Dream Yacht suspending Guaranteed Charter Income payments

[Dr. Sea]

Originally Posted by mvweebles

Protect your asset and mitigate your losses.
.

This sentence from mvweebles summarizes the best advice. Forget the legal skirmish. As many have commented, that is a losing game. But what about mitigating losses and protecting your asset?

Mitigating. Not much you can do here, unless your boat is located in a place that you can go to it and use it while it is out of charter. At least you will be getting some value for your monthly investments. Some countries like BVI are absolutely closed to anyone who isn't already on the island, so you may not be allowed to go to your boat, at least for a while.

Is your boat really out of charter? Is Dream Yachts continuing to use it while paying you nothing? You need to find out. Even if you can't physically go to your boat, you need to contact someone on the island to find out.

There may be help from American banks if you have financed it through one of them. In California several banks are offering 30-90 day moratoriums on mortgage payments. If your bank is one of them, this could mitigate the financial crunch you will be feeling for the next 6 months. When I had a boat in the Sunsail fleet I set my mortgage payments to equal the guaranteed lease payment from Sunsail. I know how much it would have hurt to have to make these payments with no help from Sunsail.

Protecting. If Dream Yachts is floundering financially, it is quite likely that they are scrimping on yacht maintenance. This would be a significant concern of mine for a boat that I can't see and examine. Find out what they are actually doing to maintain your boat. Get someone on the island to check on your boat. Also insurance. Make sure that you have been personally in touch with your insurer. Don't accept any of Dream Yachts' assurances. They assured you monthly lease payments.

It seems reasonable to assume that Dream Yachts is in serious financial trouble or I don't think they would have taken this extreme step. The "optics," as the politicians say, are terrible. Dream Yachts has been presenting itself as an equal competitor with Moorings and Sunsail. Unless one or both of these follow suit and stop payments to their owners, Dream Yachts has taken itself out of the competition for the foreseeable future.

Good luck. Please keep us posted. I'm sure there are plenty of other CF readers who are keeping an eye on this situation.

[letsgetsailing3]

Originally Posted by mvweebles

Y'all assume there is someone to successfully sue (meaning they have money), that the OP has a leg to stand on, and the courts will act rationally. The boat is at serious risk. It is now in the hands of a company who has breached an agreement because they have no income. They can seriously jack you up. And they will to save their skin.

Get the boat. Now. Don't waste your time with lawyers and courts. Plenty of time later for that. The downside risk of leaving it with them far, far exceeds the upside benefit that they turn around and make you whole. How many local vendors do you think are not verging paid who will be in line in front of you?

If dream yachts doesn't hold the title free and clear, they can't sell your boat, scavenge it for parts, or trade it to pay their bills.

[jim King]

My boat is with Sunsail and, while we have not had word from them yet as to whether we will be getting a check this month, I know that their contrac is the Charter boat industry standard and is used almost verbatim by DYC. I'm waiting for word from Sunsail that I won't see a check this month and that my contract will be extended as you saw from DYC. I know the force majeure clause probably gives them an excuse not to send out a check and I don't see how they can do anything else given the circumstances (no charter money coming in to cover their expenses). I don't think any of the charter boat companies have deep enough pockets to keep afloat for long in a shut down like they are experiencing.
I am somewhat fortunate in that I paid cash for my boat and have no mortgage to cover. What you might do is to contact your mortgage company and ask for an extension to cover the time you are not seeing income from DYC. I'm sure yours isn't the first one they are dealing with in this crisis. Look for an extension from DYC as well as your mortgage co. and look for better times ahead when we can all get back on the water.
cheers,
Jim

[LF4]

First, I am really sorry to hear that others are going through this struggle. The financial burden must feel like a weight. I hope something can be worked out to the benefit of all.

But if that does not happen...

As a boater who doesn't own a boat -- it makes me wonder if there are going to be some slick deals on boats that were "over bought" by others that need to get out of their contract and relinquish the asset/liability (however you want to look at it)

Another question I have is this: What countries are currently closed to foreign nationals. Which ones are remaining open? I wonder if there are some slick deals on yacht charter to be had as a vacation.

[a64pilot]

The deals most want won’t materialize, that is on nearly new boats, sold cheaply, way under market.
The reason is, is that they will be owned by banks, and while I can’t explain why a bank will sit on a repossessed house and let it rot away until a few years later it’s trashed and truly next to worthless, but they do.
We have all seen houses that have been repossessed and sit and rot.
I bought a boat right after the fall of 08, and got a good price, but the steals just didn’t exist, and the ones that were steals, were junk, so at first glance they looked to be a steal, then you saw the boat.

Just like last year, many thought they could run out after the Hurricane and buy a new damaged Cat for $50,000 and fix it up for another $50,000. Maybe one or two did, but it was only one or two, and likely they had some kind of inside info.

[Montanan]

FYI:

A bit of information regarding DY's ownership and capital position.

Fountaine Pajot and the investor Next Stage take control of Dream Yacht Charter, world number 2 in yacht charter. The multihull yard and its partner want to accompany the development of Loïc Bonnet's company.

