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Daily Briefing October 31 2017

Buy Rickmers, get $200,000 top golf club membership free

Topics

Buy Rickmers, get $200,000 top golf club membership free

 

THE new owner of insolvent Rickmers Holding - now almost certain to be Bremen-headquartered builder Zech Group - will enjoy the right to tee off at one of the world's most exclusive golf clubs as part of the package, according to the restructuring plan.

Assets of the company, which went under in June, include corporate membership of Singapore's Sentosa Golf Club, widely considered to be among the best in Asia. The report values the membership at €170,000, or roughly $197,000.

The restructuring document, seen by Lloyd's List, also reveals that Rickmers Group chief executive Ignace Van Meenen was sacked on the spot earlier this year, after he was deemed to have divulged price-sensitive information in a media interview.

As the public face of the company, Mr Van Meenen loyally gave repeated public assurances that Rickmers could be saved, even after it looked to have long passed tipping point. That now appears to have been his downfall.

The restructuring proposals, presented to creditors at a meeting in Hamburg in mid-October, shed light on the hitherto little-known extent of the collapsed Rickmers empire, which comprises 156 companies worldwide.

Some 101 of them are based in Germany, with 26 in the Isle of Man, nine in Singapore and eight in Cyprus. There are also operating subsidiaries in Belgium, China, Denmark, Japan, Malta, the Philippines, Romania, South Korea, Sri Lanka, Thailand and the US.

Also forming part of the package, alongside the golf perk, are stakes in various Hamburg-based entities outside the group. These include 50% of shipbroker Harper Petersen, 100% of marine surveyor Expert Shipping Service, 17% of German Lashing Robert Böck, 12% of MTC Marine Training Center Hamburg and 25% of Hamburger Hafenterminal Wallmann & Co, a multipurpose terminal at the port of Hamburg.

As a job lot, total assets are valued at some €47.8m. Liabilities, on the other hand, come in at a thumping €1.34bn. On the hook are - among others - HSH Nordbank, owed €564m; UniCredit, €146m; a Hyundai shipbuilding unit, €27m; and Deutsche Bank, €9.2m.

At the time of application for insolvency, Rickmers Group owned just 35 ships and managed a further 70. This total, contrary to the widespread perception that Mr Rickmers' owned fleet ran into three figures in terms of vessel numbers, seems to reflect bank pressure for disposals.

Those owed money were told at the recent creditors' meeting that they were looking at a payout of just three cents in the euro, although they will also be offered the chance to invest in the reborn concern.

Bertram Rickmers, the founder and former sole shareholder of Rickmers Group, will also be on board as a minority shareholder. But Zech Group, a construction company owned by Kurt Zech, will be in the driving seat. Barring any unexpected hurdles, it is hoped to sign off the deal by late November, according to a Zech Group source.

Zech Group got into shipping after setting up a project shipping arm, Zeaborn, several years ago. In the course of this year, Zeaborn has acquired vessels and, indeed, entire companies from Rickmers Group, so close ties are already in place.

Earlier this year, Zeaborn acquired Rickmers Group's multipurpose division Rickmers-Linie, on undisclosed terms. The document states that the price was negative, with Zeaborn getting ?6.6bn to take the company off Rickmers' hands.

Mr Zech is known to regard himself as a stick-to-your-knitting construction guy rather than a shipowner, and is likely to devolve management to existing Zeaborn top brass Ove Meyer and Jan-Hendrik Többe. Mr Rickmers will presumably also get a hands-on role.

 


 

Top stories:

Shipping could be facing new CO2 measures as early as 2018

THE shipping industry could be forced to adopt new decarbonisation measures as early as in 2018, despite countries, industry representatives and non-governmental organisations remaining divided on the sector's greenhouse gas emissions obligations and aspirations.

The International Maritime Organization's intersessional meeting on the reduction of greenhouse gas emissions that convened in London last week in the hopes of getting closer to an initial decarbonisation strategy for the maritime sector saw little material progress, with the notable exception of defining measures.

