Cyprus Shipowner To List On Stock Market

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

29 September 2006

Cyprus ship-owner Cyprus Tanker Holdings plc (OTH) plans to list on the Cyprus Stock Exchange in November, raising CYP13m in an IPO, which it says it will spend on buying more tankers.

The company expects to be the first maritime stock to be launched on the new common trading platform between the Cyprus Stock Exchange (CSE) and the Athens Stock Exchange (ASE), which is due to go live in October.

The common platform, which has been talked about for years, has come to fruition after officials from both bourses met a year ago and signed a cooperation agreement. At the end of 2005, the total number of listed companies on the Cyprus Stock Exchange was 144. At year-end, the equity market capitalisation (excluding the Investment Companies Market), amounted to CYP3.2 billion (EUR5.58 billion), up from CYP2.0 billion at the end of 2004.

OTH was established in June, 2005, and owns three small tankers totalling 20,000 dwt. Executive Chairman Michael Ioannides says that all three tankers are modern, double-hulled vessels. Single-hulled vessels will be banned from US and European waters from 2007, and world-wide from 2010, something which is currently underpinning the market for more modern tankers. In its first six months of operation, OTH reported profits of US$1.1m, and net assets of US$22.4m.

Ioannides points out that shipping companies benefit from an advantageous tax regime in Cyprus, with no tax levied on profits or dividends from shipping operations. But he deplores the fact that the Cyprus shipping registry has fallen from 4th to 10th place worldwide in the last five years, due at least in part to the banning of single-hulled ships from the Registry.

Speakers at a Cyprus maritime conference last June called for the setting up of a Cyprus Chamber of Shipping and blamed poor liaison between the industry and the government for the decay in the Cyprus fleet.

It is easy to blame the poor performance of the Register on difficulties with Turkey, which will still not allow Cyprus-flagged ships to use its ports, but many speakers said that this was not the primary factor.

Charalambos Mylonas, Chairman of the Cyprus Union of Shipowners, praised the Department of Shipping, but said that in competing countries such as Malta and the Bahamas, close co-operation between the private sector and government through a Chamber of Shipping has been effective at improving performance.

Mr Mylonas also complained that shipping-related legislation often failed to pass through parliament, for reasons that were obscure; and he criticized the executive government for delays.

A more positive sign for the Registry is that the Executive Committee of the Paris Memorandum of Understanding on port state control (the Paris MOU) decided to admit Cyprus to its White List earlier in the year, recognizing the significant improvement Cyprus has achieved concerning security standards of the Cyprus Registry and the drastic reduction of detentions of Cyprus ships.

The Committee also decided that Cyprus will be from now on a regular member of the Paris MOU. ''This fact consists an independent evidence and supports even more the picture of Cyprus as a serious and reliable navigational country,'' said an announcement.

The MOU, as it is known, compiles three lists, White, Black and Grey. Over the last few years Cyprus has moved rapidly up through the ranks of the Grey List. The 31 White List members, who include the UK, Sweden, the US and Germany, record the lowest rates of detention of inspected ships, and incur fewer inspections in MOU ports.

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