NEW YORK ( TheStreet) -- A blank-check company sponsored by the Greek shipping group Navios Holdings (NM - Get Report) finally has a business to go along with its incorporation, after announcing an agreement on Thursday to purchase 13 tanker ships for nearly half a billion dollars.
Eleven of the ships are so-called "product" tankers, meaning they carry refined products such as gasoline or jet fuel. The other two are chemical tankers.
Called Navios Acquisition (NNA - Get Report), the company is a SPAC (short for special-purpose acquisition company), which first floated shares to the public in June 2008, not long after the New York Stock Exchange allowed such vehicles to list. (SPACs have a dubious history, with many cases of shareholder fraud, and for years only the American Stock Exchange would allow them.)
Several years ago, before the crash and the recession, SPACs enjoyed a boom, with investors lining up to sponsor them. After raising money through a public offering, SPACs must then search for a business to acquire, often taking private companies public through the back door.Navios Holdings itself -- and its CEO, Angeliki Frangou, one of the few women in corner offices in the shipping industry -- is no stranger to the special-purpose vehicle. A SPAC sponsored by Frangou in the early 2000s acquired Navios and brought it public. One of the oldest and most venerable names in dry bulk, Navios has existed since the 1950s, when it was the ocean-going shipping arm of U.S. Steel. Generally, SPACs have about a two-year window within which to do a deal. If the sponsors don't meet this self-imposed deadline, the vehicles dissolve and shareholders theoretically get back their money. Navios Acquistion was therefore running up against its own deal deadline. According to SEC documents, the SPAC's CEO, Angeliki Frangou, who also heads up Navios Holdings and its sister Navios Partners (NMM - Get Report), was approached in February by a bank looking to help sell nine tankers then on order at shipyards. Most likely, the group or groups who had placed the orders for these ships had run into financial trouble, and could no longer afford them. Navios then bought four other ships, and an option to buy two more, from a series of other sources. The sellers weren't identified. But in order to facilitate the deals and obtain better terms on its acquisition financing, Navios Holdings first acquired the ships.