Debt finance trends for the

port and liquid storage sectors

Stocexpo 2015, Rotterdam

By Berend Paasman

Agenda

2

Section 1 Short introduction DNB

Section 2 Bank and capital market finance trends

Section 3 Case study: Term Loan B acquisition finance

3

DNB is a Norwegian bank, globally leading in

selected industries

Leading

Maritime bank

- Shipping

- Offshore

- Logistics

Leading

International

Energy Bank

Leading

Global

Seafood Bank

DNB Group

20 international offices,

including:

- London

- New York

- Singapore

DNB is market leader

for domestic lending in

Norway

A global player within:

DNB has a dedicated global ports and liquid

storage terminals finance group

Global Logistics Group is a team of dedicated

professionals to the port and terminal sector

- Team of professionals in London, Singapore and New York

focusing on the port and terminal sector

Global knowledge and client base:

- Globally diversified loan portfolio: Europe, Asia,

North America and South America

- Currently about 20 client relationships, including the

largest container terminal operators and largest liquid

bulk operators

- Total commitments to the industry ~ USD 1.5bn

- Over 60 loan transactions completed

- Complemented by port M&A

- Capital markets (US HY bonds, Term loan B)

Focus sectors:

- Container terminals

- Liquid bulk terminals

- Bulk terminals / ro-ro terminals (selectively)

4

Selected locations of financed terminal

projects, and port companies

DNB is an active lender to the port and liquid

storage terminal sectors

5

London Gateway (UK)

GBP 531,500,000

MLA and Bookrunner

2011

HES Beheer N.V. – ATIC

Acquisition

EUR 110,000,000

Arranger and

Documentation Agent

2014

Brasil Terminal Portuario

(Brazil)

USD 679,000,000

IFC B-loan lender

2011

DP World RCF

USD 1,000,500,000

MLA

2012

DP World (Canada)

CAD 150,000,000

MLA and Documentation Agent

2013

IMTT (US/Canada) &

IMTT-Finco, LLC.

Revolver USD 1,500,000,000

& Bond USD 182,881,079

Participant

2013

Gujarat Pipavav

Port Limited

GPPL (India)

USD 152,000,000

IFC B-loan lender

2013

LBC Tank Terminals

Bank: USD 396,000,000

Bookrunner & MLA

US Bond: USD 350,000,000

Joint-Bookrunner

2013

DP World Callao SRL (Peru)

USD 350,000,000

MLA, Facility and

Documentation Agent

2013

GCT Global Container

Terminals Inc.

USD 1,020,000,000

Senior Loan Bookrunner

2013

Carrix, Inc.

Amended & Restated Credit

Agreement

MLA, Facility and

Documentation Agent

2014

APM Terminals

Callao S.A.

APM Terminals Callao S.A.

(Peru)

USD 217,000,000

IFC B-loan lender

2013

Hestya acquisition of HES

Beheer NV

Term loan B: EUR 250,000,000

Bookrunner

Bank; EUR 65,000,000

MLA and Bookrunner

2014

London Gateway

LGTT Facility

GBP 100,000,000

Lender

2014

DP World RCF

USD 3,000,000,000

MLA

2014

Nava Sheeva (India) Gateway

Terminal

USD 160,000,000

MLA, Facility and

Documentation Agent

2013

Gate terminal B.V.

LBBR Expansion Facility

EUR 76,500,000

MLA

2014

Total Terminals International,

LLC

USD 320,000,000

MLA and Joint Bookrunner

2014

Agenda

6

Section 1 Short introduction DNB

Section 2 Bank and capital market finance trends

Section 3 Case study: Term Loan B acquisition finance

Bank and Capital Market Trends for European

Liquid Storage Borrowers

• In general, liquidity and terms improving for high quality/

Investment grade (“IG”) borrowers, whereas reducing liquidity and

less favourable terms for more risky/ high yield (“HY”) borrowers

• Shift towards more “Institutional money” versus “bank lending” in

Europe

• Specifically for liquid storage companies:

• Both bank and capital markets open for the sector

• Capital markets like the long term stable cash flows

• 2015 finance demand in liquid storage sector expected to be

driven by M&A activity

General: Investment grade loan volumes at three

year high

8

Markets driven by increased M&A activity and high refinancing volumes

Europe:

Loan volume up 31% compared to 2013, fuelled by

record-high refinancing activity

With more than 800 deals, 2014 saw the highest number

of deals since 2005

Borrower friendly conditions have enabled a lot of early

refinancings and amendment of 2012 and 2013 deals

Corporate M&A activity picked up 20% from 2013

(reached €110.1 billion)

Average loan margins on a downward trajectory

European IG Loans (€ bn)

European IG Loans by purpose (€

bn)

General: European leveraged loan volume up

15% in 2014 - spreads widened in H2

9

Inst. investors take a larger share of the volume New Issue Volume (€ bn) Leveraged Loan Returns

General trends:

Loan volume up 15% in 2014, fuelled

by high M&A activity

Non-bank lenders share of loan

volume is increasing, with institutional

investors making up almost 59% of

the primary market

Cov-lite structures have come to stay,

especially on cross-border (US) deals

Loan spreads widened in H2 2014,

and terms were flexed in credit

specific circumstances

Leverage has been ticking upwards,

but is still comfortably below 2007

levels

Highest CLO raising in 2014 (€14.5

billion) since 2007 and twice the

volume of 2013

Institutional investors are majority of investors in

the European leveraged loan market

10

Increasing share of institutional investors

• Non-bank investors have increased their activity in

the European market, primarily by institutional

investors (CLOs, hedge, life/pension etc.)

