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Shipowners must be open with their bankers if they want finance

Shipowners must be open with their bankers if they want finance
The shipping industry is in flux of that there is no doubt as was hammered home at the recent Marine Money Greek Shipping Forum.

Indeed, the forum was launched by a German economist warning "there are some positives, some negatives and many challenges" going forward. Holger Schmieding, chief economist, Hamburg-based Berenberg Bank, then warned about the powerhouse China, said: "In five to 10 years I would worry about China."

Shipping's survival and the need to "count the pennies" as any improvement in the sector will be "no better than mediocre" was a theme of the forum 11 October. The 300-odd delegates were also reminded on many occasions by the bankers, lawyers, analysts and shipowners who made up the panels that the money available is the bank's money and in light of this shipping companies must be open with their bankers.

One of the first panelists, Star Bulk Carriers president, Hamish Norton, was also the first to declare, "count the pennies you have". "Do this carefully as they leave and as they slowly come in," he said, adding “ even in this market breakeven is not far off”. Randee Day, head Goldin Maritime, agreed with Norton saying "cash must be protected" adding anyone thinking of growth "must be a cash buyer".

Iraklis Prokopakis, vp and coo, of NYSE-listed containership owner Danaos Corp, said new capital for growth is almost impossible to find, but gave a thumbs-up to restructuring, while Aristides Pittas, ceo of Nasdaq-listed Euroseas, an operator of bulkers and container ships, was the first to actually use the word “survival”. "There is no positive outlook so most companies are presently trying to survive," he said.

Day emphasised owners must be able to show their bankers their ships "are able to trade", adding "if you can do this I don't think banks will move against you".

"Owners must understand the money is the banks money and the banks must understand the owner is doing the best for the bank. The corporate entity has to be served not the ship, it's important both sides recognise the other is acting in good faith," said Norton, later adding, "Star Bulk believes now is the time to invest in dry bulk".

Pittas complained banks not wanting to talk to the owner until it is too late “for them to set a plan for two years down the road, and you end up with a one-year plan". He acknowledged banks are in a difficult position, saying "you now talk to risk people, not shipping people."

Niklas Carlen, research director, Maritime Strategies International, said owners must make themselves bankable. "The company must be audited and have a management structure in place," he said. Because of regulations today "nominal figures no longer stand-up. Banks look for corporate structure and profitability, this is the new reality", said Carlen. He said collateral is not so important, but the "underlying asset value is important and age here is important, as you can't scrap a vessel unless it is debt free".

When it comes to restructuring, Carlen said "the owner must approach the bank early and have a well-thought through plan on how he is going to contribute to the restructuring".

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