Member states agreed on the duration of short, medium and long-term measures, a significant step in providing at least some clarity to owners, operators and ports, who should be paying close attention to upcoming negotiations in anticipation of immediate effects on their businesses.

These are only provisional agreements. They will have to be ratified during the Marine Environment Protection Committee sessions, the supreme decision-making assembly for environmental matters. Agreements drawn up during the intersessional meetings are usually honoured at MEPCs.

The next MEPC is in April 2018, when it plans to draw up a five-year GHG emissions reductions strategy. This will be followed by a comprehensive strategy in 2023.

The group agreed that candidate short-term measures could be measures finalised and agreed by the MEPC between 2018 and 2023; candidate mid-term measures could be measures finalised and agreed by the MEPC between 2023 and 2030; and candidate long-term measures could be measures finalised and agreed by the MEPC beyond 2030, the IMO said.

While the word "could" leaves a lot of leeway, it indicates there is a strong backing for adhering to this timeline.

Each measure will come into force and into effect individually, depending on its peculiar characteristics. This means the industry should be prepared to face new measures beginning in 2018.

However, the time between 2018 and 2023 will foreshadow an aggressive period of campaigning from all sides of the debate.

Full story

Cosco is planning a $1.9bn fundraising spree to finance its orderbook

COSCO Shipping Holdings is planning to raise up to Yuan12.9bn ($1.9bn) through issuing new shares on the Shanghai Stock Exchange to up to 10 investors, including its state parent conglomerate China Cosco Shipping Group.

The parent Cosco Shipping will acquire 50% of the issuance, while the other nine investors have yet to be decided, Shanghai- and Hong Kong-listed CSH said in an exchange filing on Monday.

The funds raised will be used to finance containership newbuildings on order, which include six 21,237 teu vessels, five 20,119 teu, four 14,568 teu and five 13,800 teu, the company said.

The total building cost of the 20 ships stands at approximately Yuan17.4bn, of which Yuan3.6bn has been paid.

Full story

 


  

Analysis:

Pickup in scrapping lifts hopes of a tankers recovery

CRUDE tankers' scrapping volume has finally picked up since July after nearly two years in the doldrums, a development owners hope to be the first step towards a rebalanced market.

Firm demolition rates, weak asset values and soft earnings environments were widely reckoned to be the main factors behind the resumption of tanker recycling, and the consensus is they will continue to drive the pace of scrapping into 2018 and possibly beyond.

The speed of vessel scrapping will likely determine when freight earnings can recover from the current down cycle, with a large volume of newbuilding tonnage due to hit the water from now to end-2018.

Data from Lloyd's List Intelligence suggests 50 crude tankers totalling 9.1m dwt are scheduled to be delivered from mid-October to end-December, while another 153 vessels with 31.6m dwt are due in 2018.

Continued elevated demolition activity will help to offset some of the upcoming newbuild deliveries, setting the stage for a market recovery. 

Full story

Clean tankers' outlook for 2018 still lacklustre

THE oversupply of clean tankers remains a concern when the market is functioning without disruptions, as shown by the fall of earnings to five-year lows recently. However, supply shocks can still create short-term shortages, during which there are rate spikes. This indicates the supply overhang is not as dramatic as it appears at first glance.

Next year should be another lacklustre year overall, but expect to see windows of higher returns as unexpected, yet inevitable, supply chain issues arise.

Full story

 


 

Markets

India has shipped its first wheat cargo via Iran's port of Chabahar

INDIA has partly operationalised the port of Chabahar in Iran, its $500m project to access Afghanistan, Russia and Europe without having to go through Pakistan, as it sends the first consignment of wheat to Afghanistan from India's western seaport of Kandla.

The shipment will be discharged in Chabahar and then be taken to Afghanistan through a land route.

