Maritime CEO

Norton Rose: Finding finance vital

 

London: One of the world’s most well-known transport lawyers talks to Maritime CEO today about key issues affecting shipowners.
 
Unsurprisingly, Harry Theochari, the head of transport for global law firm Norton Rose, is quick to discuss the financial plight of shipowners today.
 
Questions perennially asked to Theochari these days are typical of the shipping downturn: how to avoid bank foreclosures; the best way to go about restructuring and refinancing; and where to go to source alternative forms of financing.
 
“Many lines are near bust and some will have to bite the bullet,” concedes the seasoned lawyer, who has more than 30 years experience in the field, 28 of which have been with Norton Rose.
 
Noting how shipping has traditionally accessed capital from debt financing, something that has fallen away in the last five years, Theochari  says that ship finance-wise there is a “massive shortfall in billions of dollars from banks from 2008 onwards”.
 
Private equity coming in to shipping has been, and continues to be, a “big theme”, he says. While at the onset of the global financial crisis there were a number of vulture funds circling shipping for a couple of years, what Theochari sees nowadays is a much more sophisticated set of private equity players entering shipping, mainly from the US and also Canada.
 
“They understand the business,” Theochari says, “and increasingly they are not just here to buy assets but buy whole books, buying the portfolios of banks who have quit shipping.” Theochari says private equity is filling some of the gap in ship finance, but “can’t cover it all”.
 
Helping fill the void in ship financing, Theochari notes an increase in the bonds market, some activity in the New York stock market and even the London Stock Exchange focusing on shipping for the first time “in years”.
 
This financial boost is something borne out in Norton Rose’s most recent transport survey, which came out last week.
 
The survey showed “a lot more consensus” than the previous year, Theochari says. The 2012 survey had too many discordant views.
 
What this year’s poll shows, according to Theochari, is a “fragile confidence beginning to develop” with some stability across all sectors.
 
What heartened Theochari  most from the poll was the fact that around 60% of respondents were investing or about to invest in new ships, equipment, or aircraft.
 
Nevertheless, potentially quashing this optimism and bringing the discussion full circle, Theochari concludes, “A lot will be dictated on whether shipping will be able to find the finance.”  [28/03/13]

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