Moore Stephens Envisages Increased Pressure for Incipient Impairment in Shipping

(Press Release)
Monday, July 30, 2012

Accountant and shipping industry adviser Moore Stephens says it expects to see an increase in the sort of pressure recently exerted on shipping companies by the US Securities and Exchange Commission (SEC) to make disclosure when the market value of their vessels is less than their carrying value.


The pressure for this type of disclosure, often referred to as ‘incipient impairment’, has been reflected in the 2011 filings of many SEC registrants. Moore Stephens partner David Chopping says, “The SEC has seen impairment charges in the accounts of a number of shipping companies in the last few years. But it has apparently not seen quite as many as it might have been expecting. It is easy to understand why the SEC, and others, might consider disclosure of market value to be useful information and want to see it more widely disseminated. It is more objective than valuations based on management estimates, it is more comparable across companies, and it sets benchmarks against which companies’ own policies can be assessed. Indeed, for some parties, the information might seem far more important than valuations based on projected future income streams.

“At the same time, it is equally easy to visualise objections to such disclosure. Values are to be determined on an unfixed basis, so are arguably of only limited relevance where vessels are fixed for fairly long periods with high-quality charterers. Similarly, while values may look comparable, if the fixture position differs significantly, then such comparability might be considered spurious. And even if a vessel is operating in the spot market, or a fixture is going to be ending shortly, whilst other objections might be less compelling, there are still concerns about the volatility of market values. How relevant is a valuation at a point of time in a volatile market where an asset might have many years still to operate?

“Nonetheless, it seems very unlikely that the SEC will change its mind and decide that such disclosure is not useful. It is far more likely that other bodies, and indeed investors, will start expecting to see such information. This can happen without any need for changes in the rules, and indeed the SEC has not explicitly changed the disclosure requirements. It seems to have relied more on the ‘Al Capone’ approach of a kind word; everyone already knows it has a gun!”

 


Finance

Canada May Ask Far-offshore Drillers to Pay Extra

Canada may ask oil companies to contribute to the hundreds of millions of dollars or more the country has to pay to an international body if they drill far offshore,

European Owners Lead in Buying Up Secondhand Tonnage

With European owners leading the pack in buying up vessels, the sale and purchase market appears to have been notably active in recent years, reveals Clarkson Research Services Limited.

Monjasa Bags Credit Facility from Société Générale

Danish bunker fuel supplier and shipping firm Monjasa has signed a credit facility with French bank Société Générale for USD 80 million.    A statement from

Government Update

US Offshore Lease Sale Yields $18 Mln in High Bids

Today’s U.S. oil and gas Lease Sale 248 garnered $18,067,020 in high bids for 24 tracts covering 138,240 acres in the Western Gulf of Mexico Planning Area, announced

Another Hurdle for The Ocean Alliance

Commissioner William P. Doyle of the U.S. Federal Maritime Commission today voted in favor of requesting additional information from The Ocean Alliance parties.

Canada May Ask Far-offshore Drillers to Pay Extra

Canada may ask oil companies to contribute to the hundreds of millions of dollars or more the country has to pay to an international body if they drill far offshore,

Insurance

Investors to Acquire $1.5 bln Shipping Portfolio from NORD/LB

NORD/LB Norddeutsche Landesbank and KKR Credit have reached an agreement by which, subject to completion of certain conditions precedents, KKR Credit, together

Hong Kong Shipping Group Wants Aid to Arrested Ship's Crew

The Hong Kong Shipowners Association (HKSOA) on Thursday called on the city's authorities to provide assistance to the crew of a Hong Kong-flagged coal ship off

Grounded Bulk Carrier Refloated in Washington

The U.S. Coast Guard is responding to an incident involving a motor vessel that grounded in the Columbia River near Skamokawa, Washington, Friday night.   The motor vessel Rosco Palm,

 
 
Maritime Careers / Shipboard Positions Maritime Security Naval Architecture Navigation Offshore Oil Pod Propulsion Ship Electronics Ship Simulators Shipbuilding / Vessel Construction Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.0838 sec (12 req/sec)