KARATZAS MARINE ADVISORS & Co.
SHIPPING COMPANY VALUATIONS
“Don't be seduced into thinking that that which does not make a profit is without value.”
Arthur Miller
Most valuations in the shipping industry are for individual vessels and marine assets, as stand-alone assets and on a "charter-free basis", since commodity vessels are primarily employed in the spot charter market. There are however cases whereby a vessel, held in an offshore Special Purpose Company (SPV) via which vessel may have outstanding time-charter (or other contract employment); and, the capital structure of the SPV can consist of equity, senior (first preferred ship mortgage) or junior debt (second lien, mezzanine, etc); any financing may be in the form of a lease (finance or operating lease), Joint-Venture Partnership, co-investment, etc Under such a scenario, the value of the SPV can be different than the value of the shipping asset, given the value of the charter cash-flows attached; and for certain structures such as structured leases, levered leases, etc, only the value of the SPV equity or debt may be required for sale in the secondary market. Likewise, for holding and parent companies with several SPVs under their umbrella, a valuation of the shipping assets alone can be materially different than the Enterprise Value (EV) of the SPVs.
Beyond the valuation of single shipping assets, our firm has extensively been called upon to provide company valuation reports for fleet of vessels, often unique assets with high degree of specialization and purpose, or companies holding or managing such assets, potentially also holding employment agreements with charterers and technical managers. Our valuations were documented on both asset basis valuation methodology but also considerations for replacement cost, discounted cash flows based on projections for freight rates and operating costs, and also adjusting for parameters associated with such projects such as valued added by management, relationships with charterers, competitive risks, SWOT analysis, VAR analysis and relevant considerations.
Valuations provided for such projects were utilized for mergers and acquisitions, divestitures of lines of business or disposing off of shipping assets, project origination, arbitration and private placements.
Among the credentials held by personnel of our firm are Accredited in Business Valuation (ABV) by the American Institute of Certified Public Accountants (AICPA), for shipping company valuations, This qualification is in addition to Accredited Senior Appraiser (ASA) by the American Society of Appraisers and Certified Marine Surveyor (CMS) by the National Association of Marine Surveyors (NAMS), typically applied to shipping asset and vessel valuations, allowing for our firm to provide in-depth, well-qualified, reliable independent marine asset valuation reports and appraisals, as well valuations of shipping companies at SPV- or holding-level, for any purpose, including investing, financial, auditing, documentation, fairness opinion, expert testimony and litigation.