»Suezmax-Tanker Fleet Fund II«
The vessels
This fleet fund comprises four identical crude oil tankers of the Suezmax class, i.e. the MT »Cape Bari«, the MT »Cape Bastia«, the MT »Cape Bonny« and the MT »Cape Brindisi«. These vessels are modern 159,000 tons double-hulled crude oil tankers.
The market
Crude oil tankers can be deployed in different markets. The existing Suezmax tanker fleet transports crude oil mainly between Northern Europe and North America, West Africa and North America, and the Black Sea/Mediterranean Sea and Northern Europe. 18% of the fleet is over 15 years old. According to the strict IMO 13G rules, some 28% of the existing fleet must be eliminated from the market and/or broken up (info as of March 2005).
Partner
Construction shipyard: The four ships were built at Hyundai Heavy Industries Co. Ltd., Ulsan/South Korea, a well-reputed South Korean shipyard with a lot of experience in tanker construction.
Ship management: Columbia Shipmanagement (Deutschland) GmbH is responsible for the ship management. This company, which belongs to the CSM Shipmanagement Ltd, Limassol/Cyprus group, one of the world’s major ship management firms, is an affiliate of the well-reputed Schoeller Holdings Ltd., Limassol/Cyprus (Dynamar Rating 2 (1= low risk; 10 = high risk).
Charterer: MT »Cape Bastia«/MT »Cape Bonny« were chartered to Roanoke Shipping LLC, a 100% affiliate of the renowned OMI Corporation, Connecticut (USA). OMI Corporation warrants performance of the charter contracts. An American enterprise that is listed on the New York Stock Exchange, OMI is a top international owner and operator of tankers. At present, the company’s fleet comprises 41 vessels, including 15 Suezmax and 26 product tankers. According to a current assessment conducted by Dutch rating agency Dynamar, OMI Corporation’s ranking is 2. The life of the MT »Cape Bastia« and MT »Cape Bonny« charter contracts is 7 years plus three one-year renewal options (+/- 45 days). Daily charter rates are USD 28,750 (net) for the initial seven-year period. Daily charter rates for the three one-year renewal periods are USD 31,050 (net).
Pool: The MT »Cape Bari« and the MT »Cape Brindisi« are directly deployed, within the Gemini tanker pool, on the trip charter market. The Gemini tanker pool, established by OMI Corporation and König & Columbia Tankers Ltd. in December 2003, comprises 17 Suezmax tankers at present, 15 of which are owned by OMI Corporation and two by the first fleet fund initiated by Emissionshaus König & Cie. The four vessels of the second Suezmax Tanker Fleet Fund will increase the number of units operating in the Gemini tanker pool to 21. The average earnings generated by the pool fleet were approximately USD 63,000 per day in 2004, and USD 52,255 per day in the first six months of 2005 (time charter equivalent “TCE”, comparison first six months of 2004: USD 52,984), which was significantly above the estimates for MT »Cape Bastia« and MT »Cape Bonny«.
Advantages of the Investment
- The income from charter rates generated to-date by MT »Cape Bari« is significantly above prospectus.
- The deployment of two vessels under long-term fixed charter contracts and two vessels on trip charter basis is an attractive mix of safe investment and profit chances.
- From the very start, the vessels operating in the pool have been benefiting from the growth market of international logistics.
- Owing to prompt option for tonnage tax, investors can budget the tax effects from the very start, even in the event of good performance of the ships.
- As single-hulled tankers, to the extent they are still operated, must be broken up pursuant to IMO 13G requirements, the demand for new ships is high.
- Conservative estimates of administrative and operational costs assume a 3% increase p.a.
- The present low-interest phase benefits the investment in the initial phase; conservative forecast of interest development.
