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Ship purchase procedures

 

We have number of holding groups newly investing into Shipping and becoming shipowners in Turkey. These newcomers frequently ask us about the procedures of ship purchasing. Therefore we have decided to put below guidelines in our website:

- We guide our clients about the market situation. Where the prices are today compared to previous years and what is our expectation about the ship sale prices in coming months / years.

- If the client is purchasing a vessel for their own cargo, they usually know what exactly they require.

- If the client is purchasing the vessel for investment only, then we work together to decide which type of vessels they should be investing in at that particular time which depands on the market circumstances.

- We usually give our clients names of technical advisors which they can get a help while choosing a vessel with best specifications suitable to their needs.

- We provide the buyer with the list of vessels available for sale in the market at that given time suitable to buyers requirements

- We provide the buyer with the list of vessels reported sold since some months (or years) which would help the buyers to compare the prices with the recent sales

- After the buyer chooses which vessels they like most, we provide them with each vsls TC description (or Q88 or Gasform C which depands on the vsls type), latest quarterly listings, recent photoes, plans etc for the buyers to study each vessel in more detail

- We keep the buyers informed regularly about the price changes on sale candidates and inform the buyers with any newly available candidates in the market. We also inform our clients with the vsls itinerary for inspection.

- Once the buyers decide which vessel they wish to purchase, they have two options: We can either make a firm offer to the sellers on subject inspection basis on buyers behalf OR alternatively the buyers can inspect the vessel first and we prepare an outright firm offer for the buyers after their inspections. Surely we ask the sellers if they wish to entertain a subject inspection firm offer. If the sellers only wish to work outright basis, the buyers have no choice but to inspect the vessel first.

- When the buyer decides to inspect the vessel, we arrange the inspection permission from the sellers for the vessels physical inspection by the buyers inspectors (if the buyers need help to find an independent inspector, we provide him with an independent inspectors names ww and contact details). We provide the buyers with the agents details at the said inspection port which the buyers inspectors can contact directly in order to make the further arrangements for boarding the vsl. We provide the LOI form for the buyers/inspectors signature before they board the vsl. 

- Buyers should also inspect the vessel's classification records. We arrange the inspection permissions from the sellers for the class records inspections. If the buyers need help to find an independent inspector, we provide him with an independent inspectors names ww and contact details. Buyer talks to him directly for its cost etc. Buyers usually have to pay to the class minimal amounts (various class to class) to inspect each vessels class records.

- We prepare a full terms firm offer on buyers behalf. Draft of the offer will depand on the type of sale contract which we will be using eventually. Norwegian Sale Form 1997 and Norwegian Sale Form 2012 versions are the most common contracts which are used in second hand sales. Japanese sellers prefers to use Nippon Sale Contract therefore when offering to Japanese sellers we usually base our firm offer on Nippon Sale Contract.

- After we present our firm offer to the sellers on buyers behalf, we start negotiations with the sellers on accept / except basis via email. 

- If and when the full sale terms are agreed between the buyers and the sellers, we prepare the recap (recapitulation) of the deal and send the same to the buyers and the sellers for their final confirmation. Ship sales are usually done under English Law and according to English Law once the recap is confirmed by each party, the deal is done.

- Thenafter we insert the sale terms into the sale contract which both parties decided to use during our negotiations (i.e Norwegian Sale Form or Nippon Sale Form). The Buyers and the Sellers should sign the MOA (memorandum of agreement) without any delay.

- Within 3 days of signing the MOA, the Buyers shall lodge 10 pct deposit (the amount may depands on the negotiated terms). Such deposit usually placed into the joint deposit account opened at the sellers bank with the names of the buyers and the sellers. Today, opening joint accounts usually take more than 3 days as the buyers and the sellers have to provide the bank with a lot of documents / application forms etc which the buyers and the sellers shall provide without any delay. Therefore we usually insert into the agreement a wording covering such delays as well. Sometimes opening an escrow account is an easier solution.
Or alternatively the buyers and the sellers shall agree to nominate a thrustee account who shall hold the deposit for the buyers and the sellers under the contract until the delivery of the vessel which we as Pelikan provide it for our clients frequently if required. 

- Depands on the negotiated terms, the buyers usually have the right to place 2 representatives onboard the vessel at their cost and expense immediately after they lodge their deposit. Those representatives are on board for the purpose of familiarisation and in the capacity of observers only, and they shall not interfere in any respect with the operation of the Vessel.

- Buyers shall decide which flag they wish to use for their vessel. Each flag authorities require different list of documents which we need to inform the buyers to prepare as soon as possible before the delivery. Those list of delivery documents are usually prepared as an addendum to the MOA. At this point, the buyers will need a good shipping lawyer to check the wording of the delivery documents provided by the sellers. We guide our clients with good shipping lawyers names and contact details which they can contact. Once the buyers' lawyers check and accept the wordings of each delivery documents, the sellers proceed with preparing the original documents.

- Sellers shall tender relevant notices for drydocking / underwater inspection / delivery. Once the vessel is at the delivery port, depands on the agreement, usually underwater inspection shall be carried out by class approved divers at the presence of the class surveyor. Such inspection is NOT a subject to the sale but the sellers shall repair or reimburse (depands on the agreement) if any damage is found affecting the vessels class. 

- Buyers usually have 3 days to take delivery of the vessel after the Sellers tender the notice of readiness for delivery. Closing meetings usually takes place at the sellers bank. The buyers advise which date they will be coming to closing meeting. 

- At the date of delivery, we get together at the closing place agreed in the MOA when the Buyers checks the original delivery documents if they are matching with the copies which they received previously. While buyers are checking the documents, usually bunker surveys are carried out onboard the vessel or the buyers may accept to pay the captains declared amount of bunkers and luboils onboard the vessel. 

- If all are ok, buyers shall release the 10 pct deposit in the joint account in favour of the sellers. Thenafter they shall pay the balance of the purchase money to the sellers bank account against the original delivery documents. 

- Protocol of delivery and acceptance certificate is signed by the buyers and the sellers reps. Sellers crew leaves the vessel and the buyers crew goes onboard the vessel. The Sellers captain and the Buyers captain signs a protocol of delivery and acceptance certificate onboard the vessel as well.

- The vessel is yours. We hope she will be a lucky ship getting all good cargoes around.