[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/

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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.