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3 Deals to Watch: Transports, Tankers & Traders

NEW YORK ( TheStreet) - Energy pipeline transporter SemGroup (SEMG - Get Report) rejected a bid by Plains All American Pipeline (PAA - Get Report) on Thurday in a continued statement to Plains that it's valuation of the company is all wrong.

SemGroup's Board of Directors rejected an unsolicited October bid of $24 per share in cash for the Tulsa based energy transporter, terminal and storage company founded in 2000. In its statement rejecting the hostile offer, SemGroup pointed to the fact that its stock currently trades at $28.41 a share, nearly 20% higher than Plains's bid. SemGroup's board said in a letter to Plains rejecting the takeover that it, "continues to believe that your current proposal is opportunistic and fails to adequately reflect SemGroup's bright prospects."

It isn't the first time Plains has made a low priced bid for Semgroup and it's just another chink in a multi-year takeover drama.

The now quashed hostile bid was a culmination of almost two years of opposition by Plains to SemGroup's recovery strategy from a 2009 bankruptcy and resulting civil litigation with the Securities and Exchanges Commission. In March 2010, Plains offered to buy SemGroup out of bankruptcy for $17 a share. The offer that was rejected by SemGroup's board and company instead went public in November 2010 and priced at over $24 a share on the first day of trading.

This summer, amid a wave of spinoff and IPO plans, SemGroup decided to spin its Rose Rock Midsteam business into a separate publicly traded company and to contribute its SemStream business to NGL Energy (NGL - Get Report).

In August, SemGroup announced it would raise $181 million by doing a public offering for Rose Rock Midstream -- previously the SemCrude oil & gas storage and pipeline division of the company that holds a crude storage facility at the delivery point for West Texas Intermediate in Cushing, Oklahoma. At the end of August, SemGroup then also announced a spin of its SemStream businesses to NGL Energy. Management said that the proceeds of the both transactions would be used to pay down the company's $343 million in debt.

Plains's takeover offer in October was rebuff to SemGroup's spin strategy and its overall post-bankruptcy planning. In its letter to SemGroup about the takeover offer, Plains' Chief Executive Greg L. Armstrong said, "We believe that the attractive and certain value we are proposing to deliver to SemGroup's stockholders is greater than any value that might be created on a reasonable timetable from any of SemGroup's other strategic alternatives."

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SemGroup's stock, which trades above the October hostile bid price, is down more than 2% year-to-date and well below its post-IPO high of $34.28 a share reached in March. The company's struggled to be profitable since its IPO, reporting a net loss of $132 million in 2010, and net income of $2 million nine months into 2011.

In its letter, Plains wrote, "Our proposal provides all of your stockholders an opportunity for liquidity at an attractive and certain value that mitigates the timing, market and execution risks associated with any alternative value creation transactions."

While that may be the case, SemGroup's management has so far been able to draw out a 41% increase in Plain's bid through its obstinacy. SemGroup's current stock price of above Plain's latest bid also shows that investors are expecting a higher bid to come.

Bloomberg reports that the government of Uganda may allow Tullow Oil to sell $2.9 billion worth of prospects in the country to France's Total (TOT - Get Report) and China's CNOOC (CEO) in the next month according to Ugandan minister of mineral development Peter Lokeris.

The SemGroup rumors and Tullow stake sales both fuel deal making among pipeline operators and Chinese firms searching for oil and gas.

General Maritime (GMR), the second biggest oil tanker owner in the U.S., filed for bankruptcy on Thursday as a result of a shipping glut and a fall in oil demand.

In its filing, New York -based General Maritime listed assets of $1.71 billion and debt of $1.41 billion today in its Chapter 11 bankruptcy petition. It also said today that Oaktree Capital Management and Swedish bank Nordea will give the failed tanker operator up to $275 million in capital to reorganize, called debtor-in-possession financing.

According to research firm Clarkson, the number of large oil tankers in operation are up 9%, the biggest increase since 1983, in the last two years. The tanker orders came as shipping rates spiked in 2008, but have since fallen with global economic fragility. According to Bloomberg reports prices from the Baltic Exchange, shipping rates for large oil tankers that ship roughly 20% of the worlds oil averaged $7,627 a day this year, a more than 75% drop from 2010.

One of General Maritime's largest unsecured creditors is Bank of New York Mellon (BNY) with a $300 million claim on bonds due in 2017 and Oaktree Capital Management, which gave the shipper a $200 million loan. The company's bonds which traded as 98 cents on the dollar earlier in the year plummeted to just over 10 cents on the dollar. In August, General Maritime was delisted from the New York Stock Exchange.

Bloomberg reports that Regions Financial (RF - Get Report) is in exclusive talks to sell its Morgan Keegan brokerage unit to Stifel Financial (SF - Get Report), citing other anonymous sources. With Morgan Keegan, Stifel would have one of the largest brokerages in the U.S. with nearly 3,000 brokers and would be the largest takeover for Stifel, which has been acquisitive in recent years.

Regions Financial put Morgan Keegan up for sale in June as it tries to raise capital to repay the U.S. Treasury's preferred-share investment in the Alabama -based company. Currently, Regions is one of the largest remaining TARP recipients and is still struggling with its capitalization

Separately, Bloomberg also reported that Guggenheim Funds is in talks to sell its Claymore ETF's division with $6.8 billion in assets under management for several hundred million dollars, according to anonymous reports of people with knowledge of talks. Overall, Guggenheim holds over $125 billion in assets under management.

In 2009, Guggenheim bought Claymore's ETF's division and re-branded it under the Guggenheim name, which was founded in 2000.

-- Written by Antoine Gara in New York

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CEO $123.43 0.00%
BNY $15.83 0.00%
NGL $12.78 0.00%
PAA $22.94 0.00%
RF $9.38 0.00%


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