The long-planned Convoy Escort Programme, a privately financed fleet of armed patrol boats intended to counter Somali pirates, may be drawing nearer to a startup.
Martin Reith, an insurance investor and former CEO of Lloyd's of London member Ascot Underwriting Ltd., has become the lead financial backer of a $30 million private offering to capitalize CEP.
The offering is now being circulated to potential investors, and CEP can be up and running within five months once the money is raised, said Sean Woollerson, a partner with Jardine Lloyd Thompson P.L.C. and one of CEP's originators.
The proceeds will pay for seven patrol boats, each of which would be fitted with two smaller rapid inflatable boats, or RIBs, that can be launched to investigate or fend off pirate threats. Each patrol boat will be manned by an eight-member armed security team, with five additional crew members.
Once operating, CEP plans a second offering of $40 million to expand.
The patrol boats will escort ships through the Gulf of Aden from the mouth of the Red Sea as far as Salalah, Oman. Woollerson acknowledged that numerous pirate attacks have occurred to the south and east of the planned route, but noted that CEP "cannot be all things to all men" and that the escorts may free naval assets for use in the wider Arabian Sea and Indian Ocean areas. Ultimately, the company aims to protect up to 470 ships per month, or about 25 percent of the traffic through the Gulf of Aden.
CEP will carry three levels of fees based on the speed of the escorted vessels, but will generally cost $30,000 to $35,000 per voyage. This includes an insurance guaranty that will reimburse owners if a ship is taken or damaged at any point during a voyage, a feature that -- along with the protection itself -- should significantly reduce owners' war risk, and kidnap and ransom premiums, Woollerson said.
The escorts will follow marine best-management practices, including rules on the use of force that comply with international law. The boats will also have black boxes and the security teams will wear helmet cameras to record all incidents, he said.
The CEP fleet will operate under the flag of Cyprus, which has passed legislation specifically enabling the service to operate, he added.
CEP's startup, more than three years in the making, involves 22 companies so far, including Ascot and London-based Marketform Group Ltd., along with personnel recruiters, vessel brokers and other service providers.
--By Doug McLeod
August 22, 2012
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