Odessa Maritime Days
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Odessa Maritime Days 24 May 2013 – Odessa
description
Odessa Maritime Days. 24 May 2013 – Odessa. Ports: Facts & Trends. Transactions: Pre-Crisis. Ports: Facts & Trends. Crisis. 2008-2009 Global economic crisis impacted the global trade flows Trade flows start to decrease and number of containers go down - PowerPoint PPT Presentation
Transcript of Odessa Maritime Days
Odessa Maritime Days
24 May 2013 – Odessa
May 2013 Odessa Maritime Days 2
Transactions: Pre-CrisisPorts: Facts & Trends
Odessa Maritime Days
Crisis
May 2013 3
• 2008-2009• Global economic crisis impacted the global trade flows• Trade flows start to decrease and number of containers go down• Sea freight rates have gone down dramatically• Companies are in financial distress and are forced to sell stakes in port
assets• Operators have difficulties closing a financial loan• Less appetite for port concessions• Even African projects slow down: syndication
Ports: Facts & Trends
Odessa Maritime Days 4
Project Bankabilitya viable project is not yet a bankable one
May 2013
Economic & Financial Balance
Financial Viability Bankability
IRR NPV Secu-rities DSCR
• Determined over a period of > 20 years
• Includes future project phases
• Determined over a period of < 20 years
• Depending of project start-up phase
Odessa Maritime Days 5
Project Bankabilitya viable project is not yet a bankable one
• Debt service• Revenue protection (tariff and competition)• CAPEX/ OPEX aligned with revenues• Value Engineering and port planning aligned with business demands
• Securities• Proper structuring• Proper risk engineering• Quantification (value) of impact of different structures and risk allocations: create value• Safeguarding in the mean time authorities interest to retain discretion over policy• New era of contract engineering
May 2013
Odessa Maritime Days 6
Value engineeringA viable project may not yet be bankable
May 2013
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21(400,000,000)
(300,000,000)
(200,000,000)
(100,000,000)
-
100,000,000
200,000,000
300,000,000
400,000,000 Cash Flow Diagram
Cumulative FCF Investments Opex Revenues
mio
USD
• This project has a project IRR of 19% and a positive NPV.
• However, the first year of positive Free Cash Flow is in year 6
• The pay-back period is 10 years from initial investment.
• Vale created after the expansion investments in year 15 are not of interest for the lenders!
• So, how bankable is this project for project financing?
Odessa Maritime Days
Basic Port Management models
May 2013 7
Type Nautical Access Infrastructure Superstructure Labour Nautical services
Antwerp Public, by Regional Government (100% subsidy)
Public, partly PA partly Reg. Government
Mostly PrivateSome public cranes at daily rent fee
Private via regulated dock labor pool
River towage: open thru 7-yr concessionHarbour towage: by PABunkering: open
Rotterdam Public by National Government (100% subsidy)
Port Authority*
Private Private incl. subcontract.
Towage: openBunkering: openPilotage: private, closed
Felixstowe (HPH)
Harwich Haven Authority responsible dredging &maintenance navigation channel
Private Private Private Pilotage: Harwich Haven AuthorityOther: Private, Open
Port Models
Odessa Maritime Days
Financial Structure Business Case Model
May 2013 8
Terminal Operator
Handlingfees Storage fees
Assets
Equity
Concessionfees
Commercial loans
Opex
Port Authority
Port dues Concession fees
Assets
Soft loans
Subsidy
Opex
Commercial loans
Surplus profit is transferred
back to PA
OperatorPort Authority
Cash Flows PA/TO
Odessa Maritime Days
Financial Structure Business Case Model
May 2013 9
Port dues
Concession fees
BC TO BC PA
Minimal rate of
return PA
Cash Flows PA/TO
Revenue Handling
fees
Surplus profit
Minimal rate of
return TO
X%
Y%
• Create market appetite• Secure revenues operator• Concession contract (bankability)
• Competitive tendering for concession• Maximise value to Port• Align concession fees with surplus
profit (time and amount)
Contract Award Criteria
• Selection and awarding (give substance to objectives of Ministry/PA)
– Value: • throughput guarantees• productivity • risk absorption
– Money:• upfront fee • fixed fee• Royalty/ revenue share
May 2013 Odessa Maritime Days 10
Tender Process
transaction costs
preparation pre-qualification proposal
time
5 Candidates 1 Preferred Candidate
negotiation
€
public
private
• High transaction costs at the tail of the tender procedure for both public and private sector
• Time consuming negotiations as contract/critical topics are brought in the process (too) late
Draft
Contrac
t Final C
ontract
Transaction Costs – Classical Approach
May 2013 Odessa Maritime Days 11
Tender Process
transaction costs
transaction costs
preparation + market consultation
pre-qualification
5-10 Candidates 3-6 Candidates
contract “dialogue”
3-6 Candidates
publicprivate
Draft
Contrac
t
proposal
Final C
ontracttime
€
BA
FO
Proposal
Transaction Costs – Competitive Dialogue
• Significant transaction costs at the beginning of the tender procedure for both public and private sector
• No time consuming negotiations as contract/critical topics are brought in the process early and under competition
May 2013 Odessa Maritime Days 12
Tender Process
Potential to deal with sensitive topics
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