Noble & Company is aiming to raise up to £4.7m for its Abbey Shipping enterprise investment scheme (EIS).
The EIS gives investors an opportunity to invest in a Romanian-built double-hulled ship, the Santa Ana, which will be used for the transportation of oil products. The ship is valued at $22m and 75 per cent of the purchase price is being raised through a bank loan with a repayment period of seven years. It is currently at sea, transporting gasoline, jet fuel and kerosene, so a physical inspection of the ship has not yet been possible.
Abbey Shipping has negotiated an initial charter lasting 11 months and 29 days with Santa Ana Tankers, which will commence when Abbey Shipping takes ownership of the Santa Ana. After this, the ship will be available for charter and will be assisted in this by Pacific Basin UK for a fee of $90,000 a year. Ship management company IndoChina UK will maintain the ship and supply crew for a fee of $102,000 a year.
As well as EIS tax reliefs, investors in this EIS could benefit from the tax advantages granted to shipping companies under the UK Tonnage Tax rules. Investors also get a degree of asset backing, since the ship can be sold to produce capital gains.
However, this EIS is likely to be of interest only to investors who are prepared to take high risks. The charter market is cyclical and dependent on factors such as freight rates, which could fluctuate and impact on the ship's earnings. There is also no guarantee that further charters will follow, since demand for oil tankers is related to demand for oil products, and this would affect profits for shareholders.