Press Release
Security concept for Bulkerflotte 1 successfully concluded
Security concept for Bulkerflotte 1 successfully concluded
• Capital increase of around 27 million US dollars pledged
• Greater stability through additional security contributions
• Sustainable stabilisation of ship investment fund (Flottenfonds)
Hamburg, 29 August 2011. Nordcapital, the Hamburg-based issuing house for closed-end funds, could obtain a joint sustainable solution for its Bulkerflotte 1 with all partners. Because of the insolvency of the charterer Korea Line Corp. (KLC), the fund experienced a liquidity crisis in February 2011. “Thanks to the successful interaction between the shareholders, the shipyard, the banks and the initiator it has been possible to sustainably stabilise the fund for the next few years,” explains Reiner Seelheim, CEO of the Nordcapital Group.
The Bulkerflotte fund is designed as a holding company with nine single-ship companies. Two of the Supramax bulk carriers have a long-term engagement at Hanjin, seven vessels each had a five-year charter contract with KLC.
Current charter situation of the vessels
Despite the very difficult situation, the five vessels formerly chartered to KLC that are already sailing could be quickly re-deployed by the shipping company ER Schiffahrt owned by the group of companies. The vessels sail in the bulk-handling pool of the Norwegian Klaveness Group. The eighth vessel, the MS E.R. Bornholm will only be delivered by the shipyard at the end of September 2011. Now that the takeover of the vessel has been secured, the contract carrier will also soon conclude a new engagement.
Capital increase and additional extensive security contributions
During the three-month fundraising phase that lasted until the end of August 2011, a total of 26.8 million US dollars were pledged for the continuation of Nordcapital Bulkerflotte 1. This is equivalent to almost 90 per cent of the original sum envisaged for the business continuation concept.
In addition to the contributions of some four million US dollars already pledged in advance of the implementation as well as 30 million US dollars in guarantees, the Nordcapital Group will make another three million US dollars available as capital increase. The initiator itself is also a partner with limited partnership capital interests of 4.6 million US dollars. The Deutsche Bank participates in the form of an additional loan of three million US dollars.
Thus, the takeover and the continued operation of eight vessels are secured. The bulk carrier E.R. Bogense scheduled for delivery at the end of November 2011 is not taken over. The shipyard has terminated the building contract because of default by the shipping company subject to retaining the deposit. Over and above, it was mutually agreed with the shipyard that both sides will refrain from any further claims against each other.
Additional stability through increased security contributions
The implementation of the security concept secures the liquidity of the six vessels formerly chartered to KLC on the basis of expected market developments. The simultaneously increased liquidity reserves ensure that the concept is more robust in the long term. In accordance with the concept, all vessels can continue to provide the full debt service during the restructuring phase and so reduce the debt in the medium term as planned.
Meanwhile, claims against KLC will be properly asserted for all seven single-ship companies. Since the South Korean shipping company is expected to be restructured, there is considerable potential for the fund to pro rata compensate the loss in revenue in the future.
On the history of Nordcapital Bulkerflotte 1 and the position of KLC
In the summer of 2008, the Nordcapital Bulkerflotte 1 was exclusively marketed by Deutsche Bank. Total equity capital of 170 million US dollars was raised. The investment volume reached 485 million US dollars. As a result of the bankruptcy application by Korea Line Corp., the ship investment fund needed additional capital to ensure liquidity. The relevant concept was accepted at the shareholders' general meeting on 1 June 2011 with 96 per cent approval. For the time up to implementation, a short-term bridging concept was agreed with the banks until the end of July, which subsequently was extended until the end of August. The increase in capital has been paid by the shareholders on a voluntary basis. 18 per cent of the original subscription amount was needed.