Ship Financing: Investment Opportunities and Strategies for New Market Segments - E-Interview with Dr. Albrecht Gundermann

E-Interview with Dr. Albrecht Gundermann about: "Ship
Financing - Investment Opportunities and Strategies for
New Market Segments"

                       Title of Interview:           Ship Finance
                       Name:                         Dr. Albrecht Gundermann
                       Functional Area:              Managing Director
                       Organisation:                 Maritim Equity
                                                     Beteiligungsgesellschaft




Short professional CV:
   •    major professional experience / positions held
   •    Liberian Registry – Regional Managing Director
   •    Commerzbank Global Shipping AG – Senior Relationship Manager




       Investment Opportunities and Strategies for New Market Segments
        In the context of the Conference on Ship Finance at SMM 2008, Hamburg

While international financial crisis still increases in size and reach some major national
economies face severe recession risks. The international ship financing community –
being the pacemaker of international trade and growth – now has to deal with those
issues as well.

Hence, the ship finance industry has to give some answers to how maritime markets and
players are affected by the credit crisis. Do we have to invent new and innovative
financing schemes? Will there even be new opportunities for ship financing arising from
the crisis? How are investments in ship funds affected by the new market environment?
What does this mean for the private investor in ship funds?

This virtual roundtable wants to shed some light on these issues related to ship
financing. We invite experts from companies, banks and institutions to present their
views on current and future market perspectives.



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Dear Mr. Gundermann,


Question 1:
Which of the players in the ship financing sector are affected most by the credit crisis?
Why is this so, are there substantial differences by country / on the global level?

Answer:
             American Investors. Because they created deals with unreasonable
             leverage. Shipping has always been subject to volatile markets.
             Investments were always based on sufficient equity and long term
             strategies. Those who ignore these basics will suffer.
             Traditionally, the more short term view of American investors did not match
as well as the long term of view of – for instance - Norwegians and Germans.
Most inspiring is to see what happened in the 80ies.




Question 2:
Is there a need to invent completely new and innovative financing schemes? Will there
even be new opportunities for ship financing arising from the crisis?

Answer:
             Why? The industry exists since hundreds of years. We should remind
             ourselves of what we can learn from this history. As mentioned above, any
             strategy has to be long term. This is not a playground for unexperienced
             investors who are searching the high yield and quick exit. Any structure
             should have sufficient equity and the debt portion should be repaid in a
reasonable time frame.




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Question 3:
How are investments in ship funds affected by the new market environment?

Answer:
              The investments are affected by different lending standards, meaning
              higher margins and liquidity costs of the banks and tougher covenants. This
              will squeeze the return of investors in many cases. We have many funds
              that will suffer under the “cost increase clause” which allows the banks to
              burden the borrower with the higher refinancing costs. In some cases, we
will see the sale of the ship.


Question 4:
What does this mean for the private investor in ship funds?

Answer:
            For existing investments, it will mean a lower return. Most investments that
            have not been finalized at this point will fail due to a lack of bank financing.
            On the other hand: 2009 will offer fantastic opportunities for those who have
            enough equity at hand.



Question for a brief delphi-survey :
Please name – from your personal expertise – the three most important reasons why
ship funds will still be a smart move for investors in the near future (2-5 years).

Answer:
            I do not think that any investments into shipping will be successful if the
            investor has only a time frame of 2-5 years.




Mr. Gundermann, thank you very much for this interview!




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