Chaffers Marina Newsletter - May 2023

CHAFFERS MARINA

Photography by Robert Taylor

Hello Chaffers Mariners,

I trust the colder turn in the weather has not put too much of a damper on your boating enjoyment. With Chairman Guy away on travels to some truly adventurous and exotic places, I would like to take the opportunity to welcome you to the first edition of our revised newsletter. Thanks to a lot of hard work by our communications team (Robyn and Saiful particularly) we have produced the first in what we expect to be a monthly communication to stakeholders that will provide an update on both what is happening day to day in our marina and the longer-term activities that the board and company management are working on. This is a direct response to the excellent feedback received at the last Annual General Meeting (AGM) where shareholders requested that we provide more regular and more targeted communications, particularly around the progress with the Long-Term Asset Management Plan (LTAMP). As a board we were delighted to get such a lot of support and the desire from our stakeholders to know more about what is happening and when is a very heartening level of engagement. We have a range of different stakeholders and interested parties with different preferences as to how they would like us to communicate with them. Our recent survey, the results of which are summarized in this month’s newsletter, show the work we have done to identify how we can do this best, and we are committed to continuing with refining and updating our activities here.

While we need to balance requirements for commercial sensitivity around some aspects, we are keen to provide as much information as possible as to what is happening with both the Long-Term Asset Management Plan (LTAMP) and the general operations of the marina. As always, we are happy to take constructive feedback on how we do this so please feel free to provide further feedback to us as we bed down our new comms process and thanks again to those who have donated their skills and time to make this happen.

The May Board meeting was focused mostly on the funding options for the Long-Term Asset Management Plan (LTAMP) and an overview of the options under consideration is contained in this month’s newsletter. The board spent a considerable amount of time discussing the pros and cons of the various options and we continue to work together as a united board to bring options and a recommendation to shareholders at a Special General Meeting (SGM) later in the year. A number of discussions and considerations are still underway, and these will need to be concluded before the Special General Meeting (SGM) can be scheduled.

The board also discussed and agreed the fee increases for next financial year. These will be communicated to all shareholders and tenants later in the month and are broadly in line with Consumer Price Index (CPI) increases and the increases signalled at the last Special General Meeting (SGM). We are mindful that the increased cost of living is affecting everyone, and we have adopted a balanced approach that takes this into account, while ensuring that we continue to operate the marina both safely and effectively.

Best regards

Paddy Hanna

Deputy Chairperson Chaffers Marina Ltd

COMMUNICATION SURVEY RESULT REVEALED

We are excited to present the much-anticipated results of our recent Communication Survey. Your participation and feedback have provided invaluable insights into our communication practices and will help us shape a more effective and efficient communication strategy moving forward. The survey aimed to identify areas to improve and understand your preferences regarding communication channels and frequency. We are deeply grateful for your contribution.

The survey concluded with 90 responses from 203 emails, representing a response rate of 44% and a completion rate of 97%. It has also revealed that out of the total 90 participants, 74 were Chaffers Marina’s shareholders – there are 151 total shareholders.

For the full result of the survey, click on the link below.

https://www.surveymonkey.com/results/SMAo6pTxpnpqABSsCw9JnCLg_3D_3D/

We encourage you to continue sharing your thoughts, ideas, and suggestions. Your input is essential in shaping the future of our marina’s communication practices. Together, we will try and build a stronger, more connected marina community. Thank you for your continued support and active participation.

Lastly, Chaffers Marina would like to acknowledge the contributions of Robyn Harris, Paddy Hanna and Anna Kirklan for their pivotal role in shaping this Communication Strategy. We are grateful for their advice, professionalism, and collaborative spirit throughout this process.

KEY FINDINGS

Preferred Communication Channels

Email remained a popular choice for announcements and formal communication, the team are open to exploring other media and tools to capture a wider audience and communicate in the most effective manner.

Communication Frequency

The survey results highlighted a preference for timely and concise updates rather than sporadic or excessive messages. We are keen to find the right balance to ensure you receive relevant information promptly.

Preferred Communication Content

The survey findings provide insights on the types of communication content that resonate the most with our stakeholders. Information related to the Long-Term Asset Management Plan (LTAMP), security, costs, and car-park spaces were among the topranking content preferences.