Briag Merlet
Published on July 31, 2017
Acquisition of majority shareholding
Next Stage, a specialist in equity investment in medium-sized companies, and the Fountaine Pajot shipyard have announced that they have entered into exclusive negotiations with the Dream Yacht Charter group to acquire a majority stake. This capital investment of ?11 million for Fountaine-Pajot and ?14 million for Next Stage is a first step in the group's long-term industrial support policy. It should be noted that Next Stage has already acquired a stake in Fountaine-Pajot in 2016.

The transaction is expected to close before October 2017.

Funds for further development
Dream Yacht Charter was created in 2001 by Loïc Bonnet. With a first base of only 6 yachts in the Seychelles when it was created, the company is now present in the main navigation basins of the globe, through a fleet of more than 850 boats positioned in 47 bases. With his partner Romuald Caillaud, Loïc Bonnet had until now succeeded in self-financing the company's development, whether through internal growth or external acquisition. The company, which posts a turnover of 90 M € in 2016, will now rely on its new shareholders to consolidate and pursue its industrial development, in a boat rental market in full mutation with the development of collaborative practices and boat clubs.

Synergies
By taking a stake in Dream Yacht Charter, Fountaine-Pajot takes a prime position in the boat rental market, where multihulls dominate. The rochelais yard is supported in this investment by one of its own shareholders. Synergies will emerge, as Nicolas Gardies, Managing Director of Fountaine Pajot explains. "This association with Dream Yacht Charter and NextStage is totally in line with Fountaine-Pajot's growth strategy. It reinforces our company's position in the rental world, where Dream Yacht Charter occupies a central place, particularly in the catamaran segment. This alliance will benefit from the remarkable dynamics of each of our two companies and the development of all possible complementarities."

[KC375]

Originally Posted by belizesailor

I doubt that DYC took this action without consulting legal councel. As others have posted, there is almost certainly a clause or clauses which allow them to do this. If so, they have in fact not violated the contract.

If the OP seriously wants to pursue legal action on this then he should have an attorney review the contract. I suspect he will find the above.

Legal review of the contract should also clearly define boat owner's options in this scenario.

Belize under normal course of business I think you are right that they would operate within their contractual obligations. And I'm confident they did get legal advice, which might even have told them they are not entitled to do what they did.

Once a business head towards a liquidity crisis / insolvency...well normal behaviour no longer applies.
If you look like running out of cash in weeks to a month or two you worry much more about cash than contractual obligations. If you don’t survive the trustee in bankruptcy will sort it out for you. If you survive long enough to face a few counter parties in court, well that’s a big win.
Ignore the contract, stop the cash going out the door, save the company, try to make it up later to the folks whose contract you violated.
Somewhere in that process the board of directors had better be getting their own legal advice as they may suddenly be on the hook for real obligations if they did not supervise management properly.

[Cadence]

I'm sure the OP isn't alone. My concern would be the financial ramifications of defaulting on a loan which sounds likely for many. I hope many have treated their investment as an LLC or whatever is the equivalent in their home country. So you lose the boat an whatever you have into it but your other assets are protected.

[KC375]

Originally Posted by letsgetsailing3

If dream yachts doesn't hold the title free and clear, they can't sell your boat, scavenge it for parts, or trade it to pay their bills.

I think you might substitute shouldn’t for can’t.
If they are in crisis, and are losing revenue from having two boats needing parts....it is very likely they will raid one to get the revenue from the other.


That's not likely now as no boats are going out but as busines picks up they will still be in a cash crunch

[KC375]

Originally Posted by LF4

First, I am really sorry to hear that others are going through this struggle. The financial burden must feel like a weight. I hope something can be worked out to the benefit of all.

But if that does not happen...

As a boater who doesn't own a boat -- it makes me wonder if there are going to be some slick deals on boats that were "over bought" by others that need to get out of their contract and relinquish the asset/liability (however you want to look at it)

Another question I have is this: What countries are currently closed to foreign nationals. Which ones are remaining open? I wonder if there are some slick deals on yacht charter to be had as a vacation.

There will likely be some good deals in the future.


As to vacation deals Noonsites has a pretty good run down of what countries are closed. The basic summary ALL OF THEM

[letsgetsailing3]

Originally Posted by KC375

I think you might substitute shouldn’t for can’t.
If they are in crisis, and are losing revenue from having two boats needing parts....it is very likely they will raid one to get the revenue from the other.

That's not likely now as no boats are going out but as busines picks up they will still be in a cash crunch

I don't think that's any more likely than a marina coming and stealing parts off your boat. It would be theft, they would be caught, and they would go to jail for that.

I suppose it's possible, but seriously, you've got bigger worries in this world.

You might as well get used to the idea that you're extending your contract for six months.

[sailcrazy]

Just so you know, in case you're thinking of coming and claiming your boat...if the boat is in the BVI, the country is not open to non-residents. If it's in the USVI or in Puerto Rico, incoming folks must self-quarantine for 14 days on arrival. And PR is on a 7pm-5am curfew. But having spent the past 6 full seasons here in the north-eastern Caribb on our boat, and currently on anchor in St Thomas (going no where fast!) ....I'd claim it as fast as you can! After 5 years, or 5+years, in charter, with the level on mx they likely spend (not) on your boat....are you sure you'd want it back at all?

