Discount & Drop, Yet Double Hull Trades Under Offer Price (DHT)

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Double Hull Tankers (NYSE: DHT) priced its 8 million common share public offering at $10.50 per share Tuesday evening.  This was very fast compared to its filing date

After discounts and fees, the double hull tanker fleet operator will receive net proceeds of $79,478,360 and the proceeds are for general corporate purposes such as acquisitions of vessels and businesses, strategic alliances, reduction of outstanding borrowings, capital expenditures and working capital.  After the reaction, Double Hull’s market cap is about $313 million before the effect of these shares.

Merrill Lynch & Co. and UBS Investment Bank are joint book-running managers and Dahlman Rose & Company is co-manager for the offering. Underwriters have been granted 1.2 million common shares to purchase for over-allotments.

What is interesting is that this is also a decent share discounting considering the size and the use of funds.  Double Hull Tankers are not exactly in oversupply around the globe, and they are the new standard for transporting crude overseas. 

On Monday, before the filing, shares were around $12.00.  Yesterday shares fell to $10.50 ahead of the pricing.  Despite a $10.50 pricing, shares are down marginally at $10.41 after 90-minutes of trading.

Usually shares rise after a drop like this, despite the dilution.  The 52-week trading range is $9.32 to $18.79.  Would it be fair to refer to the reaction to this financing as… a tanker?

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Jon C. Ogg
April 30, 2008