Stolt-Nielsen S.A.

Stolt-Nielsen S.A. is a diversified company that provides distribution services for bulk liquids, subsea services, and is in the business of research, production and marketing of farmed seafood. Its Transportation Group (SNTG) provides integrated door-to-door transportation of bulk liquids through its three divisions: the Stolt Parcel Tankers division, the Stolthaven Terminals division and the Stolt Tank Containers division. The Subsea Services Group (Stolt Comex Seaway-SCS) is a leading provider of subsea engineering, survey and construction services to the offshore oil and gas industries. The Seafood Group (Stolt Sea Farm) breeds fish in a controlled environment, and processes and markets seafood products. In addition, Stolt-Nielsen S.A. is the major shareholder of Stolt Partner S.A.

Sixty-five percent of the company’s revenues originate from the Transportation Group, 25% from the Subsea Services Group, and the remaining 10% is derived from the Seafood Group. For the nine months ended 8/31/95, all three groups reported increased revenues. The Seafood Group, although the smallest and as yet unprofitable group, experienced the fastest growth of all three groups in this period, increasing its revenues by 30% on top of its 40% increase in 1994. The Transportation and Subsea Services Groups each reported a 20% growth in their revenues in the first nine months of the current fiscal year. Continue Reading

South Korean Shipyards: Opportunity or Threat?

When Hyundai shipyards received their first supertanker order ever from a Greek shipowner some 20 years earlier, no one could imagine that 20 years later Hyundai would become the largest shipyard on earth. When Hyundai’s workers realized that the two sections of their first supertanker wouldn’t fit into each other and the Greek shipowner refused to accept the vessel even after the problem was corrected, everyone was sure that South Korea’s ambitions to become a shipbuilding power would soon deflate. Twenty years later, South Korea has achieved its goal and now its only concern is how to become the indisputable leader.

Although it sounds bizarre, South Korea had no considerable exposure to shipbuilding prior to the early 1970′s. Contrary to Japan, South Korea’s main rival with experience of over 400 years, South Korea had not been exposed to extensive shipbuilding activities until Park Chung Hee, a general who became president of the country after a coup, decided that South Korea needed to become a shipbuilding leader. Continue Reading

ICS Fears Expanding Arrests

Slow and steady – that is likely to be any progress of a new convention on the Arrest of Ships, following a joint Unctad/IMO deliberation in London. At least there will be a new convention – the meeting decided as much. But there will be no follow-up to discuss the detail of changes, of import to shipowners and lenders, until December, 1996 in Geneva.

One delegate described the meeting as “not very good,” adding that the lack of progress was “pretty hopeless.” In fact, delegates could not complete reading the draft convention during the week. Much time was taken up in discussing whether there should be a new convention, or whether there should be a protocol added to the existing 1952 Arrest Convention. Because of the wide acceptability of this convention several governments – notably Germany, Greece and Poland – felt this convention gave uniformity around the world. This could be lost with a new convention, he argued. Continue Reading

Germans Tax Scheme Continues to Fund Low Cost Container Vessels

Germany continues to be the world’s main success story for shares in shipping by the “little people” – not leprechauns, but the great middle class seeking tax breaks. Operating in a similar fashion to the Norwegian K/S system, Germany’s ship shares scheme allows purchasers of shares to gain tax cuts in Germany.

At first, the scheme was applied to German-built ships only, but this year it has gained increasing success in attracting investors to ships built in foreign yards. One of the latest offerings is from one of the companies which has shown startling success – Norddeutsche Vermögen – which is now offering the German public shares in the 3,600 TEUs containership Northern Dignity. Norddeutsche has ordered the ship from South Korean yard Hyundai Heavy Industries (HHI) at a price of US$46.5 million for delivery later this year. Continue Reading

German Shipyards Face Myriad Troubles

European shipbuilding continues to struggle against the old problems of high labour costs and few orders.  Now European Union industry ministers have voted to prolong the region’s subsidy regime until October of next year.

Despite protests from Germany, the UK and Sweden, the EU will not ratify the OECD accord on subsidies until all other members of the organisation have done so.  The trio had sought to end subsidies by May at the latest, but the  EU’s position is not now likely to be discussed again until June.  The EU is set to end subsidies next October in line with the rest of the OECD.  Although this is a disappointment to the hawks, the UK at least has signaled that it will not be taking unilateral action to end subsidies.

