For Julian Macqueen's (Lloyd's List) interview with Aslan Paksoy, click here...
Conservative family-owned shipping
firms go in search of new finance
Lloyd’s List - Julian Macqueen -
Thursday 1 July 2010
SHIPPING firms in
Turkey tend to be family-owned, with
the corollary of a conservative approach both to the industry and to financing.
In the current market, one characterised by flat rates and tight credit terms,
they are not under undue pressure. Certainly, the interest rates seen during the
crisis, of between 8.5% and 12% a year, have come down to between 4.5% and 8.5%.
And while this might apply to the larger firms, the smaller Turkish shipping
firms are struggling.
Aslan Paksoy, who runs
Finship Turkey, a ship finance boutique based in Istanbul, knows this only too
well since a good proportion of his clients come from this industry segment.
“Our job is to bring the banks, the funds and the shipowners together,” he says.
Mr Paksoy says that these
companies are enthusiastic about presenting themselves to a wider investment
community. It is also true that their choices are limited, since traditional
sources of ship finance have diminished considerably.
International banks have
closed the door on new deals, which has led to more dealings with domestic
institutions, observes Mr Paksoy. In addition, other players have emerged.
“These are independent funds, aiming at the mezzanine part of the loan,” he
Bare boat higher purchase
is one structure to emerge in the current crisis. “The seller wants to get the
money; the buyer wants to get the ship. But who’s giving the credit?” BBHP is a
way of getting around this stumbling block.
Another idea is sale and
leaseback, where the owner sells the asset to a nominal owner and then uses the
money to pare down debt or purchase more assets.
But mezzanine debt is
classed as a second mortgage. It carries greater risk and must be approved by
the first mortgagee.
These are all ways of
trying to secure funding in a hostile environment, explains Mr Paksoy. The
drawback is that the “funds are expensive”, referring to international funds
rather than specifically Turkish ones.
They want a 10%-15% per
annum dollar terms return which means that Turkish companies must give deals
careful consideration. The funds themselves are not without offers since credit
is at a premium.
Some Turkish companies
see this source of funding as a form of temporary relief, a stop gap. They might
have to pay a high rate of interest on the deal but at least they have the
funds. From the lenders’ point of view, transparency is a big issue which Mr
Paksoy says can sometimes be difficult for firms unused to operating in an
“We call ourselves the
sandbags,” says Mr Paksoy.
Apart from the interest
from international funding sources, Turkish shipping has also received the green
light from the government, which has agreed in principle a package to help
struggling shipyards and owners. In the shipyards’ case, the state guarantee is
available to ease the process of securing credit, an essential step on the road
to realising the investment.
Finship has been
appointed consultants to Turkish Exim Bank.
“Exim is lending money to
Turkish shipyards,” says Mr Paksoy. “Our job is to make these deals — many of
which are problematic — work in real terms,” he says.
Meltem Suloglu, of
Istanbul-based brokerage Pelikan Shipping & Trading, reports a lot of
interest in shipping from Turkish investors.
There are a lot of cash
buyers in the marketplace, she says. “Mainly holding groups which have
investments in different industries and sense that now is a good time to get
The range of investors is
wide — from gold dealers to textile companies — and the focus of their interest
is primarily dry bulk ships. “As far as I’m aware, these Turkish investors are
not using bank loans but their own cash,” she says.