The Ship Manager: Assistance in distress, a helping hand for start-ups. Harun Duzgoren, Managing Director, V.Ships Istanbul Marine Services Ltd.

Transcription

1 The Ship Manager: Assistance in distress, a helping hand for start-ups Harun Duzgoren, Managing Director, V.Ships Istanbul Marine Services Ltd. 10th Annual Marine Money Istanbul Ship Finance Conference Wednesday, 22 May 2013, Swissotel The Bosphorus Hotel

2 Outline 1. Priorities as a Ship Owner 2. Asset Management Structure 3. Vessel Takeover Key Considerations 4. Managing Liabilities and Creditors 5. Distressed Assets Different types of Relationships 6. Ownership Risks 7. Balance Sheet Considerations 8. Case Study Sea France 9. Benefits of engaging with a Ship Manager 10.Our Services for Start-Ups & Distressed Assets 11.Timelines of the Services for Distressed Assets 12.V.Group An Introduction 2

3 Priorities as a Ship Owner in case of default 1. Gaining early control of the vessel 2. Locating the vessel in a favourable jurisdiction 3. Managing various stakeholder liens effectively 4. Assessment and preservation of vessel condition 5. Getting vessel trading ASAP / Exit planning 3

4 Four basic functions of ship owning business Financial Commercial Technical Crewing Sourcing finance (equity & debt) Employment strategy Insurance Sourcing Optimising WACC Profit delivery Risk management Fixing Commercial management Spares & stores Surveys & services Repairs Safety & Risk Administration & management Selection & engagement Crew management Travel & administration Victualling 4

5 Asset Management Interface Investor / Bank s asset management and operations team When fixing TC and BB employment a forum is setup to discuss strategy and opportunities Main point of contact with senior managers Direct communication established for saftey and environmental issues as per ISM V.Ships asset management coordination team Commercial report (weekly) Financial Reporting (monthly) Claim Reporting (monthly) Incident reporting (ad hoc) Technical reporting (monthly) Other requests (ad hoc) Commercial operational manager Insurance department Technical operational manager Chartering Post fixture Accounting & financial Commercial management Commercial Claims Insuarance claims Accounting Crewing Technical Safety & Quality Technical management 5

6 Vessel Take-Over Key considerations Review insurance, Class, Employment details When was last valuation or inspection done? Plan jurisdiction and secure local expertise Project management Liaison with lawyers & other key advisors On board the vessel: Gain early access and get project team on board Gain the confidence of Master and crew Inspection of vessel to establish condition Plan creditors management Press and PR V.Ships has local expertise in global locations as well as ability to establish relations with master, crew, suppliers etc. 6

7 Managing liabilities and creditors Crew wages Mortgages Insurance payments Bunkers and Lube oil suppliers Class Ship agents Manager s fee and other suppliers Mismanagement can result in: Delay and disputes Additional liabilities Arrest of vessel Cargo going off spec Adverse publicity 7

8 Distressed Assets - Relationship ROADMAP 1 Pre-Arrest Initial Consultancy and Strategy Development Vessel inspection Charter / Employment analysis Legal review Insurance issues Assistance with any structuring needs Commercial agreement Technical Management agreement 8

9 Distressed Assets - Relationship ROADMAP 2a Post-Arrest & Pre-Auction Vessel take-over Pre take-over inspections Deployment of crew Implementation of management systems Readiness for trading Identification of potential employment the vessels are marketed through V.Group s global network as appropriate 9

10 Distressed Assets - Relationship ROADMAP 2b Post-Arrest & Pre-Auction Technical management Risk, Safety & Quality Risk identification and assessment: Risk management through Company and Vessel Management Systems (VMS) Technical Superintendency: Management of spares Repair and maintenance functions to ensure: safe, pollution-free and cost effective vessel operation Compliance with class rules and international (IMO) regulations governing technical condition and operational capability Crewing Crew management: Recruitment Training Management of officers Maintenance of ratings 10

11 Distressed Assets - Relationship ROADMAP 3 Post Auction Ongoing business development towards: Improving the returns on the vessel Improving the fleet s existing trading patterns Determining an exit strategy Exit through sale of asset 11

12 Ownership Risk Taking possession or taking the beneficial ownership of a shipping asset implies endorsing the responsibility and risks related to the shipping asset The type of tortuous claims that arise in a shipping context include, amongst many others: Cargo damage claims Collision with other ships and with fixed and floating objects such as harbor installations, oil rigs and buoys Personal injury to crew and other persons Fire Total loss leading to liabilities for wreck removal Environmental claims This can be mitigated by creating an independent ownership structure However, the effectiveness of this structure highly depends on how far the financiers distance themselves from the management and control of the asset Full Management & Control No Management & Control Risks 12

13 Balance sheet considerations On Balance Sheet Off Balance Sheet Economic ownership (incl. shares and loans) Equity held by 3rd party managing owner Equity held by 3rd party managing owner Arms length loan arrangement Economic risks/ rewards Financier has main risk/ rewards Risks rewards shared between parties Equity held by independent third party Full control over the entity/ asset Financier controls sale of the asset and employment of asset Financier controls sale of the asset No control over the entity/asset Commercial trading at discretion of the commercial manager Pre clearance with auditor needed to agree treatment 13

