Medmar debt chase lifts veil on collapsed Greek operator

When Connecticut's Eagle Bulk Shipping finally lost patience with Medmar Inc and took it to court over an unpaid charter bill last month, it unveiled a rare insight into a low-profile operator that had fallen apart.

Papers filed with a federal court in New Orleans show Athens-based Medmar Inc presented a "moderate risk" to shipowners and suppliers, as it had a reputation for late payment, which is not unusual for the sector.

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However, a due diligence report by consultancy Infospectrum, commissioned by New York-listed Eagle Bulk, also highlighted chairman and main shareholder Donald McTaggart’s planned return to shipowning, although apparently through corporate entities outside Medmar Inc’s umbrella.

TradeWinds was first to report last week that Medmar Inc had suddenly closed down, leaving behind a fleet of chartered-in ships and what sources have described as a "big mess".

The surprise collapse affected contracts for ships controlled by Greek and Scandinavian shipowners, and big chartering names, including German energy provider RWE. Bunkers suppliers were left with bills unpaid.

Little information has been publicly available about the 50-year-old bulker operator, which kept out of the limelight as it sought to serve key dry bulk clients.

The Infospectrum report, carried out in October 2018 as Eagle Bulk was considering Medmar Inc as a new customer, said the Greek operator had a "mixed" reputation in the market, although that was getting better and its payment delays were not outside of what can be expected in shipping.

Consistent delays

"Judging by the company's overall performance, and from fairly consistent delays in payments, cash flow interruptions might occur, but we believe these are primarily attributable to slow-paying shippers or receivers," Infospectrum concluded.

Bunker suppliers had once seen Medmar Inc as a slow payer, leading some in the market to tighten their credit to the operator, Infospectrum said. But that had been improving, and fuel suppliers were offering credit terms in the "low to mid-six figures".

Management stated that Medmar has no directional exposure to the freight market at present, simply receiving a margin for its shipping services

Infospectrum

"Three sources at owners indicating fixing with Medmar in the past months, with charter hire payments delayed for some days, but [were] paid in full after a few days," Infospectrum wrote. "Our sources indicated no operative problems."

Details of Medmar Inc's finances remain confidential. Infospectrum placed its 2017 revenue at about $27m and gave the company a five-point rating, suggesting moderate risk.

McTaggart declined to comment.

At the time of the Infospectrum report, which did not become public until it was lodged as evidence in Eagle Bulk's aborted lawsuit last month, the Greek operator's management spoke confidently of its position as a pure charter operator that took no long-term exposure to tonnage.

"Management stated that Medmar Inc has no directional exposure to the freight market at present, simply receiving a margin for its shipping services, with 2017 being profitable year," Infospectrum said in the report. "That has to be taken on trust."

But this meant the company also had no significant assets on its balance sheet, just freight and charter hire balanced against outgoing payments to shipowners and bunkers suppliers. While its plans for vessel acquisitions showed some access to funds and co-investors, Infospectrum said, they were not expected to appear on the company's own balance sheet.

50-year history

Medmar Inc has its roots in the shipping empire of the late company chairman, John McTaggart, who started the business in 1969.

"With his extensive experience in the chartering and operation of every type of vessel, [he] built us into one of the leading providers of chartering, brokering, management, agency and other specialised services to shipowners and charterers throughout the world," Medmar Inc said in a undated company profile that was also submitted as part of the Eagle Bulk lawsuit.

In 1982, John set up Medmar Inc as a private limited company in Turks & Caicos, although it continued to operate primarily out of its Athens headquarters, according to the report by Infospectrum commissioned by Eagle Bulk.

Medmar Inc's Athens address

Also in Athens was Medmar Lines Inc, a Liberian entity that managed Medmar's chartered vessels, although in recent years this company has been phased out, with Medmar Inc operating as the primary contractual entity, according to Infospectrum.

