Dream Yacht suspending Guaranteed Charter Income payments

[belizesailor]

Originally Posted by bstreep

The OP hasn't posted since post #3...

Typical, but I bet this goes on for another 20 pages! [emoji6]

[AndrewA2]

Originally Posted by bstreep

The OP hasn't posted since post #3...

He is using his stealth ninja skillz to travel across countries to go get is boat ... shhhh

[Vasco]

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.

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."

Thanks. Can always rely on you to get the facts.

[Montanan]

https://www.sailonline.com/boat-owne...boat-ownership

Layman's guide to charter boat ownership, a.k.a. charter boat ownership for dummies.

Under the typical ownership arrangement the charter company pays to the owner monthly installments that annually "guaranteed" amount to about 9% of the purchase value of new boat which is intended to cover the owners mortgage payments and perhaps a bit of return. That payment is the funds that DYC appears to be deferring for at least six months. I say at least six months because the circumstances have a longways to play out. If the deferment of the guarantee is for six months then the owners are looking at about 4.5% of the purchase value of their boat being deferred in receipt of payments.

[contrail]

"KKR, the owner of Moorings/Sunsail purchased the company in 2017... A few months later they lost their two most profitable bases in BVi and SXM. Fast forward to 2019, and they lost their Bahamas operation... Now this... I wouldn't be surprised if KKR cuts their losses here.

The money in charter companies is on the sales side. That means yacht sales revenue. The actual charter operation is usually a loss leader to a certain degree."





It must be said that the BVI base, at least, has made its way back to the forefront, not only with recovery but with many improvements, as well! No idea about SXM and it's probably way too early for the Bahamas. But, the Tortola base is looking pretty good!

[a64pilot]

If they don’t own the boats, how do they make money selling them, is their commission that high?

[KC375]

Originally Posted by a64pilot

If they don’t own the boats, how do they make money selling them, is their commission that high?

The sources I've seen suggest 10%...on the entry into the fleet and sometimes on the way out.


1200 boats, 5 years in fleet, 240 boats a year, $400,000 a boat 10% commission...$9.6 million...about the same magnitude as FP's reported Net for last year....


That might explain FP's interest in DYC...especailly as FP was loosing out to Lagoon and Lepoard in other charter fleets.

[letsgetsailing3]

Originally Posted by mvweebles

Just get the boat even if your standing is questionable. I'm sure you have usage rights - take the boat and don't return. Let them come after you. Believe me, coming after you would be close to the bottom of their list right now.

Protect yourself.

I don't really even understand this comment.

Dream Yacht doesn't own your boat, and can't sell it. But they are providing a slip in the mean time.

Given the world is shut down for the moment, what are you going to do with a boat right now? Other than create other problems for yourself?

Maybe I'm missing something, but assuming you could get to the boat (which you can't) what are you protecting yourself from?

[jmschmidt]

Like someone said Force Majeure can work both ways even though your Dream Management Agreement may not say that. It stems from the Doctrine of Economic Frustration from which the concept of bankruptcy arose. A person cannot be forced to do something that is an economic impossibility. You did not mention in what Dream base your boat is located and what flag she flies. These may be key if both are US. If in some foreign location your options may be limited or nonexistent.

One thing is certain the charter yacht business is dead for the foreseeable future. If all the dying companies were made whole tomorrow it would take months before any customers showed up. Ditto with the airlines.

[IAmGroot]

Originally Posted by bstreep

The OP hasn't posted since post #3...

And that was about 26 hours ago and he said he was going to go crack a beer. And here we are on page 6 of responses. Jeez, give the guy a break.

There are a lot of interesting ideas in here but at the end of the day we are all in the same boat, so to speak. Vacationers cannot get to where they want to go, OP cannot get to his boat, and Dream Yacht is probably not sitting on a huge pile of cash that they can dole out while this mess gets cleared up. From a number of other threads in this Forum, even if OP could get to the boat, it is quarantine-time wherever you go.

I think the folks who have mentioned "force majeure" here have hit the nail on the head, and I suspect that clause is going to be utilized by a LOT of companies and individuals in the coming months. And then when folks go to consider deals with Dream Yacht, Moorings, etc. in the future, this is just one more thing to put into the risk vs. reward equation, along with hurricanes, earthquakes and rainy days of sailing.

I had a boat in the Chesapeake with Dream Yacht about 7-8 years ago and it was a recurring tradeoff between that income that made the B.O.A.T. a bit more affordable for my family to enjoy, and watching chartering yahoos destroy it with carelessness or inexperience. It's a math and statistics and risk problem - and sometimes the wrong end of curve makes its presence known.

All that said - if I had a floating escape pod right now...I would be sailing SOMEPLACE!

[valhalla360]

Originally Posted by ol1970

I can add this tidbit. We were in Dusseldorf this year and sat with the Dream Yacht guys to go over the program and get pricing just for the hell of it. The came back with several formal proposals under the guaranteed income program.

I responded back with a bullet point list of questions, a number of which were directly related to this exact scenario. Their honest answer back to me was, yep there is risk and you can get screwed...but hey don't worry that will never happen! Just be happy and start boating.

Well now anybody who signed on with them in the past few years is in a real world of hurt. Your boat has instantly depreciated by six figures, there is no income, DYC will keep it in charter for 1 or 2 more seasons and you cannot do anything about it. It will be worth even less that they tried to coax you into believing when you signed on the dotted line. Most owners don't really want the boats they put into charter when they are done because they are not owners versions, they are max cabin and head versions. This season is done, there will be zero cruising between countries without quarantine.