• Of the 237 active investors in Europe, 132 were

institutional, 69 were European banks, while the

remaining 36 where split between non-European

banks, securities firms and finance companies

• The increase of institutional investors is one of the

reasons for terms and structures being pushed, as

the institutional investors are more willing to accept

bullet structures on lower fees and margins and with

fewer covenants than the banks

• With the highest CLO raising in 2014 (€14.49 billion)

since 2007, combined with an increasing number of

mid-market direct lending funds coming on stream,

we expect the competition from non-banks to further

increase in the European loans markets going

forward

# of active investors by type

Investors by type – 2014

No

data

Diverse and solid activity in the Bank Market for

port and terminal operators and developers

11

Note – The above table only lists deals in the public domain

• Active Market: 27 deals in 2014, only 4 liquid storage deals with volume of $953m

• Different types of deals: acquisition, project and corporate

• Bank market open for developed and developing jurisdictions

# Name Country Sub Sector Transaction TypeTotal Debt

($ USDm)Close DNB

1 TTI US Container Refinance + Expansion 310 Dec-14 DNB

2 Gate Terminal Netherlands Break Bulk LNG Expansion 100 Nov-14 DNB

3 DCT Gdansk Poland Container Expansion 361 Nov-14

4 Hestya ( bank debt of Hes Beheer acquisition) Netherlands Bulk / liquid storage Acquisition Finance 85 Sep-14 DNB

5 Dhamra Port Co Ltd India Bulk Expansion 50 Sep-14

6 ICTSI Philippines Container Corporate Facility 350 Sep-14

7 ABP Acquisitions UK Ltd UK Multipurpose Refinancing 440 Aug-14

8 Houston Fuel Oil Terminal Co (RCF in addition to TLB) US Liquid storage Refinancing 75 Aug-14

9 Tisur Matarani Port Peru Bulk Expansion 280 Aug-14

10 London Gateway LGTT UK Container Expansion 160 Jun-14 DNB

11 Intels Nigeria Port Nigeria Supply Base Expansion 153 Jun-14

12 Vitol Tank Terminals International BV Netherlands Liquid storage Corporate Facility 650 Jun-14

13 Port of Tauranga Ltd New Zealand Container Refinancing 215 Jun-14

14 Navegantes Port Brazil Container Expansion 226 Jun-14

15 Hes Beheer (ATIC Acquisition) Netherlands Bulk / liquid storage Acquisition Finance 143 Jun-14 DNB

16 Port of Newcastle Australia Bulk Acquisition Finance 812 May-14

17 Terminal de Contenedores Quetzal SA Guatemala Container Expansion 126 May-14

18 King Abdullah Port Saudi Arabia Container Expansion 141 Apr-14

19 DP World Dubai Container Corporate Facility 3,000 Apr-14 DNB

20 Acu Port T2 Brazil Bulk Expansion 395 Apr-14

21 Sun Kwang New Container Port Korea Container Expansion 150 Mar-14

22 LLX Acu Port Brazil Bulk Expansion 387 Mar-14

23 Instanbul Port Turkey Cruise Privatisation 600 Feb-14

24 Ports America US Container Refinancing 850 Feb-14 DNB

25 Karanja Terminal & Logistics India Container Expansion 80 Feb-14

26 Terminal Investment Ltd Netherlands Container Refinancing 200 Jan-14

27 Carrix US Container Refinancing 1,600 Jan-14 DNB

Total 2014 11,938

Strong interest from capital markets in the port

and terminal sectors

12

• Capital markets very much open for port and liquid storage terminal deals: 4 deals

with over USD 2 billion total debt in 2014

• Various different instruments – USPP, Term loan B’s, IG Bonds, MTN, HY Bonds

• Especially used to refinance mature terminals, or part of an acquisition finance.

