RegionalSealinkProject

Presented by AIMS Ltd, Ghana July 2011

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RegionalSealinkProject

OutlineofPresentation 1. PurposeofStudy 2. BackgroundtoStudy 2 Background to Study 3. ValueProposition 4. Mission&Vision 5. DesiredResult 5 D i dR l 6. ImplementationofProject 7. SpecialPurposeVehicle a) TransitiontoImplementation b) Tasks

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Purpose The purpose of The Regional Sealink Project is to The Project determine the viability of improving regional maritime services by the establishment of a coastal maritime shipping service which thi d hi i i hi h this document shall refer t as t h ll f to Transnational Regional Maritime Shipping Company (RMSC). RMSC is designed to provide cabotage1, including both passenger and freight services, interconnecting West and C t l Af i d Central African St t States. Th objective i t i The bj ti is to improve the frequency of maritime services which will enhance commerce in and between the two regions.
1. Cabotage:Therighttooperatesea,air,orothertransportationservices withina particularterritory.
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Background The Project falls within the mandate of NEXIM, which is to support to the Nigerian Private Sector. Under the NEXIM Trade Support Facility the broad objectives, amongothers,areto: among others, are to: IncreaseNigeriastradeflowfromcurrentlevels; Deepenthepaymentsystem; Assist to achieve NEPADs goal of African Integration; AssisttoachieveNEPAD sgoalofAfricanIntegration; Enhancecapacitybuildingininternationaltradeand project financestructuring; Create job and investment opportunities thereby meeting the Federal Government economic reform g p y agendaof povertyalleviation.
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Background Supportfortheproject: Support for the project: NEXIM is a catalyst in the creation a regional trade andacompetitiveedgeexistsinthedevelopmentof themarketplacebyprovidingchannelsfor regional th k t l b idi h l f i l integration; NEXIM works in concert with ECOWAS Commission NEXIM works in concert with ECOWAS Commission and the ECOWAS Bank for Investment and Development; The Project is supported by the West African Chambers of Commerce and Private Sector Associations. Associations
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Background

In West and Central Africa, an efficient coastal sea transportsystemhasbeenidentifiedasacomplementary transportation solution to congested road transport systems, existing shipping lines and airlines inability to systems existing shipping lines and airlines inability to meet existing demand for transport infrastructure and services.

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Background

The lack of adequate transportation among states in West and Central Africa makes the cost of transporting West and Central Africa makes the cost of transporting peopleandcrossbordertradingquiteprohibitive.These costsareabarrierto: R i Regionalintegration;and li t ti d Freemovementofpersonsandgoodsinthesub region.

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Background

Presently, the cost of shipping goods by sea along the coastline is prohibitive because, in many the coastline is prohibitive because in many instances, goods between West African destinations are transshipped through Europe or SouthAfricabecauseofthenonexistenceofdirect S th Af i b f th it f di t coastalsealinks.

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Background

Costs are related to excessive transit time make Africa exportersnoncompetitive.TheseconstraintsmakeWest Africa transport and logistics costs one of the highest in theWorld. the World

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Background There have been initiatives in the past to study the There have been initiatives in the past to study the feasibility of a coastal shipping company operating between the ECOWAS members. Attempts at implementation of coastal services, h i l i f l i however, h have b been unsuccessful due to a variety of reasons which include, butarenotlimitedto: Undercapitalization; Mismanagement;or Politicization Politicization. Itisnowgenerallyagreedthattheprivatesectorshould drivetheintegrationprocess.
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Background

The Regional Sealink Project feasibility study has been undertaken by African Investors Management Services Ltd. Ghana (AIMS) at the Request of the Nigerian Export Import Bank (NEXIM). The contract to undertake the study was signed on February 24th 2011. There are two components to this study: ( ) (1) Technical Feasibility and a y (2) Business Plan.

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RegionalSealinkProject
Mission &Vision Mission RMSC will complement and improve existing transportation services offered by airlines, trucking and bus companies by providing additional capacity and bus companies by providing additional capacity and the alternative of ocean transport routes plied by modern efficient multipurpose vessels designed forregionalandinterregionaltrade. f i l di t i lt d Vision The vision of RMSC is to foster inter regional The vision of RMSC is to foster interregional maritimepassengerandfreightservicesasacatalyst to trade development in and between the sub regionsbecomingtheforemostcarrierintheregions. i b i th f t i i th i
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ValueProposition

Presentlytheinterregionalmaritimecoastaltradeis servicedbyinadequate,unsafe,oldvesselswithout regardtopassengersafety. RMCSisofferingasafe,secure,modernfleetwith g , , experiencedinternationalmanagementwhichshould havethecapacitytocompeteeffectivelyinthe regions. regions

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RegionalSealinkProject
ValueProposition Theunderlyingtechnicalaspectsofthisbusinessare reviewedatlengthintheTechnicalReportonRegional SealinkProject. Sealink Project Employmodernsecuremultipurposevesselsthat carrypassengers,freightandvehicles. Takeadvantageofmoderncommunicationstoassure passengersafetyandthesharingofinformation relatingtoscheduling. l ti t h d li

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RegionalSealinkProject
ValueProposition

RMSCalsoisofferingthecombinationofpassengersand cargo,whichisanattractivepropositiontowomentraders inparticularwhoaremorecomfortableaccompanying l h f bl theirgoods. Maritimetransportderivesitscompetitiveedgebyits capacitytocarrylargercargosthantrucksandairlinesat lesscost. less cost

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DesiredResult

Createaprofitableprivatesectorcorporationcapableof Create a profitable private sector corporation capable of delivering excellent cabotage services to West and CentralAfricaonaregularreliablescheduledservice.