[KC375]

Originally Posted by Montanan

FYI:

A bit of information regarding DY's ownership and capital position.

Fountaine Pajot and the investor Next Stage take control of Dream Yacht Charter, world number 2 in yacht charter. The multihull yard and its partner want to accompany the development of Loïc Bonnet's company.

Briag Merlet
Published on July 31, 2017
Acquisition of majority shareholding
Next Stage, a specialist in equity investment in medium-sized companies, and the Fountaine Pajot shipyard have announced that they have entered into exclusive negotiations with the Dream Yacht Charter group to acquire a majority stake. This capital investment of ?11 million for Fountaine-Pajot and ?14 million for Next Stage is a first step in the group's long-term industrial support policy. It should be noted that Next Stage has already acquired a stake in Fountaine-Pajot in 2016.

The transaction is expected to close before October 2017.

...

...

That is not completely good news for owners of boats in Dream Yacht’s fleet.

The good news is their counter party is a sophisticated financial player. That’s also the bad news. They will pull the plug without emotion if that is what the numbers say to do or if they can’t get additional funding.

Neither NextStage nor Fountaine Pajot have particularly deep pockets. NextStage stock is treading at its lowest since IPO and some 20% off its peak. Fountaine Pajot gets lots of extra leverage from Dream Yachts....when times are good drives additional sales volumes BUT when Fountaine Pajot’s order book stops growing is the same time Dream Yachts needs cash.

If FP has a robust enough order book AND they have been prudent in their capitalization they will get through this. (prudent capitalization is not the norm in boat builders)

[Bullshooter]

Remind me not to go into a contract buying a boat and putting it into charter.

That said, in the past I have read good reviews of DYC (tho I never chartered with them) and I don't think this is a scam. I think they are caught in the position of having NO business coming in due to the pandemic, and are just trying whatever they can to stay afloat. Not that it is fair to the owners, I understand that, but I can also appreciate the difficult spot that DYC is in.

Let's just hope it is only 6 months or less before the pandemic subsides and things start to get back to normal.

[Montanan]

DTC has about 950 vessels in its charter fleet which now is yielding zero revenue and which 45 marina bases are incurring costs. Certainly will be cutting back on their operating staff dramatically until the world settles as to quarantines but also until income and wealth returns so as to garner the disposable income to avail chartering customers. Their income stream will be cut to zero in the near term and then should be expected to be modest until prosperity returns, whenever that maybe.

The ownership programs they have vary considerably from "guaranteed" to "percentage participation". The only thing "guaranteed" in such a contract is that they will not pay you more than they bargained for, but if the company struggles financially then the "guarantee" will not be forthcoming.

DYC is basically a time share / rental recreational travel company. When recreational travel collapses such companies can collapse in rapid order and typically have little assets. They don't own their fleet for example.

Neither of DYC's majority owners have deep pockets so the ability to have major capital infusion into DYC from their present owners is likely challenged.

About Fountaine Pajot


Founded in 1976 by Jean-François Fountaine and Yves Pajot, the iconic brand FOUNTAINE PAJOT has been producing cruising catamarans since 1983. Thanks to its unique know-how in the area of designing and building comfortable catamarans, FOUNTAINE PAJOT has released 40 different models and delivered close to 3,000 catamarans to destinations all over the world. FOUNTAINE PAJOT offers a complete and up-to-date range of catamarans, both sailing catamarans (Lucia 40, Helia 44, Saona 47, Saba 50, Ipanema 58 and Victoria 67) and motor yacht catamarans (MY 37, MY 44 and Queensland MY 55). For fiscal year 2015/2016 (as at 31 August 2016), FOUNTAINE PAJOT had revenues of €70.6M.
Alternext Paris, ISIN: FR0010485268 — Symbol: ALFPC – Eligible PEA/PME Again data is available on FP.

About NextStage
NextStage is an investment platform created in March 2015 and listed on the Euronext Paris market (Compartment C) since December 2016. At June 30, 2017, it had an Net Asset Value of €160.4 million. NextStage specialises in Medium-Sized Companies (MSCs), which allows investors access to an unlisted and often inaccessible class of asset that drives growth and performance. The investments it makes are equity investments with little or no leverage over an unlimited time frame to provide funding and accompany for the growth of MSCs that work alongside visionary entrepreneurs. NextStage is backed by the know-how and stability of the asset management firm NextStage AM, which was founded in 2002. NextStage has already closed twelve investment transactions since its inception. It is governed by the tax laws for SCR.2 Its capital is held by prominent shareholders such as Artemis, Téthys, AXA, Ardian and Amundi. NextStage is grounded in an innovative and ambitious industrial vision whose aim is to accelerate the growth of top-flight MSCs around four long-term trends of the 3rd industrial revolution: the emotion-driven economy and the quality of the customer experience, the on-demand and sharing economy, the industrial internet and the positive economy (or green growth).
NextStage is listed on the Euronext Paris Compartment C regulated stock exchange (ISIN: FR0012789386, Ticker: NEXTS). Accueil -
One can readily obtain data on this company.