:: gms leadership :: - the role of the cash buyer - japan - ec.pdf · 2018. 6. 19. · 4.1. gms...

1 18th November 2013

The role of the Cash Buyer

GMS Tokyo Conference on Ship Recycling

Agenda

1. Cash Buyers and their expertise in the ship recycling industry

2. The Changing Role of a Cash Buyer

3. Meeting CSR requirements

4. Closing Thoughts

18th November 2013 2 GMS Tokyo Conference on Ship Recycling

1.1 Cash Buyers and their expertise in the ship

recycling industry

3

•Cash Buyers are not brokers

•Cash Buyers are Principals/Traders: They buy vessels on a cash basis from ship

owners and resell to ship recycling yards on Letters of Credit

•Constant monitoring of the market:

Factors affecting the pricing

Availability of capacity

Supply and Demand of Vessels

•Our Know-how allows us to provide accurate guidance for the achievable prices

and availability of reliable end buyers.

GMS Tokyo Conference on Ship Recycling 18th November 2013

1.2 Cash Buyers and their expertise in the ship recycling

industry

4

•Cash Buyers take delivery of vessels on both “delivered” and “as is where is”

terms.

•GMS has a team of experienced professionals capable of:

Structuring “tailor-made” deals according to the needs of the seller

Resolving technical matters

Finding value in all types/age of vessels

Identifying the best options of recycling for a shipowner/sellers

•Owners must be careful as not all “CASH BUYERS” are actually “CASH”

buyers….


1. Distribution: Negotiations have to be conducted with limited number of buyers

rather than a multitude of ship recycling yards in several different countries ( 1

vs 300)

2. Industry knowledge

• Country specific (India, Bangladesh, Pakistan, China, Turkey)

• Government Regulations

3. Risk Minimization (Price changes, currency fluctuations, sudden legislative

and regulatory changes)

4. Ease of Delivery (standard contracts)

5. Logistics and Delivery (As Is vs. Delivered )

6. Repeat relationship

7. Fair margins (value for money)

8. Meeting CSR requirements

9. Maximization of Asset Value

1.3 Cash Buyers and their Role in Ship Recycling Why do Ship Owners (shipping markets) use Cash Buyers?

5 GMS Tokyo Conference on Ship Recycling 18th November 2013

1.4 Cash Buyers and their Role in Ship Recycling Why do Ship Recyclers use Cash Buyers?

1. Wide Inventory to chose from

2. Financing (sight vs. issuance of LC / acceptance of LC)

3. Ease of delivery (local regulations)

4. Detailed understanding of Buyer needs (type of ships, LDT,

Banking, etc.)

5. Local representation

6. Market forecasting

6 GMS Tokyo Conference on Ship Recycling 18th November 2013

2.1 The Changing Role of a Cash Buyer

7

• GMS is getting involved in complicated projects:

Discharging cargoes and taking over vessels (collisions,

groundings, etc.)

Insurance / Salvage matters

• GMS is exploring chartering potentials and bareboat possibilities

• Ship Finance

• Investments in ships and companies


2.2 GMS in the PE Markets

18th November 2013 8

GMS Examples of Private Equity Transactions :

Example 1 – Acquisition of Existing Company (i.e. Konig & Cie)

Example 2 – Struggling Owner Needs Cash – GMS Buys 50% of vessel acts as

joint venture partner

Example 3 – Owner Needs to Sell Vessel but Wants to Continue Operations –

GMS buys 100% of the vessel and structures a sale leaseback / BB back

Example 4 - Cash strapped owner wants to buy a new vessel but has no funds on

hand – GMS buys the “new” asset and takes in one of the owner’s “older” assets

as a down payment and holds a note for the balance

Example 4 – Owner does not want to handle recycling of the vessel – GMS buys

vessel clean or with cash flows attached and maintains ownership for set period

of time until current employment obligations expire and vessel is recycled


3.1 Meeting CSR Requirements


•Recycling under responsible terms is already taking place:

1) China: Recycling is taking place alongside the berth, and the infrastructure and

superstructure are already developed. GMS has concluded over 40 vessels only

since 2011

2) India: Yards have developed their practices and are continuously investing in

order to further develop their infrastructure. Some of them are already meeting

some of the highest standards and are approved by Japanese shipowners. They

are capable of meeting international guidelines, even with the practice of

“beaching”

3) Turkey: Lower capacity, but the practices undertaken provide for environmental

friendly sound and safe ship recycling

4) Bangladesh: Showing interest to develop


3.2 CSR: Where are we standing today?


Shipowners:

CSR not as prevalent among Shipowners

Interest mainly from Japanese and Scandinavian shipowners, for

deliveries in India, China, Turkey

Ship Recycling Facilities:

Adopting ISO standards

Enhancing training of the workforce

Developing infrastructure

Complying with HKC


3.3.1 CSR: GMS


•GMS - Development of ship recycling program (SRP) which is value driven: balance

between cost of CSR and the actual value of the ship

• SRP: Cooperating closely with facilities in India, China and Turkey which are meeting

enforcing responsible ship recycling.

ISO 9001: Quality management system that meets customer and applicable statutory and

regulatory agreements

ISO 14001: Environmental management system for the positive performance, production and

efficiency, related to environmental issues

OHSAS 18001: Framework for providing a safe and healthy working environment

ISO 30000: Efficient safe and environmentally sound management system for the recycling of

ships, based on the methodology “Plan-Do-Check-Act”

Acting proactively: Continuous improvement of the practices undertaken in the ship

recycling facilities in order to comply with international Guidelines and the forthcoming

mandatory regulations around ship recycling



3. 3.2 Meeting CSR requirements

GMS - Probably the only

Cash Buyer with a proven

record of efforts to

continuously promote the

RESPONSIBLE ship

recycling....



3.3.3 Meeting CSR requirements

…for more than 10 years.

• Investments of hundreds of thousand

USD to promote CSR.

•Cooperating with experts in order to

ensure environmental friendly and

sound ship recycling


4. Closing Thoughts


• The role of the Cash Buyer in the ship recycling industry is imperative in

order to ensure that selling for recycling will be a smooth process

• The role of the Cash Buyers is evolving along with the needs of the

shipping industry

• New procedures have transformed ship breaking from an environmental

liability to an eco-friendly process

• CSR programs should not be associated with lower value of an asset.

• GMS through the SRP, and depending on the state of the markets, is

offering the option to the shipowner to have higher earnings while

maintaining internationally acceptable standards.


4.1. GMS FACTS


GMS founded in 1992 in the United States of America:

Began through the acquisition of US Maritime Administration vessels / Russian

Naval Vessels

GMS has made great efforts to help modernize the ship recycling process

Participate in the deliberations leading up to IMO’s Hong Kong Convention on the

safe & Responsible Ship Recycling

2012 : estimated $5.1 BILLION worth of ships were recycled and GMS responsible for

in excess of 16.5 million DWT worth of ships, totaling about 300 vessels

2013: Already concluded excess 200 vessels despite drop of supply of excess 40%

comparing to 2012.


Established in USA in 1992….LARGEST CASH BUYER IN THE WORLD!

In last two years, principals of GMS have delivered more than a quarter of the world’s fleet sold for

recycling.

World's FIRST ISO 9001:2000 certified Cash Buyer.

EXCLUSIVE sales offices in all five of the major ship recycling markets in the world (Bangladesh,

China, India, Pakistan and Turkey).

Offices in USA, UAE, SINGAPORE and CHINA to provide 24/7 service to clients worldwide.

Financial and Management capability to:

Buy fleets on simple CASH "as is where is“ terms.

Take forward positions

Structure deals

Leader in Green Recycling:

IMO’s Hong Kong Convention

Development of Green Yards


GMS (USA) GMS (UAE) GMS (CHINA) GMS (SINGAPORE)

Cumberland, MD-USA Dubai, UAE Shanghai, China Singapore

T: +1.301.759.9240 T: +971.4.423.0720 T: +86.21.6075.1900 T: +65.68.238.037

E: [email protected] W: www.gmsinc.net


:: gms leadership :: - the role of the cash buyer - japan - ec.pdf · 2018. 6. 19. · 4.1. gms...

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