Financial Communications in Distressed Situations

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Strategies for financial communications in distressed situations for shipping companies. Presented on February 24, 2010 at Marine Money Hamburg conference.

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Financial Communications in Distressed Situations

  1. 1. Communications Strategies in Financial Crisis Situations Richard M. Lemanski Marine Money -- German Finance Forum Hamburg -- February 24, 2010
  2. 2. The facts of life in a crisis • What can go wrong probably will go wrong • The world of the traditional silent shipowner is gone • Rumors fill the vacuum of silence (expect your constituencies to use rumors for their own agenda) • You are now in the business of “herding cats” • Communications strategy follows business, financial, and legal strategy • “The market will get better” is not an action plan!
  3. 3. Practical advice • Speak with one voice • Get bad news out early so it becomes old news • Use attorney-client privilege (where available) for drafting and analysis • Understand your disclosure requirements • Be accessible, but keep a safe distance • Know where you are in the zone of insolvency • Be fearless in giving feedback, even when it is not wanted
  4. 4. Practical advice (continued) • If you do not know the outcome, (if you can) focus on the process of how the outcome will occur • Attempt to frame the human element of the story • Level the playing field in terms of information flow – Get your share of voice • Organize the constituencies • Never forget that communications is ultimately about understanding the concerns, needs, and agendas of your constituencies
  5. 5. Shareholders Type Challenge • Controlling • Realization that they may no longer be in charge • Limited number (KG, KS, • Building a consensus private equity) • Dispersed group (public) • Maintaining creditability of management team • Avoiding lawsuits
  6. 6. Bondholders • Blood in the water can quickly attract the sharks • Can be your best friend in the end -- Often have a stronger interest in seeing the firm survive as a going concern than the banks (particularly if they are unsecured)
  7. 7. Banks • Can be just as deliberately ignorant as any shipowner in facing up to problems • Do not be afraid to ruffle feathers to get a real decision maker • They may be in very different positions and one may not be speaking for all • Often have difficulty realizing they are not the only ones in the capital structure • Often have difficulty understanding that they cannot have privileged information
  8. 8. Suppliers • If entitled to maritime liens, will attempt to “jump position” with arrests (which feeds the frenzy of the trade press!) • Like unsecured bondholders, also have a strong vested interest in your survival
  9. 9. Charterers/Customers • Do they have an alternative at same or lower cost? • Expect them to use your difficulties to their advantage
  10. 10. Employees • Bearing the greatest burden • The best are often the first to go • Cannot be fooled -- They often know the problem (and possible solutions) before you do
  11. 11. Media • Loves bad news and a financial crisis is bad news (headlines, conflict, drama, cast of characters) • Often interested in the “human element” of the story • There are differences in financial versus trade press
  12. 12. About MTI Network • Established in 1989 • The leading crisis media responder for the shipping / energy industries • International Network of 17 offices • Providing 24/7 media response, planning, training and drills • Some 7000 ships from 250 companies registered in service New York • London • Rotterdam • Oslo • Genoa • Athens • Paris • Singapore • Hong Kong Sydney • Tokyo • Sao Paulo • Dubai • Barcelona • Cape Town • Montreal
  13. 13. Client driven approach to now offer financial communications … with a difference Guiding philosophy that • financial communications is just as much about “managing expectations” as “touting what is being sold” • a structured financial communications program should leverage rather than consume the time of a company’s executive management • feedback from financial markets should not drive a company’s business strategy, but does provide an important feedback loop requires personnel experienced in: • shipping • financial markets • communications
  14. 14. ‘The Leading Global Communications Network serving the Shipping, Energy, Offshore and Transportation Industries’ New York • London • Rotterdam • Oslo • Genoa • Athens • Paris • Singapore • Hong Kong Sydney • Tokyo • Sao Paulo • Dubai • Barcelona • Cape Town • Montreal

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