The Other 30%

By Matt McCleery

First mortgage financing will always account for 70% of the capital formation in the shipping industry. And why shouldn’t it? It’s dirt cheap, it’s flexible and it’s abundant. But in our view, financing the other 30% is where the business gets fun. Optimizing the other 30% allows for more leverage, higher returns on equity, lower operating break-even and frees up buying power to do more deals. The other 30% can transform a shipbroker into a shipowner, a spectator into a principal and, in the eyes of a banker, a toad into a prince. Put another way, the other 30% is what has attracted many of us to this industry.

In this September issue of Marine Money, we celebrate the unofficial beginning of the new business year by looking at the various ways the other 30% can be financed. Urs Dur begins the issue with a look at Seaspan which achieved relatively unique junior mezzanine for which Fortis created an investment grade commercial paper product. Nicolai Heidenreich analyzes the American Bulker KS transaction completed by Lasco a few months ago, and explores the depth and breadth of liquidity for the other 30% in the Norwegian KS market. Kevin Oates provides insight into the Royal Bank of Scotland, one of the most reliable mortgage lenders in the business. Finally, Geoff Uttmark presents a case why we think Japan is the land of opportunity for ship financiers and shipowners.

This is only an excerpt of The Other 30%

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