"The shipment is part of a commitment made by the government of India to supply 1.1m tonnes of wheat for the people of Afghanistan on a grant basis," India's Ministry of External Affairs said in a statement on Sunday.

Six more wheat shipments will be sent over the next few months.

Chabahar - located about 1,800 km south of Tehran - is more than just a port. It has an adjoining free trade zone.

For India, Chabahar is an opportunity to diversify its economic and trade partners by bypassing rival Pakistan, which refused New Delhi's request to gain access to Afghanistan for trade through its territory.

Chabahar will help India gain more traction in Central Asia, including partnering countries such as Turkmenistan, Kazakhstan and Russia.

India's interest in the port is also driven by China's involvement in developing Pakistan's Gwadar Port in the vicinity as it seeks to counterbalance China's geopolitical influence in that region.

Gwadar port, some 100 km east of Chabahar, is part of China's $46bn plan to develop the China-Pakistan economic corridor, aimed at opening new trade and transportation routes across Asia

Full story

Fight for market share threatens carriers' contract negotiations

CARRIERS risk securing weaker rates during upcoming negotiations for 2018 contract rates due to a failure to maintain capacity discipline following the peak season, analysts at Drewy say.

"Lines have, for some unapparent reason, suddenly eschewed some of their normal modus operandi," Drewry said. "In particular, there has been a complete lack of service suspension announcements for the traditional shipping slack season in the fourth and first quarters."

This would be understandable if demand and freight rates were strong, but spot prices had been on a downward trend for a number of months, Drewry said.

This was most significant in the Asia-Europe trades, where annual contract negotiations were already underway.

"Every weekly deflation to spot rates further weakens carriers' negotiating position," Drewry said.

Rates were falling not because of any weakening in the supply-demand balance but because of undercutting in the market. Rates were falling despite improving ship utilisation levels.

Full story

US Gulf activity is supporting handysizes

HANDYSIZE bulker owners have enjoyed modest increases in earnings in recent weeks, with brokers estimating rates in the segment to stay firm in the coming month.

The strongest driver for the smallest dry bulk tonnage segment emerged from the US Gulf, as an uptick in activity improved rates by 5.2% week on week.

There is also major congestion along the Mississippi River, giving more reason for rates to continue to rise as fewer ships can enter the market.

The Baltic Exchange noted that the east coast of South America and the Pacific both began to soften mid-week, with ample vessel availability in both the basins building pressure on spot rates.

The Baltic Handysize Index rose 1.2% over last week to 687 points on Friday, from 679 points a week earlier.

Full weekly Handysize report here

 


 

In brief

Distillates will dominate the initial post-2020 bunker scene

THE preferred choice for marine fuel will be middle distillates when the new International Maritime Organization bunker rules kick in from 2020, Bank of America Merrill Lynch has forecast, with owners and refiners both showing a lack of appetite for investing in other types of bunker solutions so far.

Echoing what many other industry participants predicted, the bank expected that shipowners would consume distillates to meet the mandatory global sulphur limits in bunker fuels at 0.5% in the initial post-2020 period, and abandon high-sulphur fuel oil.

"Distillates are going to be the clear winner of the policy change," the bank said in a note.

Full story

Glencore has cut its coal output guidance by another 8m tonnes

GLENCORE has again cut its coal production guidance for the full year, this time on the back of strikes in Australia and weather-related disruptions in Colombia.

The new guidance for 2017 is 124m tonnes, the miner and trader said in a production report on Monday. That compares with actual output of 125m tonnes in 2016 and 132m tonnes in 2015. Earlier this year, Glencore expected output of 135m tonnes, give or take 3m tonnes. This was then revised down to about 132m tonnes, and the latest revision has taken another 8m tonnes off that.

Full story

Japan's Oshima Shipbuilding is willing to take lower-priced orders to meet its targets

JAPAN's Oshima Shipbuilding is willing to take cheaper orders to meet its target next year, according to a senior official.

