Finance construction period financing. The potential for owner-operator increased liquidity using these interest-free federal and state government loans appears enormous. This change also creates CCF owneroperator eligibility for the long-discussed America’s Marine Highway (AMH) and Dual Use Vessel (DUV) projects. This should encourage new-entry owner-operator Ropax services for the AMH I-95, I-5 and I-10 corridors. Also, and perhaps of equal importance, this change may attract CCF leasing company financing (of the sort that Sun used for Sun Ship) for this market. The introduction of these Sun CCF leasing structures should result in owner-lessors being able to meet rate-on-investment hurdle rates, while offering demise charter rates that would be 30 percent and 40 percent lower than those in standard leasing transactions. These demise rates will in turn enable operators (by passing on a portion of this savings) to achieve reductions in their customer charges to compete with highway and rail services in these transportation corridors.
About the author H. Clayton “Clay” Cook was the MARAD General Counsel who was responsible for the 1970 Act CCF Program implementation. His work with the program has included advice for both private sector clients (such as NASSCO and Sun) and U.S. Government projects (in work for MARAD itself and for the U.S. Navy). His work for the Navy’s National Shipbuilding Program (NSRP) 2008 Workshop lead to the issuance of U.S. Patent No: US 8,010,431 B 1. As a partner at Cadwalader Wickersham & Taft, and counsel at Fulbright & Jaworski LLP and Seward & Kissel, Clay has advised banks and financial institutions, shipyards, and vessel owners and charterers in the construction, ownership and financing of more than $4 billion in U.S.built vessels. Clay has assisted clients in vessel ownership and operations in the Jones Act coastwise and Great Lakes trades, and the U.S. fisheries, in work that has included Title XI and CCF program use in citizen and non-citizen vessel lease financings. He is retained by bank and leasing company owner-lessors, and by law firms, as special counsel for structuring and providing opinion advice on the two MARAD programs and citizenship requirements for the ownership and operation of vessels in the U.S. domestic trades. You can contact Clay at Cook@CookMaritimeFinance.com.
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