The role of the Cash Buyer

Transcription

1 The role of the Cash Buyer 18th November 2013 GMS Tokyo Conference on Ship Recycling 1

2 Agenda 1. Cash Buyers and their expertise in the ship recycling industry 2. The Changing Role of a Cash Buyer 3. Meeting CSR requirements 4. Closing Thoughts 18th November 2013 GMS Tokyo Conference on Ship Recycling 2

3 1.1 Cash Buyers and their expertise in the ship recycling industry Cash Buyers are not brokers Cash Buyers are Principals/Traders: They buy vessels on a cash basis from ship owners and resell to ship recycling yards on Letters of Credit Constant monitoring of the market: Factors affecting the pricing Availability of capacity Supply and Demand of Vessels Our Know-how allows us to provide accurate guidance for the achievable prices and availability of reliable end buyers. 18th November 2013 GMS Tokyo Conference on Ship Recycling 3

4 1.2 Cash Buyers and their expertise in the ship recycling industry Cash Buyers take delivery of vessels on both delivered and as is where is terms. GMS has a team of experienced professionals capable of: Structuring tailor-made deals according to the needs of the seller Resolving technical matters Finding value in all types/age of vessels Identifying the best options of recycling for a shipowner/sellers Owners must be careful as not all CASH BUYERS are actually CASH buyers. 18th November 2013 GMS Tokyo Conference on Ship Recycling 4

5 1.3 Cash Buyers and their Role in Ship Recycling Why do Ship Owners (shipping markets) use Cash Buyers? 1. Distribution: Negotiations have to be conducted with limited number of buyers rather than a multitude of ship recycling yards in several different countries ( 1 vs 300) 2. Industry knowledge Country specific (India, Bangladesh, Pakistan, China, Turkey) Government Regulations 3. Risk Minimization (Price changes, currency fluctuations, sudden legislative and regulatory changes) 4. Ease of Delivery (standard contracts) 5. Logistics and Delivery (As Is vs. Delivered ) 6. Repeat relationship 7. Fair margins (value for money) 8. Meeting CSR requirements 9. Maximization of Asset Value 18th November 2013 GMS Tokyo Conference on Ship Recycling 5

6 1.4 Cash Buyers and their Role in Ship Recycling Why do Ship Recyclers use Cash Buyers? 1. Wide Inventory to chose from 2. Financing (sight vs. issuance of LC / acceptance of LC) 3. Ease of delivery (local regulations) 4. Detailed understanding of Buyer needs (type of ships, LDT, Banking, etc.) 5. Local representation 6. Market forecasting 18th November 2013 GMS Tokyo Conference on Ship Recycling 6

7 2.1 The Changing Role of a Cash Buyer GMS is getting involved in complicated projects: Discharging cargoes and taking over vessels (collisions, groundings, etc.) Insurance / Salvage matters GMS is exploring chartering potentials and bareboat possibilities Ship Finance Investments in ships and companies 18th November 2013 GMS Tokyo Conference on Ship Recycling 7

8 2.2 GMS in the PE Markets GMS Examples of Private Equity Transactions : Example 1 Acquisition of Existing Company (i.e. Konig & Cie) Example 2 Struggling Owner Needs Cash GMS Buys 50% of vessel acts as joint venture partner Example 3 Owner Needs to Sell Vessel but Wants to Continue Operations GMS buys 100% of the vessel and structures a sale leaseback / BB back Example 4 - Cash strapped owner wants to buy a new vessel but has no funds on hand GMS buys the new asset and takes in one of the owner s older assets as a down payment and holds a note for the balance Example 4 Owner does not want to handle recycling of the vessel GMS buys vessel clean or with cash flows attached and maintains ownership for set period of time until current employment obligations expire and vessel is recycled 8

9 3.1 Meeting CSR Requirements Recycling under responsible terms is already taking place: 1) China: Recycling is taking place alongside the berth, and the infrastructure and superstructure are already developed. GMS has concluded over 40 vessels only since ) India: Yards have developed their practices and are continuously investing in order to further develop their infrastructure. Some of them are already meeting some of the highest standards and are approved by Japanese shipowners. They are capable of meeting international guidelines, even with the practice of beaching 3) Turkey: Lower capacity, but the practices undertaken provide for environmental friendly sound and safe ship recycling 4) Bangladesh: Showing interest to develop 9

10 3.2 CSR: Where are we standing today? Shipowners: CSR not as prevalent among Shipowners Interest mainly from Japanese and Scandinavian shipowners, for deliveries in India, China, Turkey Ship Recycling Facilities: Adopting ISO standards Enhancing training of the workforce Developing infrastructure Complying with HKC 10

11 3.3.1 CSR: GMS GMS - Development of ship recycling program (SRP) which is value driven: balance between cost of CSR and the actual value of the ship SRP: Cooperating closely with facilities in India, China and Turkey which are meeting enforcing responsible ship recycling. ISO 9001: Quality management system that meets customer and applicable statutory and regulatory agreements ISO 14001: Environmental management system for the positive performance, production and efficiency, related to environmental issues OHSAS 18001: Framework for providing a safe and healthy working environment ISO 30000: Efficient safe and environmentally sound management system for the recycling of ships, based on the methodology Plan-Do-Check-Act Acting proactively: Continuous improvement of the practices undertaken in the ship recycling facilities in order to comply with international Guidelines and the forthcoming mandatory regulations around ship recycling 11

12 Meeting CSR requirements GMS - Probably the only Cash Buyer with a proven record of efforts to continuously promote the RESPONSIBLE ship recycling... 12

13 3.3.3 Meeting CSR requirements for more than 10 years. Investments of hundreds of thousand USD to promote CSR. Cooperating with experts in order to ensure environmental friendly and sound ship recycling 13

14 4. Closing Thoughts The role of the Cash Buyer in the ship recycling industry is imperative in order to ensure that selling for recycling will be a smooth process The role of the Cash Buyers is evolving along with the needs of the shipping industry New procedures have transformed ship breaking from an environmental liability to an eco-friendly process CSR programs should not be associated with lower value of an asset. GMS through the SRP, and depending on the state of the markets, is offering the option to the shipowner to have higher earnings while maintaining internationally acceptable standards. 14

15 4.1. GMS FACTS GMS founded in 1992 in the United States of America: Began through the acquisition of US Maritime Administration vessels / Russian Naval Vessels GMS has made great efforts to help modernize the ship recycling process Participate in the deliberations leading up to IMO s Hong Kong Convention on the safe & Responsible Ship Recycling 2012 : estimated $5.1 BILLION worth of ships were recycled and GMS responsible for in excess of 16.5 million DWT worth of ships, totaling about 300 vessels 2013: Already concluded excess 200 vessels despite drop of supply of excess 40% comparing to

16 GMS (USA) GMS (UAE) GMS (CHINA) GMS (SINGAPORE) Cumberland, MD-USA Dubai, UAE Shanghai, China Singapore T: T: T: T: E: W: Established in USA in 1992.LARGEST CASH BUYER IN THE WORLD! In last two years, principals of GMS have delivered more than a quarter of the world s fleet sold for recycling. World's FIRST ISO 9001:2000 certified Cash Buyer. EXCLUSIVE sales offices in all five of the major ship recycling markets in the world (Bangladesh, China, India, Pakistan and Turkey). Offices in USA, UAE, SINGAPORE and CHINA to provide 24/7 service to clients worldwide. Financial and Management capability to: Buy fleets on simple CASH "as is where is terms. Take forward positions Structure deals Leader in Green Recycling: IMO s Hong Kong Convention Development of Green Yards 16