Business Plan Proposal - Acquisition of 12 Containerships

7474 Words30 Pages
Cass Business School

Academic Year 2005-2006

MSc Shipping, Trade & Finance MSc Energy, Trade & Finance Academic Year 2005 -2006

Business Plan Proposal:
Acquisition of 12 Containership vessels to participate in the “Motorways of the Seas” European Union Programme.

Group 17

International Commodity Trade Coursework -- Business Plan

Cass Business School

Academic Year 2005-2006

Table Of Contents
EXECUTIVE SUMMARY..............................................................................................................................2 INTRODUCTION............................................................................................................................................3 HISTORY: WHAT IS SHORT SEA
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The company’s goal is to provide regular sailings from the port of Antwerp to the port of Bilbao in order to alleviate the traffic congestion caused by the moving of containers by road and rail. Based on our research and projections, the tonnage capacity of container vessels in the EU in the near future will not be adequate to satisfy demand for shipping. By entering the shipping sector and establishing our presence in the specific route, we anticipate gaining substantial profits from the rising demand for shipping services. Furthermore, the quality of our vessels and the quality of the services that we plan to offer will offer us a significant competitive advantage over our potential competitors in the sector. The anticipated EU programme will also be beneficial to our operations, since it will increase demand for shipping services, which promote environmental friendliness and cost & time efficiency and it will offer incentives for the construction of better infrastructure, which in turn will enable us to provide an even better service. The project demands $175m with a Debt to capital of 60%. The cost of Debt is 6.5%, a cost of capital of 12%. The break even TC Rate is $ 6,825 on 2009. This project gives a NPV of $30.9m through the Discounted Free Cash flows to the firm and offers an average return on Equity of 13%.

International Commodity Trade Coursework -- Business Plan

2

Cass Business School

Academic Year 2005-2006

Introduction
Eurokout

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