Maritime CEO

Watson, Farley & Williams: The importance of due diligence

 

London: Shipowners' best weapon remains careful due diligence on charterers’ solvency, a leading London lawyer tells Maritime CEO today. Chris Lowe, head of Watson, Farley & Williams’ (WFW) maritime practice, also notes how the nature of the traditional shipowner is changing.
 
“There are now a number of funds that have acquired interests in tonnage,” he says, “and in addition to managers and operators, all need to be kept abreast of changes that affect every aspect of a ship’s lifecycle, from order and construction, sale and purchase, chartering and operation to decommissioning and recycling.”
 
As the debt market continues to contract, shipowners and maritime services companies are assessing the relative merits of different avenues of funding, Lowe notes, such as debt capital markets' finance, corporate finance, IPOs, incorporating the use of Master Limited Partnerships, export-credit agency involvement and private equity.
 
Another growing source of capital for shipping is from Islamic finance, something WFW has plenty of experience in.
 
“Exporting Islamic finance has been an interesting facet of the recent few years in the shipping finance industry,” Lowe says.
 
Our sister site covering Southeast Asia, SeaShip News reported recently on how Japanese banks have organised loans complying with Sharia law for Brunei Gas Carriers, with other Japanese financial institutions keen to follow. 
 
While admitting that shipping is still “very inhibited” by current conditions, Lowe sees some small signs of recovery beginning to emerge.
 
“Elements of the maritime business servicing the oil and gas industry have seen growth,” Lowe says, adding: “Traditional LNG companies are extending activity further into the logistics chain to exploit the opportunities in liquefaction and regasification.”
 
On lessons learned from the current maritime malaise, Lowe concludes: “The downturn has taught us that the supply chain is ever more global and that even the strongest business is susceptible to market fluctuations.” [28/02/13]

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