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RegionalSealinkProject
DesiredResult RMSCwill: Open initial service at 10 ports with combined passengerandfreightservices; Develop interregional trade based on market Develop interregional trade based on market demand; Offereaseofmarketaccessibility; R Respond to the growth of regional markets food d h h f i l k f d securityaspirations;and Provide greater mobility of goods, persons and services.

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Implementation ManagementStrategy ManagementStructureisthatofaprivatelimitedliability company managed by individuals with extensive company managed by individuals with extensive internationalexperienceincabotage. It is structured to incorporate an internationally p y recognized technical partner capable of managing the routing,maintenanceandothertechnicalmattersrelated tobusiness. to business

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Implementation MarketingStrategy: M k i S Recognizeandpenetratethepotentialmarket composedprimarilyoftraders. composed primarily of traders Includethedevelopmentofanadequatebudgetto coveradvertisingandpublicrelations. Focusonexternalcommunicationsthroughvarious formsofmediaaswellasdirectsalesefforts.The initialthrustisdesignedtogaincustomerconfidence; i ii l h i d i d i fid Assurethattheimageisoneofsecurity,safetyand professionalism professionalism
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Implementation PricingStrategy: Pricing Strategy: Theportrayalofavalueformoneyproposition: qualityoftheproductand fareschargedbyinformalvesselsandairtransport. PricingFormula: Fixedpriceperkilometreusingparametersof: Fi d i kil t i t f Distance, Price, Product,and Quantity. Prices subject to discounts and premiums according to Prices subject to discounts and premiums according to demand.
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ImplementationofProject RoutingStrategy ThreeMajorMarketSegments: h k Segment1: FreetownConakryBissauBanjulDakar Combined y j freightandpassengercabotage Segment2: CotonouCalabarDoualaLibreville l b l b ll Combinedfreightandpassengercabotage Segment 3: Segment3: Libreville Dakar FreightOnly majorportsinrange
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ImplementationofProject FinancialStrategy: gy Initialinvestmentof$36,000,000isanticipatedto take3yearstobefullypaidin. RMSC will face loses in the first 2 years as it gets RMSCwillfacelosesinthefirst2years,asitgets organizedandfamiliarwiththevagariesofthe business. Profitismadeinyear3showcontinuestoshowa profitthroughyear7. Cashflowsremainpositiveindicatingthecapacityof p g p y thebusinesstorespectitfinancialengagements IRRisanticipatedat57%overthe7yearperiod

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ImplementationofProject The Projected Balance Sheet demonstrates that the j companycan: Withstand shocks such as civil strife or natural disastersafteryear3. Pay dividends from year 5 (if acceptable to the lender). lender) Respect long term obligations related to the initial p purchaseoftheshipswillbepaidoffbytheyear7. p p y y Have sufficient strength to selffinance additional vesselstomeetdemandfromyears4and5.
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ImplementationofProject EquipmentRequirements: Equipment Requirements: $36,000,000topurchasevessels,equipment,office spaceandotherinfrastructure $ 24 000 000 for working capital to cover general and $24,000,000forworkingcapitaltocovergeneraland administrativecosts FinancingNeeds: Financing Needs: Equity $36,000,000 DebtFinancing $24,000,000

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SpecialPurposeVehicle TransitiontoImplementation Timeisrequiredtoidentifyandselect: Time is required to identify and select: Management, QualifiedTechnicalPartner, Vessels and Vesselsand FinancingfortheRMSC. It is recommended that a Special Purpose Vehicle (SPV) It is recommended that a Special Purpose Vehicle (SPV) namedSealinkPromotionCompanyLimited

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SpecialPurposeVehicle TransitiontoImplementation SPCL as the founder, it will be absorbed by the RMSC , y onceestablished: PrivateSectorBusinesses,ShippingCompanies,Port Authorities, and International Financial Institutions willbeaskedtofundtheSPCLwiththeexitstrategy of it becoming the Regional Maritime Shipping g g pp g Company(RMSC); Funding of the SPV is distinct from funding the RMSC; Estimated funding requirements for SPV is $1.5 Milliondollars. Million dollars
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SpecialPurposeVehicleTasks ( SPCL )becreatedto: (SPCL) be created to: IncorporateandRaiseFundsforRMSC SetuptheHoldingCompanyandAffiliates. Id tif IdentifyandSelectManagementTeam dS l tM tT IdentifyandSelectTechnicalPartners InitiateAcquisitionofVessels IdentifyandSelectCountryLocation RegisterofRMSC IdentifyandSelectBestFinancingScheme Identify and Select Best Financing Scheme DesignProceduresforGoodGovernance IdentifyandSelectInitialInvestors
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SpecialPurposeVehicleTasks ( (SPCL)becreatedto: ) NegotiatewithGovernmentAgenciesandPort Authorities Modify and Update Business Plan based on ModifyandUpdateBusinessPlanbasedon additionalexperience ModifyandUpdateTechnicalReportbasedon: Pl Plannedregionalimprovementoftheports, d i li f h Needs related to setting up the loading procedures, Interaction between uniformed services such ascustoms,immigrationandpolice

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SpecialPurposeVehicleTasks SPVLegalFrameworkConsiderations SPV Legal Framework Considerations IncorporationRequirements ShareCapital C Cost Timing Name Shareholders

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SpecialPurposeVehicleTasks

Thank You

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