InsightsMaritime Finance and RiskMaritime businesses face a broader range of risks than most. By Harry WardA look at some recent business transactions is proof enough.isk is a critical element of every maritime-re- solutions. Orolia has experienced solid growth and is actively lated business transaction from a ? nancial risk pursuing additional acquisitions in their niche markets.management perspective, a market perspective, Safety and environmental compliance are focus areas for R or often both. As with most business segments, Drew Marine, which was acquired by an af? liate fund of pri-maritime dealmakers and ? nanciers employ elaborate risk vate equity group The Jordan Company from another marine-management tools to evaluate the ef? cacy of acquisitions, savvy PEG, J.F. Lehman & Company last November. Con-loans and investments. But perhaps even more important currently with the Drew acquisition, The Jordan Company are the markets for goods and services that have developed acquired Lehman’s portfolio company ACR Electronics. ACR around the risky nature of most marine business sub-seg- is a leader in maritime and aviation safety and survival solu-ments. These markets have attracted a great deal of invest- tions such as rescue beacons and lighting products. As noted ment in recent years as maritime companies strive to man- in a past article, J.F. Lehman acquired OPA 1990-compliance age their risks in order to enhance ? nancial performance as leader National Response Corp (NRC) from Seacor in 2012. well as improve their public relations and safety records. In March of 2014, NRC completed the add-on acquisition of Maritime businesses face a broader range of risks than most, UK-based Sureclean Limited, a provider of specialty environ-from navigation and safety in normal at-sea operations to the mental and industrial solutions.threat of piracy and catastrophic collisions or environmental Examining another area of risk, recent months have brought mishaps. Just a few months into 2014, mariners have already a handful of deals in marine security and defense. In early faced nearly 100 pirate attacks with dozens of crewmem- 2014, The McLean Group represented 3 Phoenix in their sale bers taken hostage. Ship collisions and groundings remain to Ultra Electronics of the UK for $87 million. 3 Phoenix pro-a regular occurrence with incidents from the US Gulf Coast vides real-time sensor and processing solutions, primarily for to Virginia to South Korea already this year, bringing human Navy radar and sonar systems. The company will augment casualties as well as environmental hazards. And of course, Ultra’s existing Tactical & Sonar Systems division. In April the mystery of the vanished Malaysian Airline ? ight 370 has TE Connectivity (NYSE: TEL), formerly Tyco Electronics, ignited a massive high-pro? le search at sea, bringing focus signed an agreement to acquire SEACON Group, a provider to the challenges of tracking and locating any object in the of underwater connector technology for military and other expansive maritime domain. subsea customers for $490 million in cash. Finally, Swed-ish military contractor SAAB has just announced that it is in Risk Creates Markets talks to acquire ThyssenKrupp Marine Systems, a builder of In recent years such risks have spurred deal activity in busi- submarines and warships in Europe.nesses that are dedicated to maritime safety and environmen- An interesting deal took place in Canada during the ? rst tal matters. In December 2013, France-based Orolia (NYSE quarter, when a group of independent board members of Alternext Paris: ALORO) announced its agreement to acquire Rutter Inc. consummated a tender offer for the shares of the Techno-Sciences, Inc. (TSi) of Beltsville, MD. Orolia has publicly-traded company. A provider of defense, navigation grown via a number of successful acquisitions and is ? rmly and maritime surveillance technology centered mainly on established as a leader in the emergency response market and radar applications, Rutter had been struggling for years and in the Maritime Domain Awareness (MDA) sector. In January watched its share price fall by 95% since 2006. The investor 2014, Orolia announced the creation of McMurdo Group to group commenced their tender offer to buy all the outstanding unite its Positioning, Tracking and Monitoring Division and shares of the company in January, and by March had received its Boatracs, Kannad, McMurdo, SARBE and TSi brands. deposits of more than 38% of the shares, giving the group an With the acquisition of TSi, Orolia has added capabilities in- 80% controlling interest overall. The new owners will now de-cluding satellite ground stations and mission control software, list Rutter from the Toronto exchange and perform an acquisi-as well as coastal surveillance and offshore asset protection tion of remaining shares at the same price as their tender offer.14 Maritime Professional 2Q 2014I I 1-17 Q2 MP2014.indd 14 1-17 Q2 MP2014.indd 14 5/16/2014 11:42:35 AM5/16/2014 11:42:35 AM