Mr Emeka Akabogu, Senior Partner, Akabogu Law Firm on Friday said that most ship financing transactions ended up in the books of the Asset Management Corporation of Nigeria (AMCON).
Akabogu disclosed this while giving an overview of ship finance, in a webinar on “Nigerian Ship Finance, Loans and Recoveries”.
According to him, most of the shipping transactions that end up in the books of AMCON are as a result of operation issues.
“Presently, Nigerian ship finance market is faced by what can be defined as an aversion to financing ships by many financial institution.
“This is primarily as a result of relationship they had in the last few years as regards shipping transactions they had financed.
“The portfolio of many banks as far as ship financing is concerned have gone toxic and the reason why the transactions are on the books of AMCON,” he said.
The lawyer noted that AMCON had taken over the ships due to default by the shipowners.
Akabogu pointed out that the practical risk management steps for ship finance transactions had to do with due diligence undertaken to ensure that incumbrance attached to the ship were not in existence before takeover.
He listed some of the incumbrances as lien which could be claimed by crew members or in respect of wages claimed by crew members, ship repairs lien, or lien arrest even before the ship was put up for sale.
Akabogu said that the responsibility of the person acquiring the ship was to make sure that elaborate search to know the claims made on the ship was done.
“Ship owners need to undertake full disclosure of the existence of potential claims because when that is not done, it becomes difficult to put up a defence.
“At the point of purchase, the buyer should exercise due diligence to ensure that he is getting the right value for the ship,” he said.