Improvement Areas

Some respondents expressed a need for more streamlined and concise communications, while others requested more opportunities for two-way communication with the Board. We value this feedback and will work diligently to incorporate these suggestions into our communication strategy.

Perception of Communication Climate

The survey findings revealed varying perceptions of the communication climate within the organization. While some stakeholders viewed the communication climate positively, others felt that communication was top-down, one-sided, or lacking transparency.

LONG-TERM ASSET MANAGEMENT PLAN PROJECT PROGRESS OVERVIEW

Over time, the marina infrastructure has been affected by the inevitable effects of nature, leading to aging and deterioration. In response to this challenge, a Special General Meeting was held in early 2019, where our shareholders unanimously agreed to adopt the Long-Term Asset Management Plan (LTAMP).

This comprehensive plan involves the replacement of marina assets and infrastructures. The primary objective is to create a safe, secure and operational environment that caters to the needs of our shareholders, enabling them to berth their vessels and fully indulge in their boating adventures.

Furthermore, as shareholders, responsibility outlined in the Deed of License with Wellington City Council is to ensure the asset is returned in good order once the head license agreement expires in 2058.

Since 2019, significant progress has been made towards achieving this goal through various projects - Fig 1.

During the Annual General Meeting held last year, the Board presented a detailed update on the current status and challenges associated with the next critical project: Pier Replacement. This presentation also shed light on probable directions to move the project forward.

The article that follows will provide a detailed account of the directions taken and the significant developments that have unfolded. We are excited to share the progress we have made and demonstrate how these efforts will impact Chaffers Marina and shareholders.

Outer wavescreen Repairs

Pile

Pile Sleeving Works

Wavescreen Replacement Works (D-E Pier)

Figure.1

Breakwater Anchor Chains Replacements

Repair Works

PROJECT UPDATE

PIER REPLACEMENT

The pontoons, which were constructed in 1992, were originally designed with an estimated lifespan of 30 years. As the pontoons near the end of their design life, the need for a comprehensive plan to replace them became increasingly evident. Moreover, the sub-optimal construction practices employed during their initial construction exacerbated the situation, despite some settlement and repairs agreed upon in 2000/2006.

[Recapping 2022]

Revised Cost Estimate

When the cost estimate of $3.88 million was initially announced during the 2019 Long-Term Plan, it was based on a comprehensive evaluation of the project’s requirements, resources, and expected expenses at that time. However, the emergence and subsequent impact of the COVID-19 pandemic have significantly altered the economic landscape and introduced unprecedented challenges.

The COVID-19 era has caused widespread disruptions across industries, including construction. Taking into account the challenges posed by the COVID-19 disruptions and the inflationary trends indicated by the Reserve Bank of New Zealand (RBNZ) data, a reassessment of the project’s cost estimate was necessary.

By analyzing the impact of these factors, the revised cost estimate for the project has been estimated to be around $4.5 million at the time of the Annual General Meeting (AGM).

Tender Process

Last year, Chaffers Marina Limited sought proposals from interested parties for the Pier Replacement Project. As a result, three bidders submitted their proposals, all of which met the technical requirements of the project. However, there were notable differences among the bidders in terms of pricing, delivery time, and financing.

None of the bidders were willing to assume the risk of inflation and provide a long-term fixed price for the project. This posed a challenge, as it meant that the costs of the project could potentially increase over time due to inflation.

The project was planned to be delivered in phases back in 2019 and expected to be complete by 2034. Considering the circumstances, opting for a faster replacement of the pier could mitigate the risk of inflation and potentially minimize the impact of rising costs.

Furthermore, it’s important to note that a significant portion (70%) of the project’s costs were planned to be financed through income generated over time. With the revised cost estimate of the project amounting to $4.5 million and being paid for earlier, additional funds would need to be secured sooner to cover the increased expenses.

The outcome of the tender sees Bidder 3 as the “Preferred Contractor” with a cost nearest to the revised cost estimate and the possibility of obtaining Supplier-Related Financing.

LTAMP

[2023]

Who is Bidder 3?

We are thrilled to announce that Poralu Marine, who participated as Bidder 3 in that process, has been selected as our “Preferred Contractor”. French based Poralu Marine designs, constructs, and renovates marinas and harbors internationally, creating efficient and safe spaces for boats and ships.

