New French Incentive for Investment in French Ships

Ferdinand Vroom, Constant & Constant, Paris

Introduction
For some considerable time now, French governments of varying political tendencies have been lobbied by French shipping interests (owner/operators, unions, bankers) to create conditions for attracting private investment and personal savings to the shipping sector.  The existing panoply of incentives has not proven to be an outright success and, in enacting recently a new fiscal incentive for private sector investment in shipowning, the French government is hoping to satisfy, to some degree, the pressures of the various interested sectors by setting out three objectives:

1.    to stem the continuing decline in the size of the French merchant fleet, which has dropped from being the eighth largest in the world at the time of the 1973/74 oil crisis, with some 500 ships to twenty-third today, with only 210 ships; Continue Reading

Hvide Priced

It is no surprise that we are unabashed supporters of companies which effectively access the capital markets for the profitable development of their businesses. We wear it on our sleeves.

We acknowledge that bank debt in its traditional form still accounts for the majority of vessel finance. But, the flexibility provided by, the capital cost savings from, and the strength offered through the intelligent usage of differing capital structures – whether they be public equity, private debt or derivative contracts – are essential elements of the late twentieth century shipping environment. Continue Reading

Griffin Shipping Holdings

South Africa’s Griffin Shipping Holdings has boosted half-year dollar earnings by 46% with net profits for the period to June 30 up to $4.73 million from $3.23 million for the corresponding period in 1995. Managing director Mr. Mike Meehan also reported that operating profit for the same period amounted to $8.1 million – an increase of 57% on the previous year.

The weakness of the Rand saw a disproportionate surge in results – by 232% – due to a 19% decline in the value of the Rand against the Dollar of the half year. Cash earnings per share in Rand to June 30 grew strongly to 61.1 cents a 49% increase on the year before. The interim dividend has been increased by 50% to 6 cents per share. Continue Reading

Financing PRC Vessels

Following the 1980s crash in the shipping market in Hong Kong, several western ship finance banks left the Territory. In recent years, however, an increasing number of these banks have begun to return. There is no doubt that the China market (with its burgeoning maritime transport and shipping companies) has played a significant part in attracting such ship finance banks back to Hong Kong. Although these banks are interested in lending to Chinese shipowners, they appear, for the time being at least, only willing to do so on the basis that the vessels being financed are registered in jurisdictions other than the PRC. Liberia, Panama, Hong Kong, Cyprus, Singapore, the Marshall Islands and St. Vincent & Grenadines have all proved popular alternative jurisdictions.

The recent strong economic growth of the PRC has led to increased demand for trading between its coastal regions. Only PRC registered vessels have been able to participate in this growing market because of the protective provisions of the PRC Maritime Code, which expressly prohibits foreign vessels from engaging in PRC coastal trading and towage operations unless express consent is obtained from the relevant PRC authorities. Western banks, however, are not at present satisfying the growing need of PRC shipowners for competitive international financing to finance the acquisition of PRC registered vessels. Continue Reading

Turmoil in East European Yards

A Finnish-Russian ship scrapping joint venture plans to construct a dry dock for ship demolition in St Petersburg. The company, Interferrum-Metall, is also seeking $3m in loans to upgrade its ship scrapping facilities in St Petersburg.

Talks are being held with a German bank, a German investment company, and with the Moscow-based bank Mosbusinessbank. Finnish company Ligorio holds a 51% shareholding in Interferrum-Metall. A huge number of warships from the former USSR’s navy and obsolete Soviet-era merchant ships are awaiting scrapping in the St Petersburg and Russian Arctic region. Some estimates say these vessels could generate 100,000 t of scrap metal. Main customers for scrap are Finnish companies and Russian steel producer Severstal. end Continue Reading

Treasury Strategies – The Pot of Gold Awaits Shipping’s Innovators

It’s a hard business to be in – selling treasury strategies to the shipping business – but then novelty was always difficult to peddle to shipowners, who tend to be a conservative bunch.

