Cash-strapped OSV owners are more powerful than they realise, today’s Asian Offshore Support Journal Conference, Singapore heard.
OSV owners are caught up in the ‘disposition effect’, Radical Advice managing director Venkatraman Sheshashayee – known throughout the industry as Shesh – told more than 150 delegates. The disposition effect is a financial theory which states human beings tend to sell assets that have increased in value but hold on to assets that have decreased in value.
Rather than bemoaning weak balance sheets and declining asset values, Shesh told the assembled OSV owners they were “in a fantastic position”. “You are at your most powerful when you have the least to lose. You can tell your bank: “I can hand you the keys now or we can sit down and work it out. Why aren’t we using that power?”
Reflecting on OSV owners’ reversal in fortunes, HBA Offshore chief executive officer, Hassan Assad Basma, said the industry allowed itself to party too much. “Rather than saying what can we afford we said, ‘what can the market bear?’ We all got carried away. The banks are to blame too as they lent us more than we could afford.”
For KS Drilling, chief financial officer Diana Leng said companies should establish that the people running the business have what it takes to turn the company round before talking about new financing. “Stop focusing solely on revenue and focus on operations.”
Echoing this view, Mr Basma stressed that any new capital introduced into a business must not be used to solve old problems. “New capital needs to be new and unencumbered to grow the business – otherwise we are not going to grow.”
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