 Djibouti Code of Conduct signatories join forces for security
November 21, 2024
Signatory States of the Djibouti Code of Conduct/Jeddah Amendment (DCOC/JA) are working to develop a framework for regional coordination to tackle shared maritime threats.
The DCoC-JA is a regional initiative to combat piracy, armed robbery against ships and other illicit maritime activities in the Western Indian Ocean and the Gulf of Aden. A two-week workshop (10 to 21 November), hosted at the Jeddah Academy for Maritime Science and Security Studies in Jeddah, Kingdom of Saudi Arabia, brought together representatives of governments, regional maritime centres and partner organization. Delegates discussed ways to enhance cooperation, communication and coordination among maritime security entities, both nationally and across the region. They developed terms of reference for new DCoC sub-working groups, focused on the following specific thematic areas: Port and Ship Security; Protection of Vital Coastal Installations; Illegal Unreported & Unregulated (IUU) Fishing, and Maritime Environmental Protection. |
ah.. 65 ish is high |
agree 60p.. chart breaking out... love some more good news to help it on its way ... at 60p we are in blue skies? all time highs? |
Series of repeat chunky buys today, while the sells are random sizes. 60p likely this week imo. |
Thanks, LaV
I particularly appreciate the 'edit' footnote !
Much appreciated.
ATB |
Extrader
I don't know what Uk government information that is referring to, but UKEF have a range of products. The one in question for Bakamla is a government to government one which can be quite complicated. The Danish company which put up a satellite in the summer based on a contract with the Indonesian fisheries ministry is still waiting on theirs, despite it being 'approved' six or so months ago. I think the issues with Bakamla are several.
First is Bakamla's previous problem with corruption almost as soon as it came into existence. Second is the relative size of the project compared both to Bakamla's normal budget and to SRT's balance sheet. Third is the rather detailed due diligence required to ensure that there has been no corruption. This is not helped by the Philippines situation, but according to UKEF application forms you have to be convicted of a corrupt activity for this to kick in. And also in the Philippines case there does not seem to be a suggestion of corruption in the UK sense, more that the Philippines has been disadvantaged financially by losing the French loan and increasing the project cost for the locally financed version.
Size would be an issue with Kuwait as well, but I don't see that it has taken any longer than initially expected. I doubt that the whole process takes such a short time in any case - all these bond support guarantees have to go through the guaranteed bank and be approved there first.
Edit: I actually think that the Kuwait contract will reassure UKEF in respect of the Bakamla one. A small UK company that gets one enormous contract might require investigation on the grounds of capability, but if a second country signs a similarly large one with the same small UK company with some serious competitors involved as C5 mentioned (Airbus and Leonardo) then it does give comfort that the small UK company has actually got something they want and at a fair price. |
Ah OK.
Dependent on my phone atm.
Another Q, though re UKEF :
.."According to UK government information, a UKEF (UK Export Finance) approval typically takes around 1 to 2 weeks to process, with the decision usually communicated within 7 working days; however, more complex cases might require additional information and could take up to 2-3 weeks to finalize."
First Bakamla, what's the apparent delay -10 weeks now? - with Kuwait?
If there's an explanation that I've missed, grateful if you would indulge me and repeat it.
TIA |
Extrader
If you listen to the link provided by Owenski ... |
.."The OI loan is expensive, but I doubt if the share price would be at £1 without it..'
Could you clarify, pls?
My screen has the s/price at around half that.
?
Cheers |
I will also be at the Centurion Wed night, all being well, would be good to have dinner also at 6.30. Hope to see a few regulars there. Will only be my 2nd SRT AGM but have been invested for what seems like half a generation.. |
Very interesting Owen. He resonates quite strongly with what I felt at the time, viz if SRT's offering is the only one in town then Kuwait has nowhere else to shop and could have been made to wait until the UKEF had provided the 80% cover. The OI loan is expensive, but I doubt if the share price would be at £1 without it. Maybe had Kuwait waited and the Bakamla project had started it would be. |
Amati Global commentary on SRT @ 42:35 - |
My wife and I will be staying in the Centurion and having Dinner at 6.30pm. We would be pleased to sit with other shareholders, actual or potential. |
I will be at Centurion Wed night if any one else is there and fancies dinner? |
Hi LaValmy,
.."It seemed pretty obvious that SRT expected UKEF to take some time to issue cover for this. At the time it was stated that it was a different and shorter process compared to the Bakamla loan. That is the one I would like clarity on as it is impeding progress. The OI issue isn't, though I will ask what the hold-up is."
