Private Equity: Most conventional lenders simply do not like to provide short-term loans to shipyards or operators for construction projects. Some lenders will provide construction financing for certain types of vessels, but only when it will be rolled to term financing or a lease and then only out of necessity for existing clients or “A-list” borrowers. NFS is affiliated with a private equity partner that prefers short term loans (12 to 18 months) and is looking to expand its portfolio. The relationship is effective because NFS / MMSI are fully dedicated to the maritime industry and only recommend viable projects.
Private equity is further available in the form of sub-debt, to shore up a borrower’s balance sheet and thereby make senior debt more attractive to conventional lenders.
Oil Protection Act – 1990 (OPA-90): The “build program” for companies involved in the petroleum industry has been accelerated because of OPA-90. In many instances, the additional debt increases leverage, making it more difficult to secure construction financing. NFS can provide assistance by restructuring debt and/or securing permanent financing at the end of construction. The financial analysis and due diligence required for construction financing is generally more in-depth than that required for permanent financing. NFS can provide this information to lenders significantly reducing the time for credit review.
Line of Credit (LOC): Credit lines are available to boat builders that will dedicate funds to new builds. The construction projects require approval by NFS, but the requirements are liberal assuming that the boat builder has the capacity to guarantee the loan.Once the vessel is sold and delivered to the new owner the credit line is freed up for new construction.