specialising in advising on such investments. This announcement does not constitute a recommendation concerning a possible offer. The value of shares can decrease as well as increase. Potential investors should consult a professional advisor as to the suitability of a possible offer for the person concerned.
This announcement may not be published, distributed or transmitted by any means or media, directly or indirectly, in whole or in part, in or into the United States. This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The securities mentioned herein have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "US Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States and, subject to limited exceptions, will not be offered, sold, exercised, resold, transferred or delivered, directly or indirectly, in or into the United States or to, or for the account or benefit of, any US person (as defined under Regulation S under the US Securities Act). The Company has not been, and will not be, registered under the U.S. Investment Company Act of 1940, as amended. No public offering of securities is being made in the United States.
Neither this announcement nor any copy of it may be: (i) taken or transmitted into or distributed in any member state of the European Economic Area, Canada, Australia, Japan or the Republic of South Africa or to any resident thereof, or (ii) taken or transmitted into or distributed in Japan or to any resident thereof. Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction. The distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.
This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements relate to matters that are not historical facts regarding the Company's investment strategy, financing strategies, investment performance, results of operations, financial condition, prospects and the dividend policies of the Company and the instruments in which it will invest. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward- looking statements. These factors include, but are not limited to, changes in general market conditions, legislative or regulatory changes, changes in taxation regimes or development planning regimes, the Company's ability to invest its cash in suitable investments on a timely basis and the availability and cost of capital for future investments.
The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the UK Market Abuse Regulation, FSMA, the Listing Rules, the UK Prospectus Rules or the Prospectus Regulation Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.
Jefferies International Limited ("Jefferies") is authorised and regulated by the FCA and is acting exclusively for the Company and for no one else in connection with the Issue and will not be responsible to anyone (whether or not a recipient of this document) other than the Company for providing the protections afforded to clients of Jefferies or for affording advice in relation to the Issue, the contents of this announcement or any matters referred to herein. This does not exclude any responsibility which Jefferies may have under FSMA or the regulatory regime established thereunder.
Apart from the liabilities and responsibilities (if any) which may be imposed on Jefferies by FSMA or the regulatory regime established thereunder, Jefferies makes no representations, express or implied, nor accepts any responsibility whatsoever for the contents of this announcement nor for any other statement made or purported to be made by Jefferies or on its behalf in connection with the Company, the Ordinary Shares, the Issue or Admission. Jefferies and its affiliates accordingly disclaim all and any liability (save for any statutory liability) whether arising in tort or contract or otherwise which it or they might otherwise have in respect of this announcement or any such statement.
For the avoidance of doubt, the contents of the Company's website, including the websites of the Company's business units, are not incorporated by reference into, and do not form part of, this announcement.
Information to Distributors
Solely for the purposes of the product governance requirements of Chapter 3 of the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK MiFIR Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any manufacturer (for the purposes of the UK MiFIR Product Governance Requirements) may otherwise have with respect thereto, the Ordinary Shares the subject of the Issue have been subject to a product approval process, which has determined that such Ordinary Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as respectively defined in paragraphs 3.5 and 3.6 of the FCA Handbook Conduct of Business Sourcebook; and (ii) eligible for distribution through all permitted distribution channels (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors should note that: the price of the Ordinary Shares may decline and investors could lose all or part of their investment; the Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom; and the Ordinary Shares will be admitted to the London Stock Exchange which is intended for institutional, professional, professionally advised and knowledgeable investors who understand, or who have been advised of, the potential risk from investing in such companies. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Issue. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Jefferies will only procure investors who meet the criteria of professional clients and eligible counterparties.
For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapters 9A or 10A respectively of the FCA Handbook Conduct of Business Sourcebook; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Ordinary Shares.
Each distributor is responsible for undertaking its own target market assessment in respect of the Ordinary Shares and determining appropriate distribution channels.
UK PRIIPs Regulation
In accordance with the UK version of Regulation (EU) No. 1286/2014 on key information documents for packaged retail and insurance-based investment products, which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended (the "UK PRIIPs Regulation"), a key information document (the "KID") in respect of an investment in the Shares has been prepared by the Company and is available to investors at www.taylormaritimeinvestments.com. If a new class of C Shares is issued under the Placing Programme, the Company will make available a key information document in relation to such class of C Shares as required under the UK PRIIPs Regulation.
If you are distributing Ordinary Shares, it is your responsibility to ensure that the KID is provided to any clients that are "retail clients".
The Company is the only manufacturer of the Ordinary Shares for the purposes of the UK PRIIPs Regulation and Jefferies is not a manufacturer for these purposes. Jefferies does not make any representations, express or implied, or accept any responsibility whatsoever for the contents of the KID prepared by the Company nor accepts any responsibility to update the contents of the KID in accordance with the UK PRIIPs Regulation, to undertake any review processes in relation thereto or to provide the KID to future distributors of Ordinary Shares. Jefferies and its affiliates accordingly disclaim all and any liability whether arising in tort or contract or otherwise which it or they might have in respect of the key information documents prepared by the Company. Investors should note that the procedure for calculating the risks, costs and potential returns in the KID are prescribed by laws. The figures in the KID may not reflect actual returns for the Company and anticipated performance returns cannot be guaranteed.
[1] Note that the targeted annualised dividend yield and targeted Total NAV Return are targets only and not profit forecasts and there can be no assurance that either will be met or that any dividend or capital growth will be achieved.
[2] Source: International Chamber of Shipping
[3] Source: International Maritime Organization
[4] Source: Clarksons Research
[5] Source: Clarksons Research
[6] Source: Taylor Maritime estimates
[7] Source: International Maritime Organization
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