Case Study

This case study is showing the comprehensive structuring of the equity funding and the individual financing regarding a pool of ICE-Class chemical tankers.

Owlsgrove Capital GmbH was asked to create a structure regarding a pool of ICE-Class chemical tankers by an independent ship broker. This ship broker is specializing in clean and dirty petroleum products as well as in edible oils and other chemical cargoes. They were asked to give an indication for several undervalued ICE-Class chemical tankers at a low purchase price level and are interested in joining the structure as commercial manager and with a smaller stake of equity. The classical approach of financing the vessels through a closed-end KG-fund was not possible. Chemical tankers remain a niche-investment class to German retail investors and the competitive advantage by the ICE-Class Certification would not have been recognized. Furthermore the initiating emission houses face tough financial developments in these days. Due to recession in shipping industry the demand for KG-investments is very low and the possibilities of realizing pre-equity as well as longterm debt financing are limited.

Owlsgrove Capital GmbH prefers an investment by private equity funds interested in distressed assets. The vessels’ purchase price level is less than the half of the prices shown some years ago and there are some clear indications of markets turning better. To enhance the investor’s opportunities to participate in recovering market some of the vessels have to be traded in spot market, while the other vessels are chartered to investment grade charterers. Taking into account the intended financing non-recourse towards the investors this strategic decision was not favorable to the banks. Owlsgrove Capital GmbH was able to present a compromise to ensure the cashflow of the vessels traded in spot market.