The honest response i received back that "yep the risk is all on you, and there is no real guarantee at all so dont fool yourself" from DYC convinced me this would be a terrible financial decision with way too much risk in an undercapitalized business. This will have a ripple effect for years, and I cant see how a person with common sense would sign up for this in the next few years. DYC is toast, I'd get your boats out so you can at a minimum salvage some level of your capital.

I've pointed out a number of times on various threads. If it was really profitable (especially taking risk into account), they would buy their own boats and charter them.

There actually may be some deals coming up. I listened to the schpell at the boat show a couple times. They wanted 20-30% down, so while you won't be seeing boats selling for a quarter of the new price, you might be seeing 30-50% off depending on much equity they have. Also some owners may throw in a bit of their cash at the deal to escape.

[mvweebles]

Originally Posted by letsgetsailing3

I don't really even understand this comment.

Dream Yacht doesn't own your boat, and can't sell it. But they are providing a slip in the mean time.

Given the world is shut down for the moment, what are you going to do with a boat right now? Other than create other problems for yourself?

Maybe I'm missing something, but assuming you could get to the boat (which you can't) what are you protecting yourself from?

This company (i) breached an agreement; (ii) does not have financial strength to meet their obligations; (iii) has physical possession of a valuable asset that requires upkeep and maintenance; and (iv) apparently made no effort to communicate other than sending a letter declaring their intentions. I see nothing but down-side risk for the OP. Mechanic's lien from unpaid subcontractors, inflated claims for expense reimbursement (e.g. keeping their staff billable on meaningless maintenance tasks), mismanagement, swap of parts from OP's boat to another, etc. There's a reason lenders repossess/foreclose on assets - yes, to salvage the asset, but also to separate the bad-actor borrower from the asset to prevent further value erosion.

I fully understand current circumstances make it difficult - perhaps they have friends or contacts in the area who can assist. The alternative being stretched on this thread is to sit at home, find a lawyer, file a lawsuit, blah-blah-blah. As if that's easy now for the same reasons. Or you can sit back and hope this works its way out. It's now a cliche, but 'hope is not a strategy.'

Peter

[theDangerz]

Im honestly shocked that anyone would be talking about trying to file a lawsuit over this (right now). Not only is it highly unlikely to do any good whatsoever... but the deal on the table isn't actually so bad.

Look around. The entire system is failing globally.
As we sit here on our boat we are getting notices from renters back home that they cant pay rent. Is that a breach of contract? Of course!
But they have no other option and i'm not going to sue or evict any of them because they physically cant go to work... so how would they pay rent? Or how would a lawsuit help them pay rent?

Sadly, the upstream result of that is that I cant pay my mortgage (for long) so I have to report that to the lender. Am I breaching that contract - yes, but i also have no other option and all i can do is hope they are willing to work with me so i dont lose the home/investment.

Ive been on the phone for 2 weeks seeing what's possible there... and i can tell you that right now if the bank offered to simply suspend payments for 6 months and extend my loan by that same amount i would JUMP on the chance!!

The entire world's in chaos. People are literally struggling with life and death and/or paying for their next meal.
Much like our situation, DreamYacht has no guests, meaning no rents/income...
A 6month extension hardly seems like the biggest fear in this state of affairs (and frankly, so should the prospect of losing my home).

Im not sure where the boat is located, but if I were in this situation I would be more focused on trying to find out the plan for hurricane season. The season is coming rapidly for all of us, and as we are VERY aware our old plan for protecting the boat (and remaining insured) is no longer possible because Grenada (and all other islands) has closed its borders.

For DYC and other charter companies... not only may the old hurricane plan be reduced/gone, but the number of onsite employees may be reduced and while i hate to be the one to say it... they may be starting to think that an insurance payout looks pretty good right now.

Assuming it's located somewhere you can no longer fly in to sail the boat away on your own... I'd be a LOT more likely to take the human approach (be calling and offering to help rather than threatening to sue). Like it or not we're all in this together and I can all but guarantee that whoever is getting paid (or not) to tie the lines on that boat when the first storm comes have a lot more to worry about and a lot less to gain right now than any of us typing away here.

[DavidMRea]

They're still advertising their charter holidays, but I assume they're not taking bookings. /your boat's going to have less use. My question to them would be asking for reassurance your boat was being well looked after

[a64pilot]

Originally Posted by valhalla360

Also some owners may throw in a bit of their cash at the deal to escape.

Just about every owner will throw in quite a lot of cash, and there is lies a large portion of the problem, many can’t, they don’t have the cash, these are often the ones that won’t come down from their jacked up asking price. They don’t come down cause they can’t. They have to get X amount of money so the boat sits and not a dime is put into it, maybe the slip rent goes unpaid and eventually it’s repossessed.
When I was boat shopping in I guess 09, a Broker I spoke with told me that at every closing he attended now there were two checks written, I didn’t get it so I asked. One from the purchaser of course and the second from the seller to cover the difference on what was owed, which was considerable.
Everyone was upside down on their loans, at least those that were selling were. People that weren’t, weren’t selling. They were financially sound and didn’t have to, and weren’t selling as the value of the boat had dropped drastically.

Some boats in Charter are there because the owners are overextended, they saw the Charter as a way to get a boat that they couldn’t afford to buy.
They will be trying to sell soon maybe, but you won’t find a steal because they don’t have the assets to cover the difference in what is owed and the steal it price.

If there are going to be steal it prices, they won’t come until a year or so, after the bank repossess some and your buying from the bank.