Traditionally, shipping companies involved in Ship Acquisition in Nigeria have often relied on bank debt and equity markets to finance the acquisition and operations of vessels. The decline in the availability of bank finance has contributed to shipping companies looking for alternative sources of financing increase including access to international bond markets through high-yield bonds, recourse to private equity (including preferred equity structures) and convertible debt.
It goes without saying that shipowners need easily accessible cheap funds to finance vessel acquisition. Like all businesses, shipping requires a credit facility with a competitive interest rate. Our research reveals that a large number of ship owners drown in repayment of debts to banks due to lack of special lending terms, despite shipping being an investment with a long gestation period.
With Nigeria‘s total annual freight cost estimated at between $5 billion and $6 billion annually, there is no doubt that ship-ping is of great importance to the Nigerian economy and ship acquisition should attract increased finance.7 However, inadequate financing for the acquisition of (new) vessels have brought about a huge gap in indigenous ownership of vessels in Nigeria. It is against the foregoing background that this publication focuses on key issues that are deserving of attention when contemplating making a ship acquisition in NigeriaDOWNLOAD WHITEPAPER