Fortress may cut loose Aircastle; Greenfield gets mystery bidder; General Maritime, Arlington to link up

By Aaron Hochman-Zimmerman

New York, Aug. 6 - Equities spent Wednesday struggling to reach the positive side while Greenfield Online Inc. was struggling with its deal to merge with Quadrangle Group LLC.

At the end of the go-shop period another buyer appeared with a $17.50 offer and although the deal with Quadrangle has not been changed, investors are anxiously looking forward to any new information which may come from Greenfield's Monday earnings call.

Elsewhere, after a Citigroup downgrade on Tuesday, Fortress Investment Group LLC may be looking to sell its 38% holding of Aircastle Ltd., although a trader felt that Fortress may not get the price it hopes for.

Also, General Maritime Corp. and Arlington Tankers Ltd. reached an agreement to combine forces on the high seas.

Meanwhile, in the broader picture of the market, the Dow Jones Industrial Average slid early, but ended up by 40.30, or 0.35%, at 11,656.07, while the Nasdaq Composite Index added 28.54, or 1.21%, to finish at 2,378.37.

The S&P 500 took on 4.30, or 0.33%, to close at 1,289.18.

Small bounce for Aircastle

Citigroup cut Fortress to sell from hold on Tuesday, suggesting it may not be able to sustain its past success in the post-credit boom market.

On Wednesday a trader began hearing that Fortress will "be looking to sell off the 38% of [Aircastle] they still own," he said.

"The problem," he said "is that [Aircastle] has the oldest aircraft leasing portfolio and may not get a great price."

Aircastle's inventory of older Boeing 737s and 757s are "fuel suckers," the trader said, adding that the lease terminal values are "far lower than they are marked."

Aircastle's business model may also be better suited to the economic conditions which prevailed before the credit crisis took hold, he said.

"Their theory of taking older craft and converting them to freighters worked when the world economy was zooming, but with a slowing on hand, does UPS, DHL and FedEx need more?" he asked, or: "How many and at what price does some third world airline want them?"

Shares of Fortress Investments (NYSE: FIG) jumped up $1.05, or 10.25%, to close at $11.29.

Shares of Aircastle (NYSE: AYR) improved by $0.40, or 3.37%, to finish at $12.28.

Greenfield sees greener pastures

Greenfield's shares jumped close to an unnamed buyer's $17.50 per share offer on Wednesday, although the merger with the Quadrangle Group still remains in place, according to a company press release.

However, even at Wednesday's high share price "you still have a pretty decent spread" if the deal were to close, said an equity analyst who covers Greenfield.

Wednesday's offer for Greenfield was made two days after the expiration of the internet survey company's go-shop period which suggests to the analyst that the buyer "is from way out of town."

The potential buyer could come from a wide swath of market sectors including international sectors, he said, but "we don't know anything about the deal."

The secretive process has denied the market information about vital stats concerning the potential buyer's liquidity and financing options, he said.

"The other thing that is really surprising is that they had this bid on Monday," he said, adding that because it was announced, the stock's 3% loss on Tuesday left him feeling as though the deal may be dead.

"It's been a very, very quiet process," he said, but we will all know more on Monday during Greenfield's earnings call.

Shares of Greenfield (Nasdaq: SRVY) launched up $2.75, or 20.18%, to end the day at $16.38.

General Maritime, Arlington deal sets sail

General Maritime and Arlington Tankers agreed to merge their fleets into a convoy that will sail under the flag of General Maritime (NYSE: GMR), according to a joint press release.

The all-stock deal will give General Maritime's shareholders 1.34 shares of the new entity while Arlington holders will be given 1 share for every share they hold.

"In merging General Maritime and Arlington Tankers, we have entered into a significant value creating transaction for the shareholders of both companies," said Peter Georgiopoulos, chairman, president and chief executive officer of General Maritime, in a statement.

"We believe the new company's large diverse double-hull fleet, combined with its balanced chartering strategy, will offer shareholders stable cash flows as well as upside potential to the products and crude tanker markets," he said.

"I am pleased that our shareholders will have the opportunity to continue to receive attractive dividends supported by a balanced chartering strategy and a sizeable revenue stream," said Ed Terino, chief executive officer, president and chief financial officer of Arlington Tankers.

Shares of General Maritime were better by $2.05, or 8.47%, to finish the day at $26.26.

Shares of Arlington Tankers (NYSE: ATB) also took on $0.20, or 1.01%, to close the session at $19.91.

The deal is expected to close in the fourth quarter of this year.

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