US shipyard seeks suitors

The market is rife with rumours that a shipbuilder headquartered in the US Gulf is shopping for buyers.

It is widely believed that Signal International is the company in question but rampant speculation has made it difficult to separate fact from fiction.

Some say all of the group’s assets are on the block while others claim it’s only looking to offload its Mobile, Alabama-based ship repair and conversion division, Signal Ship Repair.

Market sources tell TradeWinds that Signal has enlisted Michael Schmidt and Steven Johnson of Global Hunter Securities (GHS), an investment bank with offices in New Orleans, to lead the campaign.

Industry commentator Tim Colton says it’s not unusual for US shipyards to test the waters from time to time even if they don’t end up pulling the trigger.

“There is nothing odd about this, assets get shopped around all the time,” he told clients in a recent memo about the rumours. 

The consultant, who lists Signal as a former client on his website, was quick to point out that the company acquired its Mobile yard over three years ago from the estate of defunct US compatriot Bender Shipbuilding.

“Signal bought Bender, made some improvements and turned it into a very profitable business,” Colton continued. “Now they want to know whether it might be a good deal to cash out and reinvest the proceeds. “

Signal paid nearly $32m to purchase the shipyard back in 2010 after submitting the winning bid at a bankruptcy auction led by Schmidt and Global Hunter but its unclear how much the waterfront facility might fetch in the current market.

When Bender went belly-up many US shipbuilders were struggling to stay afloat but today the industry is booming thanks to a flood of orders for offshore support vessels, tugs, barges and naval tonnage.

If Signal is looking to sell observers say they wouldn’t be surprised to see a private equity firm or hedge fund involved in the transaction as dozens are trying to penetrate various areas of the Jones Act market in a bid to cash in on the spike in contracting activity.

Late last month one of the company’s US competitors, TY Offshore, forged an alliance with Littlejohn & Co, a billion-dollar private equity outfit based in Greenwich, Connecticut, in a bid to secure the cash it needed to expand capacity and streamline production.

Signal International is headquartered in Mobile, Alabama but also boasts facilities in Pascagoula, Mississippi, and Orange, Texas. In addition to shipbuilding and repair the group is involved in marine fabrication.

When the company acquired the Mobile yard from Bender, which was renamed Signal Ship Repair, the site included 1,000 metres off shore frontage, six repair and construction yards and three floating dry docks.

Both Signal and Global Hunter declined to comment when contacted by TradeWinds Wednesday evening.