Thanks on both counts.
."More than likely it would involve an extra set of fees and OI may have to deposit the cash in any case.."
In the context of what Ocean has achieved by this move, an extra set of fees is irrelevant, IMO.
Ocean was able to mobilize $ 21.4m 'overnight' (I may be exaggerating) to cover an urgent need....I don't get the impression that it's at all squeezed.
Banks tend to consider contingent obligations-such as guarantees - more lightly, with Basel bank risk weighting connivance/support reflecting this, precisely because they're not as 'absolute' a credit problem : there's usually some wiggle room over interpretation or time to negotiate, whereas with cash, 'when it's gone, it's gone'....and, for balance, on the other side 'possession is 9/10ths of the law'.
In my limited -but intense- experience.
ATB |
Extrader
I just spotted your post about Santander's potrential exit. I doubt that they mean winding down their presence rather than selling up so assume that it would be business as usual. |
Extrader
I am not too bothered about this issue and I don't think there is any incentive for OI to be stalling on replacing their cash with a guarantee from their bank to Santander (which I think is what is meant by 'on OI's behalf'). More than likely it would involve an extra set of fees and OI may have to deposit the cash in any case. Whatever, it really has no impact on SRT at this stage and they would have to pay OI for the guarantee as opposed to interest at 0.75%.
It seemed pretty obvious that SRT expected UKEF to take some time to issue cover for this. At the time it was stated that it was a different and shorter process compared to the Bakamla loan. That is the one I would like clarity on as it is impeding progress. The OI issue isn't, though I will ask what the hold-up is. |
PS
Today's FT has this headline
JANUARY 19, 2025
Santander considers UK exit amid frustrations with high street banking
Spanish group reviewing its presence in the country as returns lag other markets
Any difficulties SRT (or Ocean) may be experiencing with Santander may not - necessarily - be of Santander's making :
In a former life, I helped my then employer bank exit a country, in stages : I exited one centre ...and then got promoted ( ;-<) to exit the other.
Part of the process involved is 'de-risking'...and not taking on any fresh, 'complicated' commitments.
SRT may just be caught up in a 'de-complicating' strategy not of its making.
But-if that's what is happening - the timing sucks.
Maybe another question for the AGM.
GLA |
Hi LaValmy,
.."To be a bit picky, it is Ocean Infinity that is supposed to replace the cash collateral with a bank guarantee. SRT is then supposed to replace that with the UKEF and their own resources within the timescale you mentioned. Maybe OI has found it difficult to get a guarantee that does not require them to post cash collateral in turn. If so, the cheaper option all round would be to leave the position as is."
Have you been told this by the company, pls, because the bit in bold sounds odd: it's SRT that has a credit issue and has to cash-collateralise its contingent obligation (and doesn't have the cash to do so) not Ocean (which evidently does have cash and/or adequate credit line(s) since it stumped up the money in the first place).
I would expect the structure to have been as follows :
(1) Client requires a PB to be lodged on contract signing;
(2) Contractor normally arranges for his banker (Santander?) to issue the PB;
(3) Banker is unwilling to do so (outwith Contractor's credit limit)and / or credit approval will take time);
(4) Given urgency, Contractor approaches Ocean and gets a quick cash loan, with conditions attached;
(5) These include loan int rate; fund-raise; repayment terms incl default (euphemistically, 'delay') penalties;
(6) Ocean deposits $ 21.4m cash in escrow account (SRT/Ocean)with Santander, who immediately issues wholly secured PB;
(7) The plan (see below) was for Santander to accept (i) a replacement of Ocean cash for an Ocean guarantee and later (ii) replacement of the Ocean guarantee by SRT's resources + another guarantee- from UKEF- as and when the facility becomes available. What's the reason for the UKEF delay?
Cash is the best form of security, from a bank's perspective - it's what made a quick reply to this urgent need possible in the first place. It'll be slower to surrender for lesser security/more credit risk in a hurry....
The 16 Jan trading update confirms that there was still full cash collateralisation @ 31 December :
.." Gross cash balances as at 31st December 2024 were approximately £4.5m, excluding $21.4m held in escrow.."
