Marine Money’s Ship Finance Forum held earlier this month in New York delved mainly into bluewater shipping, but offered insights that are applicable to brownwater.
A session on leasing, moderated by Vedder Price attorney Frank Nolan, delved into structures other than traditional lease formats, for example where vessels are on time-charter to a user (often through sale/leaseback arrangements).
The panelists, including Hal Malone, chief strategy officer at Navig8 Group (an international owner that has done more than $750 million of sale/leasebacks), and Sean Durkin, president of Northern Shipping Funds (a capital provider to ship owners) took the view of lease finance as an alternative to commercial bank finance, where availability has been reduced in recent years. Durkin said as much, telling the 300-plus attendees that “what we’re really doing is anything that the banks won’t do.”
Audio from the leasing session is available and worth a listen.
International and brownwater owners share the preponderance of family-owned companies, which provided an interesting angle when the discussion turned to private equity, always a big topic at such conferences.
Multiple speakers noted that European shipping families have backed private startups in the sector. Perhaps this model might be applicable closer to home. Kevin Greene, who heads up James Alpha Management (a “family office” investing on behalf of a wealthy family), described a connection between the background of the lead investor (a top banker whose portfolio included maritime assets) and the willingness of his family office to look at maritime transactions. This comfort level has enabled the investor to enter into structures where vessels are time-chartered (in partnership with spot market players), which would ordinarily be far too risky for a financial investor.
Another speaker, restructuring expert Randee Day, shared findings of a detailed statistical analysis showing that taking vessels – five-year-old tankers, in this case – in under multiyear charters produced reduced losses compared to buying stocks or owning vessels.