Poralu Marine is renowned for its expertise in floating solutions, such as floating docks, walkways, and platforms. These innovative structures are designed to withstand harsh marine environments while providing flexibility, adaptability, and ease of installation.

Furthermore, Poralu is committed to environmental sustainability through providing eco-friendly solutions for marine construction, incorporating recycled materials, low-impact designs, and environmentally conscious practices.

Poralu Marine has an extensive worldwide portfolio including Woolloomooloo Bay (Sydney, Australia), Tauranga Marina (New Zealand), Brooklyn Marina (USA), St Katharine Dock (London, England) and Hillary’s Yatch Club (Perth, Australia).

Stay tuned for our upcoming newsletter, where you’ll discover more about Poralu Marine and the proposed system. For now, click on the link below to learn more about Poralu Marine

https://www.poralu.com/en/

1 2

1. Woolloomooloo Bay

2. Anse Marcel Marina, West Indies

3. Singapore Youth Olympic games

3

Financing Realities & Principles

Apart from revenues, extra income could be generated through various means, including the sales of less productive assets, borrowings, and contributions from shareholders. However, it is crucial to note that shareholder contributions are considered by the Board as the last resort for funding because the Board appreciates shareholder money does not come free to shareholders.

Although selling assets might appear as a viable option, it is prudent to explore the level of debt that can be sustained as an alternative before resorting to asset sales. Debt allows for a gradual repayment process, which can be distributed among all marina users. This approach is particularly advantageous for marinas operating under a cooperative structure, where the aim is to keep fees as low as possible to cover costs. By using debt, marinas can strike a better balance between financial stability and affordability for shareholders.

It is worth noting that relying solely on cooperative fees may not generate the cash for debt service that lenders typically expect to see. Lenders often look for indicators of financial strength and stability, which is shown by a ‘cash cushion’ of surplus funds or alternative income streams.

At the time of the Annual General Meeting, three pathways were identified to bring the project towards a financially viable position. A fourth is added but not without the risk.

No. 1 | Commercial Debt

Chaffers Marina Limited has explored the pathway of combining equity and commercial debt. This approach involves seeking a mix of funding from investors (equity) and borrowing from financial institutions (commercial debt).

To pursue the commercial debt option, Chaffers Marina Limited initiated discussions with their house bank as well as other first-tier banks. None of these banks expressed interest in providing commercial debt for the project. The banks cited the current economic climate as the primary factor influencing their decision and the situation has worsened since.

Chaffers Marina has also turned to second-tier lenders as an alternative. However, the meetings with these lenders revealed prohibitive conditions that would impose a high burden if this route were pursued. The lenders sought a shorter timeframe of five years for repayment, which would put significant pressure on the project’s cash flow and financial sustainability. Additionally, the interest rates indicated by these lenders were high, potentially increasing the overall cost of borrowing. Consequently, the Board is not progressing commercial debt as a viable financing strategy.

No. 2 | Supplier-related Finance

Under this pathway, the project would be undertaken through a supplier-related finance arrangement with Poralu Marine. The project would involve securing approximately $2.5 million in new stakeholder funding and finance. The expected timeline for completion would be accelerated from 2027 to 2025.

Earlier this year, Chaffers Marina Limited and Poralu Marine initiated the formal application process to secure financing through bpiFrance, a French State bank. As part of the application process, Chaffers Marina underwent a thorough due diligence process for the benefit of bpiFrance and its counterpart that would insure the risk of a Chaffers Marina Limited default. Despite these efforts, the application was ultimately unsuccessful.

The negative response primarily stemmed from concerns surrounding the company’s structure and the absence of a clear guarantor. This issue mirrors challenges encountered during discussions with New Zealand banks, indicating a consistent obstacle faced by Chaffers Marina in securing thirdparty debt financing.

No. 3 | No Debt

During the Annual General Meeting in 2022, the Board introduced a pathway that involves undertaking the works through 100% stakeholder funding and finance. The estimated amount for this funding was also around $2.5 million and completion of the project was anticipated to align with the Long-Term Plan (LTP) timeline, which is set for 2034.

Having exhausted the third-party financing pathways, the project team is actively updating and refining this pathway which is more certain because it is not necessary to rely on external parties. They are making necessary revisions and enhancements for the Board to consider. The Board anticipates presenting a firm plan to the shareholders in the near future.

