Selling Equanimity – not an easy task

Razak Ahmad, The Star

With the Admiralty Court granting permission to 1Malaysia Development Bhd (1MDB) to sell Equanimity, the process of finding a buyer for the superyacht can now start.

One option is to sell the vessel at auction, but Prime Minister Tun Dr Mahathir Mohamad has indicated that the government plans to invite bids for the superyacht instead.

The company, which values the Equanimity at US$175mil (RM716mil), said the usual sale process of a yacht would begin with the seller engaging a broker.

VesselsValue’s superyacht division head Sam Tucker said the broker would market the vessel through a variety of media outlets including print and online, as well as via email to his counterparts.

“If buyers present themselves, then the survey and negotiation processes begin,” he said, adding that vessels could be on the market for years before they could be sold.

One special characteristic of selling a yacht involves ringing a bell on the ship when a bid is received.

Dr Mahathir, during a media conference after inspecting the Equanimity on Aug 11, said that the superyacht had a bell that could be rung when a bid had been made.

Tucker explained that every ship longer than 12m in length, which would include the 92m-long Equanimity, must have a bell on board.

The historical purpose for having a bell is to mark the time and to signal changes in watch systems.

Nowadays, the primary use for a bell is to comply with the International Regulations for Preventing Collisions at Sea, which is governed by the International Maritime Organisation.

In restricted visibility conditions such as fog, a ship must also sound its bell every two minutes.

“A bell is also used to mark a ceremony or occasion, in this case accepting a bid,” said Tucker.

On current market sentiments for superyachts – which are defined as yachts over 24m in length – Tucker said there had been no change, adding that superyachts had a small number of buyers.

He said a superyacht called the Anastasia, which was built by the same shipyard as Equanimity but is slightly smaller at 76m, recently sold for its asking price of €67.5mil (RM321mil), in line with market sentiment.

Asked whether the Equanimity would be able to fetch a sale price near or equal to its estimated value, Tucker said it should, provided that the vessel was in good condition.

“If the vessel is sold quickly, for example, via auction, we would expect to see a lower achieved price than if this vessel was marketed and sold organically.

“The fact that this vessel has been in the press recently and not necessarily for the right reasons, might encourage buyers to put in lower offers,” he said.

Keeping the Equanimity in shipshape condition will be an important factor in fetching a good price.

It is understood that the first year of depreciation for yachts is 20%, another 5% to 10% for the second year, another 5% to 7% for the third year and then about 5% in the subsequent years.

However, Equanimity (Cayman) Ltd, a company which is claiming ownership of the vessel and which is linked to fugitive businessman Low Taek Jho, alleged that the superyacht was being kept in poor conditions.

In a statement on Friday, the company claimed that the Equanimity is running nonstop on generator power, which it said was harmful to the vessel.

In addition, the company said the Equanimity was docked in a “hazardous environment” in which toxins such as water pollution and nearby smoke would greatly damage it.

Asked on the effects of running a yacht for long durations on generator power, Tucker said there was no specific risk to the vessel.

He said a yacht of Equanimity’s size would need up to three generators, plus an emergency generator, and running these 24 hours a day was not a problem.

Often a vessel of Equanimity’s size would struggle to find shore power that was sufficient for the electricity demand so it would run its generators regardless, he explained.

“So long as they are maintained per manufacturer’s recommendations, there should be no problem, and the resale value should not be affected,” he added.

On the effects of alleged water and smoke pollution on the Equanimity at the Boustead Cruise Centre in Port Klang, where it is currently berthed, Tucker said water pollution would not cause much harm to the yacht.

“The impact that it will have on the yacht is that the engineering department will have to clean the sea strainers, sea chest and filters more frequently,” he said.

The deck crew will also have to regularly clean the waterline of the vessel, a task that is usually routinely performed on a vessel of this size.

Tucker said smoke and air pollution could adversely affect a yacht’s condition in that it would harm the paint work if left unclean.

“As long as the crew routinely clean the vessel there should be no long-term impact on the vessel,” he said.