For many years, the McTaggart family worked in partnership with Greek shipowner John Chandris. The McTaggarts held shares in Chandris-managed bunker business Macoil International, while Chandris controlled a stake in Medmar Inc.

However, the two sides split in different directions in the late 1990s, the Infospectrum report said.

John died in 2002 and his son, Donald, who was in his mid-50s at the time of the Infospectrum report, inherited the business.

Donald is credited with first taking Medmar Inc away from shipowning into a smaller-scale charter operator focused on a select group of clients.

"The keystone of our corporate strategy is flexibility," Medmar Inc said in its corporate profile. "Over the years, Medmar has established a core of key people with the expertise to put this strategy into action. With an established market reputation and with an emphasis on strategic shipping, we are able to provide our clients with a fully tailor-made range of services for all their worldwide shipping requirements."

But in recent years, Donald was making moves to swing the pendulum in the other direction.

"In 2018, Medmar Incappears to be in an expansionary strategy," Infospectrum said in the report commissioned by Eagle Bulk. "This expansion is set to, once again, restructure Medmar Inc's operations, with the principals reportedly partnering with Greek investors and proceeding with acquisitions of modern bulk carriers."

The Infospectrum report described the Donald as having a long-standing relationship with another Greek shipowning family, that of Elias D Papageorgiou, who died in 2013.

Starting in 1992, the two families shared in a 50-50 partnership that involved Papageorgiou's daughter, Christina, controlling a fleet of two panamax and two kamsarmax bulkers managed by Sea Justice, an Athens-based company.

That relationship also eventually came to an end after owning a total of 22 vessels, with Medmar Inc-related companies selling its stake to the Papageorgious and cutting off business ties with the family and Sea Justice, Infospectrum said.

Medmar Inc's niche

More recently, Medmar Inc's business focused on key niche trades for its core customers.

Infospectrum said it was told by Medmar Inc management that the business focused on spot market chartering for cargoes of grain and sugar to Yemen, and iron ore from Russia and Finland to steel mills in Turkey.

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Since last October, the company was believed to be chartering 50 ships per year, carrying 3m tonnes of cargo annually, according to Infospectrum. Medmar Inc's own company profile shows it chartered handysize to capesize vessels, mainly working with clients under contracts of affreightment.

At the time, Donald was also aiming to make moves outside of operating time-chartered tonnage.

Medmar Inc management also told Infospectrum that Donald was involved in a joint venture with an unnamed Greek shipowner. The consultancy said that in late 2017, the shipping entrepreneur signed up to take over the bareboat charter of the 63,100-dwt ultramax Ultra Omega (built 2015) in a deal that included a purchase obligation.

The ship was to be managed by Medmar Inc while owned through a special purpose vehicle controlled by Donald and another unnamed Greek investor, with Medmar Inc carrying out commercial management.

However, a source with knowledge of the vessel told TradeWinds that Donald has no connection to the Ultra Omega. TradeWinds reported last year that the vessel was acquired by New York and Athens-based SteelShips, which features the it on its website. Shipping databases still list the Ultra Omega as ultimately controlled by South Korea's Sammok Shipping.

One owned ship?

But another effort to own a ship was completed. A McTaggart joint venture was poised to purchase another four kamsarmaxes. One of the ships, the 81,838-dwt Trade Vision (built 2011), was picked up out of the bankruptcy of the Greek shipowner.

TradeWinds reported last year that Medmar Inc affiliate Dominion International purchased the vessel, which is now named India Vision. It is the only ship listed in the Dominion fleet, according to Equasis, and the status of the other kamsarmax deals is not known.

At the time of the October 2018 Infospectrum report, Medmar Inc was also aiming to move into the fuel oil trade, providing small tankers to a power plant in Ghana, where the company had set up a branch, Infospectrum said.

"The project is said to have started as a partnership with a major fuel oil supplier, which has since stepped back, and Medmar Inc's management is currently looking for another partner in order to develop the business," the firm said.