No project bonds (yet)

# Name Country Terminal Sub Sector Finance Type

Total

Debt ($

USDm)

Close DNB Rating

1 NSW Ports Australia Landlord port US PP 300 [in market] NAIC-2

2 Stolt Houston US Liquid storage US PP 250 Feb-15 Private

3 Sunoco Logistics US Liquid storage US Bond 1,000 Nov-14 DNB Baa3/BBB

4 Hestya Energy Netherlands Dry bulk / liquid storage Term loan B 325 Sep-14 DNB Private

5 Houston Fuel US Liquid storage Term loan B 550 Jul-14 BB-

6 Virginia Int Gateway US Container US PP 450 Jul-14 NAIC-1

7 ABP Holding UK Multipurpose US PP 430 May-14 NAIC-2

8 GCT US/ Canada Container US PP 365 Dec-13 NAIC-2+

9 Forth Ports UK Multipurpose US PP 441 Nov-13 NAIC-2

10 Odfjell Norway Shipping / liquid storage Norwegian Bond 84 Sep-13 DNB N.R.

11 Asciano Australia Rail / Ports UK Bond 1,100 Sep-13 Baa2

12 ICTSI Philipines Container Medium Term Note 250 Aug-13 N.R.

13 Peel Ports UK Multipurpose Institutional 241 Aug-13 N.R.

14 Mersin Ports Turkey Container/ bulk US Bond 450 Aug-13 Baa3

15 Euroports Netherlands Bulk Port Institutional 107 Aug-13 N.R.

16 LBC EUR-US Liquid storage US HY bond 350 May-13 DNB B3/B

17 Westway US Liquid storage Term loan B 270 Feb-13 N.R.

18 Vopak Netherlands Liquid storage US PP 1,000 Dec-12 NAIC-2

19 Odfjell Norway Shipping / liquid storage Norwegian Bond 118 Nov-12 DNB N.R.

20 Oiltanking Germany Liquid storage US PP 418 Oct-12 NAIC-2-

21 Stolt-Nielsen UK Shipping / liquid storage Norwegian Bond 168 Aug-12 DNB N.R.

22 Paita Peru Multipurpose Bond 110 Mar-12 BB-

Total 8,477

Drivers for liquid storage terminal finance activity

2015

• High volume of Acquisition Finance expected driven by

M&A activity Various M&A processes announced (divestments of storage assets by oil

majors)

Many energy/ infrastructure/ pension funds looking for liquid storage assets

Both bank/ capital market acquisition finance structures used to finance these

• Limited Project Finance activity expected Few large “greenfield” projects in Europe

Many expansions/ upgrades paid out of existing cash flows or RCF’s

Agenda

14

Section 1 Short introduction DNB

Section 2 Bank and capital market finance trends

Section 3 Case study: Term Loan B acquisition finance

Case Study Hes Beheer Acquisition with Term

Loan B Finance structure

• Hes Beheer is a holding company of dry bulk and liquid bulk

terminal operators in ports in North West Europe:

• Full/ joint owner of subsidiaries incl. market leading terminals in the

ports of Amsterdam and Rotterdam: EMO, EBS, OBA, BTT

• BTT is a new liquid storage terminal

- Edible oils and clean fuels

- Capacity 200.000 CBM, with expansion possibility up to 750.000 CBM

• HES Beheer N.V. was listed at Euronext Amsterdam

• Bid by Riverstone/ Carlyle

- End 2013 consortium of investment funds managed by private equity

firms Riverstone and Carlyle emerged to take Hes private

• They already owned a liquid storage company called Hestya Energy with a

terminal in Wilhelmshaven (Germany)

- Target to buy outstanding shares for EUR 408 million (EUR 45 each),

Exclusive agreement with 58% of the shareholders, and remaining

shares to be bought through a tender

- In connection with their bid the sponsors were looking to get an

acquisition finance

Term Loan B in combination with bank facilities

was chosen for the acquisition finance

Description of Term Loan B • Tenor typically medium term/ 7 years

• Bullet/ no fixed repayment

• Debt investors include CLO’s, debt funds, hedge funds

• Rating requirement

• Can be underwritten by bookrunner banks, to leave syndication risk for

these banks

Main benefits of term loan B for an acquisition finance • Very liquid market

• Diversification of funds from traditional banks

• Does not use existing bank lines

• No fixed repayment gives flexibility during first years of transaction

• Underwriting banks can take over syndication risk

Outcome of Acquisition Process

Finance Structure: • Bookrunners DNB, Deutsche Bank

and RBC

• EUR 250 million term loan B

• In addition, some bank facilities

were provided: Capex and RCF of

EUR 65 million

Bid process successful: • Bid accepted by more than 95% of

shareholders

• Finance provided

• Hes Beheer de-listed from stock

exchange

• Company re-named Hes

International

DNB’s GLOBAL LOGISTICS FINANCE GROUP

DNB BANK ASA – GLOBAL LOGISTICS GROUP

London

Berend Paasman Global Head of Logistics berend.paasman@dnb.no + 44 20 7621 6075

William Holme Vice President william.holme@dnb.no + 44 20 7621 6007

Pierre Kerdoncuff Analyst pierre.kerdoncuff@dnb.no + 44 20 7621 6013

New York Michael Davidowsky First Vice President michael.davidowsky@dnb.no + 1 212 681 3894

Sybille Andaur Vice President sybille.andaur@dnb.no + 1 212 681 3878

Singapore Andreas Ostern Senior Vice President andreas.ostern@dnb.no + 65 6212 0715

Tze Chyuan Wong Vice President tze.chyuan.wong@dnb.no + 65 6212 0712

Cissy Zhou Vice President Cissy.zhou@dnb.no +65 6212 0705