However, for the shipyards facing problems throughout the region, the subsidy debate is a bit of a sideline.  For they are under pressure in terms of cash flow shortfalls. Continue Reading

Finance Leasing: An Introduction

Part One of a Two-Part Series

by Tom Budgett, Clifford Chance in Paris

The peoples of ancient Sumeria are thought to have devised the concept of equipment hire: a commercial relationship in which the owner of equipment allows another person to have possession and use of it for a rental payment. In modern times, this legal structure has been adapted to what is, in effect, a form of financing under which, generally for reasons associated with security or taxation treatment (or both), the provider of funds acquires title to equipment and makes it available to the user in return for a rental stream which, over the lease period, enables the owner to amortise (or recover) the cost of the equipment to it, and earn a return representing a financing charge on that original cost. Such an arrangement is often termed a “finance lease,” and this article looks at the use of such arrangements as a means of financing the acquisition of ships. Continue Reading

Finance Leasing: An Introduction

by Tom Budgett, Clifford Chance in Paris

Part Two of this series examines the differences between leases and loans.

Comparison for Fiscal Purposes of Finance Leases and Loans

A further comparison may be made between equipment finance agreements (whether lease, hire purchase or conditional sale agreements) on the one hand, and loans on the other, since finance leases, hire purchase and conditional sale agreements may well have financial consequences for both parties to the transaction similar to those of the loan. 

The legal distinction between loan financing and lease financing or hire purchase is fundamental – in the case of the former, the equipment will be acquired by and beneficially owned throughout by the user/borrower and the rights of the lender to repayment of principal and to interest in the meanwhile, even if those rights are secured by a fixed charge over the equipment, remain the rights of a mortgagee only, which give certain rights limited by law over the equipment in the event of default, but which rights in themselves do not amount to “ownership”. In the case of a lease, however, the financing institution as lessor remains throughout the beneficial owner of the equipment, notwithstanding the user/lessee has the right to actual possession, enjoyment and use to an extent more usually associated with ownership. Continue Reading

Farstad Shipping AS

Farstad Shipping AS is successfully involved in a niche market of the shipping industry. It concentrates its activities on anchor-handling tug supply vessels (AHTS) and platform supply vessels (PSV).  The company’s fleet has an average age of 9 years, 18 out of a total of 24 of its vessels operate in the North Sea, and nineteen of its vessels are involved in fixed contracts.  The company is expecting delivery of a newbuilding in the beginning of 1996.  

AHTS vessels are mainly involved in towing and anchor-handling for mobile platforms, towing of production modules and anchor-handling for cranes and pipelaying vessels.  PSVs are mainly involved in the transportation of wet and dry bulk cargoes, the transportation of deck cargoes and the transportation of pipes in connection with pipelaying.   Continue Reading

BT Shipping

BT Shipping (NASDAQ:BTBTY)  is incorporated in Bermuda.  It owns and operates a fleet of six Panamax tankers.  It mainly focuses on the North and South American and Caribbean trades.  Seventy-five percent of the company’s income originates from charterers located in this area, 22% comes from charterers in Europe, and the remaining 3% from charterers located in Africa and the Middle East.  The US’s increased imports from South American countries favor the company’s future activities.

In 1994, BT Shipping reported a loss of $3.1 million on the sale of the 216,000 dwt BT Venture (built 1971), which was scrapped after the expiration of a storage timecharter.  Distressed VLCC rates and recent regulations that reduce the carrying capacity of single hull VLCCs by up to 30% when 25 years old, forced the company to scrap the vessel. Continue Reading

Bermuda Triangle

by Bridget Hogan

Just as mariners have been taken by surprise by the treacherous waters in the Caribbean when seeking balmy weather, so Smedvig Tankships fell victim of the very commercial climate it sought as a haven.

While the disappearance of Smedvig Tankships was finally down to the failure of the tanker market and the allure to shareholders of the price on offer from Bona Shipholding, other forces were at work too. Ironically, the Bermudan law regime, which seemed so attractive to Smedvig Tankships when setting up, provided the right climate for the take-over maneuvers.

The Smedvig Tankships that disappeared last month was formed in 1993, although Smedvig as a name has been in shipping since 1935. The company successfully set up in Bermuda in 1993 and, in June of the year, an international initial public share offering of shares raised $138 million to buy six Aframax crude oil vessels to augment the existing fleet of five ships. Continue Reading