"We will focus on scoring orders first. The company is willing to take cheap orders," said Koike Sadao, the vice-president of Oshima, during an interview with the Nikkei.

Oshima hopes to secure 40 orders next year to keep its yards busy until 2020. It received 36 orders and 38 orders in 2017 and 2016 respectively.

The company plans to invest in its welding lines to boost productivity, while expanding its yard area by purchasing extra land, according to the Nikkei report.

Full story

HPH Trust has reported a near 50% slump in profits

HUTCHISON Port Holdings Trust, responsible for HPH's terminal assets in South China, has posted a 47% drop in profit after tax of HK$706.4m ($91m) for the first nine months of 2017, despite a healthy jump in throughput totals.

In addition to a significant slump in profit, the Hong Kong-based operator also reported a 3% drop in revenue and other income to HK$8.7bn from nearly HK$9bn, as the restructuring within the container shipping industry and the subsequent rationalisation of services weighed heavily on the group's bottom line.

Full story

CIMC is back in the black thanks to the container shipping industry recovery

HONG Kong-listed China International Marine Containers has posted a net profit of Yuan1.3bn ($197m) for the January to September 2017 period, recovering from a Yuan190m loss in the same period last year as an improvement in global trade conditions lifted demand for containers.

The profit figure is in line with its forecast of Yuan1.2bn to Yuan1.4bn announced earlier in the month.

Revenue for the period rose 54.3% to Yuan54bn.

Full story

Singapore has extended its port concessions until July 2018

THE Maritime & Port Authority of Singapore has decided to extend port dues concessions for containerships, bulk carriers and offshore support vessels to June 30 next year.

It made the move amid the "challenges facing the shipping, bulk and offshore marine industry," the port regulator said in a statement. "This will assist to defray costs to the industry in the short term."

Hence oceangoing container vessels with cargoes and port stays of less than five days will continue to have a 10% concession on port dues payable.

The 10% concession is granted on remaining port dues payable after the concession for the green port programme. A 20% port dues concession is already in place.

Full story

CSIC has firmed up its $3.3bn debt-to-equity swap plan

CSIC Ltd, the Shanghai-listed flagship unit of China Shipbuilding Industry Corp, has firmed up plans to buy back equity stakes in two of its subsidiary yards, which had previously been sold to eight state-backed institutional investors for a Yuan21.9bn ($3.3bn) fund injection.

The company will issue 3.8bn shares at Yuan5.78 per share - worth Yuan22bn - to the investors in exchange for their holdings of a 43% stake in Dalian Shipbuilding Industry Co and a 36.2% stake in Wuchang Shipbuilding Industry Group, according to an exchange filing.

The revealed issuance price, subject to further adjustment, was nearly 7% lower compared with the latest closing price of Yuan6.21 at the end of May, when trading in the company's shares was halted on the Shanghai Stock Exchange owing to the earlier injection.

Full story

Troubled Triyards has asked Singapore exchange for more time to post results

SINGAPORE-listed shipbuilder Triyards Holdings has asked the city-state's stock exchange for an additional 60 days to report its results for its current fiscal year ended August 31, as it continues to undergo restructuring.

In September the company engaged a financial adviser who is working to come up with a viable restructuring plan, while Triyards engages with lenders and clients to win their support amid attempts to secure needed financing to finish up existing projects.

"While the negotiation and discussion are ongoing, at this juncture the major lenders, customers and creditors of the group have indicated continued interest to support the company," said Triyards in a statement.

Full story

Algoma is getting vessels back in service, having ended a strike

CANADA-based Algoma Central Corporation has come to a tentative agreement with the Canadian Merchant Services Guild to effectively end labour action that started more than a week ago.

The union, which represents 54 navigation and engineering officers working in the group's product tanker fleet, went on strike on October 21 this year. "Vessels tied up as a result of the strike will start operations as soon as arrangements are made to return the crews to the ships," the group said in a statement.

Full story

 

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