Trustee James Giddens, who is liquidating Lehman’s brokerage, said in a bankruptcy court filing Thursday that affiliates of Mr. Ross’s WL Ross & Co. will purchase Lehman’s stake in gas-tanker company Navigator Holdings Ltd. (NVIGF) for $110.2 million in cash.
The deal is being conducted as a private sale with a limited no-shop provision. But Lehman said it will consider competing bids if received by Sept. 12.
However, Lehman said, Navigator has a “poison pill” to discourage anyone from acquiring more than 15% of the company’s stock without board approval.
For that reason Mr. Giddens said he believes that a sale to an outsider unknown to the Navigator board would be more difficult to accomplish.
“In our case, Navigator has waived the poison pill,” Wilbur Ross said Friday in an interview.
WL Ross previously had made two other investments in Navigator and with this purchase will have about 56% of the common stock. Mr. Ross’s company paid $25 a share for its stake over the past year, the same price it is paying for Lehman’s stake in Navigator.
“It’s a very interesting, niche market that they’re in,” said Mr. Ross. “What they carry is liquefied natural gas, ethylene and ammonia to shallow harbors in many developing countries, such as Indonesia, China and Venezuela.”
Mr. Ross, the billionaire investor whose winning bets in steel, auto parts and other distressed industries has led many to dub him the “king of bankruptcy,” is bullish on the market of LNG shippers.
“They are the leaders in that segment,” Mr. Ross said, noting Navigator has around a 15% market share in what is known as the handy-sized LPG sector, operating a fleet of 14 semi refrigerated gas carriers. “We believe that segment over time will grow because of all the shale gas found in the U.S.” as well as, he said, the potential for new discoveries elsewhere around the world.
Lehman owns about 34% of the total outstanding shares of Navigator’s common stock, the largest block of Navigator stock owned by a single party. The company obtained its stake in Navigator via a debt-for-equity swap in 2006.
Trustee spokesman Jake Sargent said the deal “is the most efficient and expeditious way to maximize the value” of Lehman’s Navigator shares and to “convert them into funds available for the ultimate distribution to customers and others.”
The sale of Lehman’s Navigator shares requires court approval. A hearing on the sale procedures is slated for Aug. 23 in U.S. Bankruptcy Court in New York with a sale hearing to follow on Sept. 19.
The trustee is liquidating Lehman’s brokerage separately from the Chapter 11 case of former parent Lehman Brothers Holdings Inc. Lehman’s holding company emerged from Chapter 11 earlier this year.
– Patrick Fitzgerald, (c) 2012 Dow Jones & Company