King holds court

Ross ready to talk

Wilbur Ross may have the Midas touch but his shipping empire is not immune to the market downturn.

Eight of the 40 ships controlled by the billionaire financier’s tanker vehicle, Diamond S Shipping, are tied to time charters with Overseas Shipholding Group (OSG).

The turnaround titan tells TradeWinds WebTV that he expects the bankrupt US shipowner to seek reduced rates on fixtures scheduled to expire between early 2014 and mid-to-late 2019 but believes the overall impact on his Connecticut-based shipping interests will be minimal.

On the sidelines of Marine Money’s Ship Finance Forum in Manhattan the WL Ross boss said he and his affiliates knew that OSG was at risk before they backed a $900m investment that set the stage for the acquisition of 30 products tankers from Cido Shipping in August of last year.

“OSG has had 13 consecutive quarters of losses so it’s not really a shock,” he explained when asked about Wednesday’s Chapter 11 filing how he and Diamond intend to combat counterparty risk in a market plagued by declining asset prices and charters with cash-strapped counterparties.

“We do believe that OSG needs our vessels,” Ross continued. “We do believe they intend to keep them so there may be some tweaking of pricing but our [charter rates] are not so wildly off market...

“[The bankruptcy] is an unfortunate event, it may well go down as marking a turning point in the industry but from our own individual point of view even though its eight vessels we don’t think our risk is all that material.”

Ross also touched on his commitment to continued expansion of Navigator Gas- in which he recently secured a majority stake- ongoing interest in investments in other liquid segments and a belief that its “way too early” to seriously consider a dip into the dry-bulk or container sectors.

In conclusion the legendary investor, who Fortune magazine dubbed “King of Bankruptcy” in an article published nearly 15 years ago, offered up advice for shipowners seeking Chapter 11 protection from creditors in the US after failing to cure their financial maladies out of court.

“Be honest with the lenders and honest with the charterers- be realistic in [your] expectations,” he said. “I think a protracted proceeding is not in anybody’s best interest so I think getting it over with quickly on a realistic basis is the advice I would give.”

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