The world of shipping is changing, however, albeit an evolutionary change and not a revolutionary one. That may be no bad thing – provided the evolutionary process is not too long-drawn out. For in opting to use treasury strategies to make their money and their accounting practices work for them as value-added functions, shipowners are not in a position where they are reinventing the wheel. The products and functions at their disposal are tried and tested in other international, cross-border industries such as retailing, manufacturing, travel and airlines.

Banks are only too willing to tailor the services provided for other users to the individual nature of the shipping industry. Still, however, it seems that some unsophisticated people in shipping are asking the question: “Why are treasury strategies necessary?” Continue Reading

Shipping Companies & Stock Exchanges

Shipping stocks have never been the favorites of any stock exchange around the world. The neutral to negative attitude of investors toward shipping companies is mainly attributed to the relatively small size, old-fashioned corporate structure, and the limited growth potentials of these companies. With the exception of the Oslo Stock Exchange, where listed shipping companies represent a respectable 14.5% of the total market’s capitalization, shipping companies represent an insignificant portion of the other stock exchanges’ total capitalization.

With regard to their corporate structure, most shipping companies retain the old-fashioned, unsophisticated structure where management and ownership almost always coincide. Such a structure allows for limited control from outsiders which makes investors reluctant to commit their capital to companies where they have little or no say. Continue Reading

Ship Finance for Chinese Owners

Ship Finance for Chinese Owners

The following is an abbreviated version of a speech written and delivered by Henry Chen, Director of Seagos Company, Inc. , at a private ship finance seminar in Hong Kong hosted by Marine Money, Seagos, Marsoft Capital and Nedship Bank.  Seagos, based in Stamford, CT,  represents Chinese shipowners who operate in the Atlantic and North America. As more Chinese shipping companies have started seeking financing from Western banks and financial institutions, Seagos has been drawn into the role of helping clients locate competitive sources of capital. In the following speech, Mr.  Chen focuses on some of the obstacles Chinese owners face in securing financing.

There is no question that a tremendous amount of capital is needed to sustain the growth in the Asia Pacific region, and in China in particular. Capital is needed for the build-up of infrastructure, terminals, gas storage tanks, coal burning power plants, etc. Ship financing is extremely capital intensive, and shipping companies must compete with toll roads, bridges, etc. for sources of financing. However, ship financing is sometimes assessed as high risk, and financiers are very selective about which projects they should invest in. What can we do to facilitate the selection of ship financing projects that are beneficial to both the shipping companies and the financial institutions?  What services do we at Seagos need to provide to our shipowning clients to help them secure competitive financing for their projects? Continue Reading

Inchcape’s Treasury Strategy

It’s not quite a rags to riches story, but definitely one of resurgence – London-based Inchcape is on the move as a shipping enterprise. It has new plans and has shed some of its deadwood. It has slimmed down the broking operation, for instance – selling the Lamberts broking operation and centering activities on Cleaves. Perhaps most significantly, its the team at the top – headed by the energetic chairman Colin Marshall, perhaps best known for his role at British Airways and this year’s Director of the UK’s Confederation of Industry. There still 4,000 people working for the organisation in some 220 offices in over 40 countries – and there is more. Continue Reading

HK$425m Lifeline for Tradelink Project

by K. K. Chadha in Hong Kong

Hong Kong’s troubled Tradelink computer project has received a HK$425 million (US$54.5 million) lifeline from the government. As a result, up to 100,000 trading companies will be forced to use electronic technology in business communications with the government.

The government has put in the extra funding as convertible bonds, after a loan plan was rejected b the main political parties in the Legislative Council because of the high risk involved in the project, started eight years ago. This means the government’s 40% stake in the Tradelink Electronic Document Services Co. would increase sharply if the company defaulted on the loan. Tradelink currently owes $162 million. Continue Reading