This isn't what was supposed to happen, per the 28 Oct Finance Support Package RNS :
.."The OI guarantee is initially provided as a cash loan of $21.4m with an interest rate of 0.75% per month.
The loan is expected to be repaid by SRT with a period of approximately one month - 31 December is 2 months - and replaced with a bank guarantee on OI's behalf.[This wording doesn't make sense: SRT doesn't have cash to repay $21.4m, what it should say is that Santander will take an Ocean guarantee or (more likely, since it may not have a credit limit for Ocean) a *guarantee from Ocean's banker...and, on receipt of this substitute security, release the cash security back to Ocean.
Not to SRT, that's why it was in an escrow account: to recognise Ocean's involvement and to protect Ocean's interest.
The OI bank guarantee[* confirmed] itself will then be replaced within the next 6 months using a combination of SRT's own resources and UKEF export guarantee program. [ = replacement rate will depend on quantum available from UKEF AND SRT's free cashflow AND whatever extra credit- if any - Santander is willing to grant SRT in the meantime].
So it would seem that
(1) Notwithstanding the above, Santander credit approval to substitute Ocean cash for Ocean contingent hasn't come through as at 31 December. I'd like to know why. Has its approval process been delayed by SRT's changing requirements for other contracts? If that's not the reason for delay, what is/was?
Edit : See next post !
[There shouldn't normally be an issue at Ocean's bank end : it could send Santander a guarantee for $21.4m contingent on Santander's releasing to it the $ 21.4m ...and then deciding at leisure how much cash it would in turn release to Ocean. 'Cash is king' in credit matters.]
(2) Point (1) needs clarifying, (a) because SRT is presumably still paying 0.75% per month for the loan; (b)more importantly, the loan has already run 2 1/2 months and if SRT/UKEF haven't retired the Ocean guarantee fully in (now) 5 1/2 months, the penalty kicks in:
.."In the event that SRT does not replace the OI guarantee within 8 months, a further 4m warrants per month will be issued with a strike price equal to a 15% discount on the share price at the relevant time.
This isn't quite a 'death spiral', but it does give Ocean some perverse incentives.
(3) I think the point I raised on the 16th still stands :
.."Assuming this sequence is broadly correct, could somebody ask Simon for an update on where we actually are with the UKEF facility going 'live'.
We need answers on a number of basic issues, I hope someone at the Open Day/AGM will persist until we get them.
GLA and ATB |
Nice way to spend the weekend - fantasizing about future gains :¬)
Trouble is, I think the only credible bidder is now OI. If somebody else makes a hostile bid, it would, prima facie, be in the face of opposition from both the management and our 24% holder, which means it would only succeed if it were ginormous. At 3 or 4 times the current share price they'd be in with a shout, but who in their right mind is going to offer that? What would their shareholders think of it?
I think it likely that sooner or later OI will buy SRT, but from what I've seen they're pretty patient, and far more likely to wait for something to go wrong then step in with a helpful offer of assistance than to make a quick knock-out bid. |
I’d like to know what capacity the UK gov has for keeping critical businesses UK owned. Not that we have an SRT system installed here, so perhaps its only critical because it could be a genuine long term UK success.
Pretty sure if it was in the US, Trump would find a way to keep it there.
Seeing as Labour are supposedly trying to big up our future industry, perhaps they should back that up in some tangible way.
I certainly don’t expect our shareholder base to keep shares if they can see a decent profit. We’ve been short-termists for a long time. (I don’t mean the decade of regulars here) |
Significant volume breakout. Volume well over 2x 20 day average volume
Easy for buyers to push it up now on even low volume |
A £1 is not enough! Where have I heard that said before! |
My understanding is that Leonardo and Airbus missed out on Kuwait. What does Ocean Infinity want from SRT? It is clearly in pole position, if it wants SRT as a subsidiary, but there are some substantial shareholders to win over. At the end of the day, nearly all countries will deal with global defence companies, even Israeli ones. Would the UK gov seek to limit potential candidates?
If I was looking to capture SRT, I would launch a hostile bid on Thursday.(Why wait any longer?) Catch the board off guard and gain maximum publicity. A bid of £1 would probably land 15% of the shares. The bidder could then use that as a further launch pad, or else sell at a profit to the eventual bidder.
Simon is of the opinion that this BB is widely read across the world! |
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