Links
The Dark Side
On Tuesday, a team from Watson, Farley and Williams (“WFW”) shed some light on the dark side assuring a full house of bankers and other concerned parties that they had nothing to fear in these difficult times as long as you have the right team of advisors. In a seminar entitled, “Troubled Waters: Protecting Asset Financiers in the Current Market,” Frank Dunne, Dan Rogers, Al Yudes and Neil Quartaro described the firm’s approach “to workouts, enforcements, bankruptcy, and after.” Each provided their unique perspective based upon their specialty. The mix of the presenters included the more “experienced” partners from the 80s which brought great value and interest in terms of examples or “war stories.”
Continue Reading
The Camel’s Nose
In a carefully orchestrated web meeting and presentation, DnB NOR ASA (“DnB”) responding to concerns about the quality of its shipping portfolio provided interested parties an opportunity to get a general picture of the portfolio and ask questions. Understandably, the bank had to balance the amount of disclosure against the possibility of the camel sticking his nose in the tent or, in today’s kids’ parlance, “TMI” (too much information).
DnB is rightfully proud of its global shipping portfolio which it describes as “..consisting of loans to the leading industrial players. These clients are characterized by extensive resources, a high level of fixed contracts on their vessels, strong equity and healthy liquid reserves. The credit quality of DnB Nor’s shipping portfolio, measured in terms of expected losses, is better than the average for the overall corporate market portfolio (emphasis ours).
Continue Reading
Testing the Waters
As a consequence of its insolvency, Allco this week awarded Citi the advisory role for the sale of it shipping affiliate, Allocean. This business is fundamentally sound with all the ships on charters, the charters current and the debt in place. The company owns a diverse fleet consisting of tankers, bulk carriers, containerships, LPG carriers and offshore supply vessels (see chart below). In addition it has a substantial orderbook of 15 vessels to be delivered in 2009.
Continue Reading
“Don’t Look Back. Something May Be Gaining On You”
Seeking greater certainty in these unsettled times, DHT Maritime Inc. (“DHT”) announced on Monday that it had reached an agreement with OSG under which OSG has declared part of the extension options for the seven vessels on time charter upon expiry of the vessels’ current initial charter periods. It is notable that the options were declared early and as a consequence DHT’s fleet will have 100% fixed charter coverage from 2009 through 2011 with one of the world’s premier tanker owner/operators.
Allco Shows What it Takes
Marine Money observed first hand during the restructuring years of 2000 and 2001 the absolute value of working collectively with lenders and creditors to keep a distressed business whole and trading. Two contrasting approaches come instantly to mind, the Bondholders destruction of over a billion dollars of value in their mishandled bust up of Fred Cheng’s Golden Ocean (value Mr. Fredricksen astutely cashed in on) versus the Tsakos family’s elegant handling of their Global Ocean restructuring or even Ravi Mehrotra’s strong holding together of Amer Reefer, both of which returned far greater value to stake holders by remaining viable on-going concerns.
Continue Reading
Thanksgiving
In these most difficult economic times, it is certainly difficult to reconcile the act of thanksgiving with businesses failing, huge layoffs and record unemployment. We learned that our industry is not immune and in fact, acted this week and laid-off many of our friends. We remain hopeful that this time companies will recall how profitable this sector has been over the last four years and how valuable their people are. Nonetheless, we fear it will get worse before it gets better. We caution the corporate leaders not to tear out the heart as it will be most difficult to replace when the market turns and there is again much money to be made.
Continue Reading
The 2008 Global Credit Crisis – Is shipping likely to revert to the 1980’s model?
On November 13th more than one hundred and fifty shipping practitioners, bankers and investors listened to an all-star cast of current and former ship owners, brokers, shippers, maritime arbitrators and maritime attorneys at a CMA luncheon in Stamford, CT.
Moderator Ray Burke of Burke & Parsons, introduced the first speaker, John Bamford, Senior broker at Simpson Spence & Young (USA) who summarized the present situation as: “We are in a state of temporary chaos.” Today’s time charter rates for dry cargo vessels could double and still be 50% of what owners need to make profits again. He suggested that even after the rates start moving it could take 12-18 months longer to bring the supply/demand picture into some semblance of neutrality. On a more hopeful note, he suggested that the fall out from the settlement of October FFA contracts was far less stressful than expected. Still, the physical markets will produce more casualties before things start to improve. On the supply side of the equation, John thought the consensus among brokers was that 30-35% of the fleet on order would be cancelled and some of the new “Greenfield” shipyards would not actually be built.
Continue Reading
A New Perspective
We are very grateful to Imarex’s Mike Reardon for introducing us last week to his colleague from Singapore, Jeffrey Landsberg. Mr. Landsberg suffers from a keen interest in the bulk markets and unlike Mike he focuses more on the physical market. This week we publish for the first time his weekly newsletter, which we will continue to do on a regular basis. We believe that the views of both Messrs Reardon and Landsberg are extremely valuable and a worthy addition to our publication. We hope you find them as useful as we do.
Shipping on the Global Stock Markets
In contrast to the views of our banker friend expressed earlier, private shipping companies clearly saw benefits to going public. Among many reasons for a public listing are to extend capital sources, provide acquisition currency, and allow liquidation of family holdings. At our Dublin conference, Mr. Andrew Meigh, Managing Director of Clarkson Investment Services, provided a superb historical overview of the public markets. For perspective, we have incorporated his graphs, which illustrate the global number of publicly listed shipping companies and the capital raised, the combined market capitalization of publicly listed shipping companies and the number of companies listed on major shipping exchanges. Finally, there is a list of the publicly listed shipping companies together with their market capitalization.
Legal Question
We include below a definition of force majeure for your consideration together with a question of applicability that follows the quote.
“Force Majeure literally means “greater force”. These clauses excuse a party from liability if some unforseen event beyond the control of that party prevents it from performing its obligations under the contract. Typically, force majeure clauses cover natural disasters or other “Acts of God”, war, or the failure of third parties–such as suppliers and subcontractors–to perform their obligations to the contracting party. It is important to remember that force majeure clauses are intended to excuse a party only if the failure to perform could not be avoided by the exercise of due care by that party1.”
Can one make a cogent legal argument that this applies to the credit crisis and more specifically to sale and puchase or newbuilding contracts? Let the lawyers, principals and financiers opine. Responses will be incorporated in an article in our January Survival Guide. Please email your thoughts to gweltman@marinemoney.com.
Current Issue