No. 4 | Deferment

The project can also be placed on hold until a favorable economic climate emerges. While this choice may initially seem appealing, it comes with significant risks related to health, safety, and environmental (HSE) concerns, costly equipment failures (including potential damage to private vessels), and expensive reactionary maintenance. The Board’s view is this approach is a false economy.

Moving forward

Eliminating possibilities has been challenging given market conditions, but is progress nonetheless because the path ahead is now clearer. With this in mind,and aside from the task of raising financing, the project team is diligently examining and analyzing the finer details of the pier replacement project. We will be sharing more comprehensive updates with you in the upcoming months. Our aim is to provide you with a clear understanding of the project’s status and the measures being taken to ensure its success.

We also encourage you to share any questions, concerns, or suggestions you may have. Your input is highly valued and will be taken into consideration as we continue to move forward.

MARINA MATTERS

Chaffers Marina Team

We are excited to extend a warm welcome to Connor Warnock, the newest addition to the Chaffers Marina team. Connor will be working closely with our Dockmaster, bringing his unique skill set and enthusiasm to enhance our operations.

Please don’t hesitate to say hello and introduce yourself to Connor whenever you spot him around the marina. We believe that his addition will strengthen our team and contribute to the overall success of Chaffers Marina.

Upcoming Vessel Movement

Website

To access the latest information regarding berths for sale, contractors, LTAMP, policies, and facilities at Chaffers Marina, please visit our website at www. chaffersmarina.co.nz.

We are also looking ways to improve the website with the aim to create an improved digital platform that serves as a hub for information and interaction. This will include integrating this newsletter content and implementing a real-time schedule for the boatlift.

Health and Safety

As part of our ongoing efforts to ensure a safe environment, we will be installing additional liferings along all the piers for enhanced accessibility and peace of mind.

Boatlift Schedule - June 2023

The schedule is subject to change, please call the office to make a booking.

We kindly remind everyone to promptly notify our office if you have identified a new hazard or have experienced a near-miss incident. Your input and feedback are crucial in helping us address any potential risks and continuously improve safety measures. Together, we can ensure the utmost safety for everyone at the marina.

Afterhours

If there are any urgent matters outside of office hours, you have the option to directly reach us at 027 405 8646. Alternatively, calling the office number will provide the option and instruction to redirect the call to the on-call phone.

Photography/Collaboration

We would like to express our gratitude to Robert Taylor for allowing us to feature his photo in this newsletter. If you’re interested in exploring more of his work, please feel free to contact him directly at roberttaylor1965@hotmail.com.

Additionally, if you have your own captivating photos or exciting boating adventures that you would like to share in upcoming newsletter, we encourage you to get in touch with our office.

Hot works Permit

To ensure safety and compliance, it is mandatory to obtain a Hot Work Permit for any welding (gas or electric) or grinding activities conducted onboard a vessel in the water. This permit can be obtained from the Harbour Master of the Greater Wellington Regional Council (GWRC).

Similarly, if welding (gas or electric) or grinding work is to be performed onboard a vessel while it is on the boat lift, a Hot Work Permit must be obtained. In this case, the permit can be issued by the Chaffers Marina Office.

Accounts

For those who have set up a monthly Automatic Payment, we would like to remind you that with the new rates in July, it is necessary to reconfigure the amount with your bank. This ensures that the correct and updated amount is deducted from your account.

Live Aboard

Chaffers Marina boasts a vibrant Live Aboard community, comprising 68 individuals residing across 44 vessels. Among these vessels, 22 are occupied by Shareholder Live Aboards.

Aside from the significant contribution to income, the presence of Live Aboards plays a crucial role in marina and vessel security, particularly during storm events.

Both Chaffers Marina Limited (CML) and the Board diligently manage the number of Live Aboards, recognizing their significance as an integral community within the marina. Their presence contributes to fostering a strong sense of community that CML actively promotes and values.

Parking Permit 2023/24

Starting from Friday, June 30th, the new parking permit will be available. To obtain the new permit, kindly bring your current one to the office for a swap.

Just like last year, there will be a grace period of three weeks before the parking enforcement begins issuing tickets to vehicles without the updated permit.

Crew Access

Crew members’ access cards are due for renewal at the beginning of July. The administration team will be contacting boat owners with crews to seek any updates regarding their crew members.