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How are maritime assets being valued?

12/4/2012

NEW ORLEANS - Deepwater offshore service and special purpose vessels are appreciating in value while the inland market has been somewhat stable.

That was one of the messages at a wide-ranging panel discussion on asset valuation and restructuring here at the WorkBoat Executive Summit Tuesday.

One of the key determinants of value has traditionally been the cost of steel—what it would cost to build a new one, said Dennis Bolton, manager of equipment management at Wells Fargo Equipment Finance Inc.

“Are you truly relying on just cost approach or do you actually have some market analysis and market comparables,” he said.

On the bluewater side, size is key. New 18,000-TEU vessels are really going to put some pressure on existing tonnage. “You’ll see the cascading effect of larger vessels replacing smaller ones,” said Ken Becker, director, AMA Capital Partners, New York.

When a loan or lease becomes delinquent, “You begin to arm yourself possibly for a bankruptcy,” said Nathan P. Horner Jr., a lawyer with Lugenbuhl, Wheaton, Peck, Rankin & Hubbard in New Orleans. And the reorganization process can last years.

And, Becker said, “Chapter 11 doesn’t really help you unless you know what you want to do on the other side.”

In discussing the federal court process of asset seizure, Horner noted that maritime liens don’t have to be recorded.

 In any distress situation, “trend monitoring is important,” Bolton said, citing as an example the decline in coal. “You know there’s going to be some operators out there that are heavily reliant on coal.”

Bolton also identified two basic types of marine clients: those who want to own vessels and those more concerned with day rates.

“It’s important to understand when structuring a transaction which client you’re dealing with,” he said. “Rather than looking at what the returns are, it’s much more important to understand what the drivers are.”


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