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Strategic Advisory Services

Our expert team provides objective, and timely support for investment, financing, and chartering decisions. We combine powerful quantitative analytics to identify cyclical and structural market dynamics and sophisticated risk and financial performance evaluation to help our clients develop and implement winning strategies in shipping.

Marsoft helps our clients:

                                

  • Anticipate and Act to take advantage of changing market conditions. Getting the timing right in shipping is the key to success, and Marsoft’s track record highlighting opportunities and risks is the best in the business.

  • Transaction Support. Our experienced advisors work closely with our clients to evaluate transaction upside and risks, and put into place terms and covenants to improve performance.

  • Manage Portfolio Risk. Marsoft supports leading shipping banks evaluate the risks they are taking, ensure that they are compensated for those risks, and meet demanding new risk reporting requirements.

We understand that there are no easy answers in shipping – that leadership must constantly evaluate new opportunities and risks in an environment of great uncertainty, and that consensus is rarely the right choice. We work with our clients to understand the key issues and their consequences and choose the best options. The projects described in the next few pages illustrate how we have been able to help our clients realize superior financial performance.

Leasing Industry

Credit Rating
  • For a leading North American leasing and financial services company, we built a Basel-II compliant credit rating model, which was consistent with the “6 sigma” quality-assurance standards. The client used this credit rating system to report to the regulators on the risk profile of their portfolio. The system was customized to meet the client’s requirements in IT and risk management, accommodating the client’s needs to analyze complex structures involving subordinated loans, guarantees, charters, cash reserves, predelivery, rescheduling, equity and yard/refundment risk, country risk, etc. Marsoft was credited by the head of shipping credit at the client company for helping their team achieve good portfolio performance despite turbulent shipping cycles.

Portfolio Growth Strategy
  • Our client is one of the fastest growing financial institutions in senior debt financing and leasing for the shipping industry today. We helped the client, which was new to shipping, grow its portfolio from 0 to $2 billion in three years; the client plans to realize $1 billion of growth in 2015. We provided support for

    • Senior management to assess market size and potential deal performance, as well as to implement a counter-cyclical approach to realize superior performance

    • The shipping team on market developments, cash flow risk, and residual value risk

    • Regular internal risk audit, investment decision audit, and regulatory reporting

Asset Growth Strategy and Financing Strategy
  • Marsoft’s client, a leading North American ship leasing company, developed an innovative containership design that offers significant benefits in terms of lower capital costs and especially fuel consumption relative to its existing competition. We conducted a competitive evaluation and concluded that, relative to ships then employed in selected trades, shippers could realize 13% to 40% reduction in shipping costs with these new ships. Our client has since invested more than $3 billion in a series of these new design ships.

  • We also evaluated the risks and commensurate pricing terms of the client’s loan facility and corporate performance linked to the debt risk. We assessed the potential benefits of changing the loan’s structure in terms of reduced risk and better rating, showing an opportunity to significantly reduce borrowing costs, with savings up to 80 to 100 basis points. The client eventually refinanced its loan facility.

Banking Industry

Restructuring Advisory
  • For a leading Scandinavian bank led a due diligence review of a proposed restructuring for a large tanker operator. The review determined the value of participation in the upside from the restructuring and the strategy by which the bank obtain that participation in the restructuring process. We estimate that the upside participation strategy increased expected bank margins by 20 bps – 30 bps.

  • For a leading European bank defined and executed a $500 million portfolio restructuring including designing the structure and helping to raise new equity to support a new commercial and technical management team

  • For a leading European bank evaluated restructuring options as it coped with a chapter XI proceeding. We evaluated resale options for the bank incorporating liquidity-related costs. The recommendation helped our client reduce their exposure by 30% by rapid resale of its assets.

Credit Rating
  • Implemented Basel II compliant risk evaluation, loan rating, and portfolio management systems to help a leading European bank expand its shipping portfolio while maintaining minimum risks and improving management reporting. Their regulatory capital requirements fell from approximately 8% to 6%, on a total portfolio of more than $5 billion USD, saving approximately $12 million per year. The rating model and portfolio management system is credited with helping the bank avoid potentially costly lending commitments between 2003 and 2008.

Eco Ships
  • A leading European bank was asked to finance a series of eco-design product tankers. The ships did not have long-term charter cover and the bank had to evaluate both the earnings and residual value risk for this innovative new tanker design. Without historical precedents to rely on the bank called on Marsoft to provide its assessment of the competitive gains for the fleet and the implications for lending cost for the bank. The bank has since adopted the Marsoft eco-ship analysis as a standard for both its existing and newbuilding portfolio.

Shipping Industry

Funding and Cost of Capital Management
  • Implemented a financial planning and reporting system for a leading European owner to support their rapidly growing borrowing requirements. Marsoft helped to implement a process to identify risks and mitigation options, quantify exposure, and communicate with the banks. The client successfully expanded borrowing by $250+ million at a time of reduced bank capacity, thereby minimizing equity requirements and reducing capital cost. Savings of $25 million/year relative to an all-equity strategy plus avoidance of delays of our client’s investment program were realized.

 

Investment Fund Industry

Product Tanker Shipping Fund
  • Evaluated the financial performance of an investment in a fleet of large product (LR2) tankers. The specific goals of the project are to help the joint venture evaluate the market risks and opportunities in different market scenarios and the financial performance of the fleet and the identification of the best combination of vessels to be acquired and the timing of those acquisitions.

Asset Play Execution
  • Created a tanker fund to enable institutional investors to participate in tanker “steel” asset plays. We helped deliver higher returns by choosing the timing and segment weighting that offered the best risk/return outlook. Our clients credit Marsoft with incremental 5% ROE pa, versus comparable alternatives.

 

Energy Industry

Transportation Cost/Risk Management
  • Developed an LNG transportation strategy for a client that substituted refits of existing tankers for newbuilding alternatives, thereby reducing capital costs by approximately $200 million per ship (for a fleet of twelve LNG tankers) and allowed the client to defer a costly contracting program.

  • Developed a cost and risk minimizing crude tanker chartering strategy for a Latin American oil major. The cost of long-term newbuilding charters (initially considered by our client to be the best option) at the time was $48,000/day; Marsoft’s recommendation had an average cost of $32,000/day. Savings to date amount to nearly $6 million/ship/year.

  • For a leading Indian industrial conglomerate, developed a chartering and contracting strategy which maximized gains from low Cape charter rates while minimizing the exposure to a possible rising market. The utility has deferred newbuilding investments and saved more than $6/tonne on its imports to date.