14 Case Study Sea France Scenario 2011 SeaFrance went bankrupt Vessel was laid-up in Calais by SeaFrance The vessel was repossessed by the mortgagee bank The bank contacted V.Ships Leisure to assess condition of the ship and V.Ships Leisure conducted survey and condition report V.Ships Leisure was contacted also as technical administrative advisor Solutions V.Ships Leisure proposed management and change of flag from French to Maltese V.Ships Leisure suggested to create a Special Purpose Vehicle (SPV) company in Malta The company was established by using a client of V.Ships Leisure/the Bank. V.Ships Leisure arranged that the client acquired the vessel using the SPV Maltese company V.Ships Leisure took over the management of the vessel and transferred her from Calais to Tilbury where she was laid-up While in Tilbury the vessel was dry-docked and reactivated for operation The Bank bareboat chartered the vessel to DFDS V.Ships Leisure also arranged the transfer of the vessel on behalf of DFDS from Tilbury to Dunkerque where they took over the management 14

15 Benefits of engaging with a Ship Manager Typical ways of engaging a ship manager onto subject vessel / account Asset inspections» Exercising periodic inspection option available to you within mortgage contract (App. 1) Undertakings» Incorporating parameters within the contract for manager to report e.g. level of funding (App.2) Audit and reporting as lender s representative» Diligence and reporting on key operational and financial parameters Value added by V.Group Advisory and lender s representative services Ascertaining asset condition accurately Project planning and management Recognising and managing risk effectively Managing key stakeholders (crew, supplier etc.) 15

16 Timeline of services to distressed assets 1) Marine Services Arrest / Possession 2) Technical / Crew Management 3) Structuring Auction / Sale 4) Commercial / Asset Management The above services can either be contracted independently or as a package. 16

17 Services for Start-Ups Asset Management: Senior managers with a blend of commercial and technical skill-sets. The asset managers serve as your representatives, providing a direct link between the owner and any aspect of service relating to the managed asset. Marine Services (can be arranged in a Frame Agreement or ad hoc) Consulting Services in respect of the asset Vessel Inspection and Health Check Preparation of Asset Recovery and/or Acquisition Management of Suppliers and other Stakeholders Technical Management (through a Ship Management Agreement) Vessel Takeover Technical Management & Ancillary Services Crewing & Manning Construction Supervision at Yard Corporate Structuring (through Letter of Appointment) Legal Advise & Corporate Structuring Commercial / Asset Management (through a Commercial Management Agreement) Deployment Plan Charter Party Review, Negotiation & Follow up Commercial Management Services Financial and Operational Reporting Claims Handling Exit Strategy Insurance: In-house insurance brokers and general adjusters Sale & Purchase: A team of S&P brokers with a diverse range of experience in S&P, newbuild, and demolition markets. 17

18 V.Group an introduction V.Group is the world s largest provider of ship management services to a fleet in excess of 1,100 vessels encompassing most ship types An international company with 70+ offices located in 26 countries employing 1,900 office staff and with a roster of 25,000 sea staff V.Ships, a brand which covers, in addition to core ship management activities, a broad range of maritime services including crewing, leisure, financial, insurance, consulting, logistics, technical staff, commercial, underwater maintenance and agency services A privately owned company, jointly held by management and OMERS, that has expanded significantly in recent years through organic and inorganic growth V.Groups aims to be recognised as the first choice global supplier of the highest quality services to the Shipping industry, with absolute regard to Safety and the Marine Environment. 18

19 Core services Technical Management Crew Management Consultancy Services Customised Reporting Seagoing Maintenance Procurement IT Systems Ship Agency Insurance Services Chartering/Post fixture Average Adjusting Training Services Catering Travel Services Accounting Services 19

20 Global Network AMERICAS EUROPE MIDDLE EAST ASIA/ AUSTRALIA 20 Boston Buenos Aires Houston Miami Montreal Rio de Janeiro Antwerp Arkhangelsk Astrakhan Batumi Burgas Constanta Drammen Genoa Glasgow Gydnia Hamburg (2) Istanbul Kaliningrad Kherson Klaipeda Limassol (2) London Monaco Nakhodka Naples Novorossiysk Odessa Oslo Paris Piraeus Plymouth Riga Rijeka (2) Rotterdam (2) Samara Sevastopol Stavanger Tallinn Tbilisi Southampton (2) Split St. John s St. Petersburgh Bahrain Dubai (2) Fujairah Cebu Chandigarh Chennai Delhi Kochi Kolkata Manila Mumbai (2) Shanghai (2) Singapore (2) Sydney

21 Ship Management Fleet Breakdown Summary by main categories Tankers 61.0% Bulkers 16.7% Containers 4.5% Others 17.8% 21

22 22 THANK YOU