Efficiency consideration
(Standard limited liability capital, specifications with rounding differences)
| year | initial investment | tax | payout | amount (delayed) | accumulated |
| 2005 | -55.000 | -0 | 0 | -55.000 | -55.000 |
| 2006 | -50.000 | -47 | 4.000 | -46.047 | -101.047 |
| 2007 | -121 | 8.000 | 7.879 | -93.168 | |
| 2008 | -121 | 8.000 | 7.879 | -85.289 | |
| 2009 | -121 | 8.000 | 7.879 | -77.410 | |
| 2010 | -121 | 8.000 | 7.879 | -69.531 | |
| 2011 | -121 | 8.000 | 7.879 | -61.652 | |
| 2012 | -121 | 8.000 | 7.879 | -53.773 | |
| 2013 | -121 | 8.000 | 8.879 | -45.894 | |
| 2014 | -121 | 9.000 | 8.879 | -37.015 | |
| 2015 | -121 | 9.000 | 8.879 | -28.136 | |
| 2016 | -121 | 9.000 | 8.879 | -19.257 | |
| 2017 | -121 | 10.000 | 8.879 | -9.377 | |
| 2018 | -121 | 11.000 | 10.879 | 1.502 | |
| 2019 | -121 | 11.000 | 10.879 | 12.381 | |
| 2020 | -242 | 12.000 | 11.758 | 24.139 | |
| Sales | 72.440 | 72.440 | 96.579 | ||
| Total amount | -105.000 | -1.861 | 203.440 | 96.579 | |
| Average payment without sales p.a. | 8,4% | ||||
| total capital reflux; absolute / in percent | 203.440 | 203,4% | |||
| Surplus from the investment after taxes and agio; absolute / in percent | 96.579 | 96,6% |
For the calculation of the total capital reflow the following premises were put at another taxable income in the amount of EUR 170,000 and a participation sum of EUR 100.000:
- Investor single
- Tax rate in 2005 to 2020 42%
- Solidarity surcharge 5,5%, during the complete running time.
- Church taxable, Church tax not tax-deductible.
- Tax payments are carried out with pawning of a year.
- Payments are carried out in May of the subsequent year. They are considered for reasons of the representation as supply in the developing year.
- In the year 2020 all payments are carried out in the same year.
Economic data
At a sale after 15.5 operating years (average) a value in the amount of respectively approx. 40% of the purchase values of the ships is assumed.
A participation is possible as a standard limited partner or as an advantage limited partner. The Preferred limited liability capital receives a preferential payment of 7%. Preferred limited partner receives average payments (without sale) in the amount of approx. 7% p.a , related to the standard limited partner.
Standard limited partner receive at first scheduled payments in the amount of 4% in 2006 and in the amount of 8% as of 2007. The payments shall be increased to 13% in accordance with payment course to 2020. Altogether, without sale approx. 133% payments are planned, respectively related to the standard limited liability capital.The average payments (without sale) for the standard limited liability capital is approx. 8.4% p.a.
Terms of Accession to Fund
Investors acquiring a stake in the »Suezmax Tanker Fleet Fund II« will be percentaged limited partners in the four limited partnerships. Stakes can be acquired as standard and/or preferred limited partners. Accession is as trustor via a fiduciary company. The investment generates trading income.
| Standard limited liability capital | 25% + 5% immediately after accession | 25% 1st December 2005 | 50% 1st Mai 2006 |
| Preferred limited liability capital | 25% + 5% immediately after accession | 25% 1st December 2005 | 50% 1st Mai 2006 |
Analyses
“With the percentage of initial charter rates in total revenue being low, this offer constitutes an entrepreneurial approach. Scope feels that it is first and foremost the relatively conservative spot market rates that constitute the chances to be expected.” The security rating as regards taxation is very high, it is high as regards investment and business management, and significant as regards revenue and exit.
Security rating: 1.30 – Total rating 1.75.
“An investment in the Suezmax tanker market, in which demand is likely to be high in the long term, offered by experienced partners and based on reasonable assumptions.”
Both rating report and market survey are available. The current business report 2004 of König & Cie. GmbH & Co. KG as well as the assessments of independent analysts are available on the internet at www.emissionshaus.com.