Creating Ship Shares

[alex_greene]

I was just wondering if it was possible for a ship's owner to convert cash into ship shares and thereby reduce the monthly mortgage.

I imagine the Captain feeling a little flush at the end of the year, and deciding to plough some of the end-of-year profits into creating a few new ship shares. The certificates would be held in the little safe in the Ship's Locker, where only the Captain / Owner and the ship's designated Purser would have access to them.

Ship shares would be a stable, non-refundable conversion process - they cannot be refunded for cash once spent - but it would ultimately reduce monthly costs, which means that the ship would ultimately move from a survival footing to one where they stand a good chance of having a healthy profit margin on a regular basis.

I'm just wondering whether that procedure has been covered before.

 

[F33D]

I was just wondering if it was possible for a ship's owner to convert cash into ship shares and thereby reduce the monthly mortgage.

Hmmmm. It isn't designed that way as a ship share has no cash value per se. You'd have to take the principle and just pay it down with the cash and refigure the loan.

 

[alex_greene]

There's a difference between something having "no cash value" and something that is "not redeemable for cash."

Paying a few million in cash might not reduce the mortgage; the bank would just put the money in as credit on mortgage payments yet to be made. If you paid in the equivalent of 12 months' mortgage payments, the bank would just tell the captain she would not have to make any mortgage payments for the rest of the year - but the following year, the monthly mortgage payments would be exactly the same size.

A ship share would actually lead to an ongoing reduction in the monthly mortgage payments for the balance of the duration of the mortgage. I was thinking that ship shares would be used to offset the value of the principal part of the loan, reducing the amount that would need to be repaid monthly in the form of the mortgage repayments - and the cost would be the certificate, which represents the owner relinquishing a percentage of ownership of the vessel to the bearer of the ship share certificate.

So X ship shares would reduce the principal by X%, which in turn reduces the mortgage payment by X% - and the price is that the person who invested the necessary money now owns X% of the ship.

It doesn't have to be the ship's owner - anyone could invest their money and create ship shares, even for remote vessels, taking the certificates and sequestering them (perhaps in the very bank itself), giving the owner of the ship shares at least a small say in what each ship does, and where it goes. All that is needed is for the majority shareholder to agree, and carve off the necessary X% ownership in a notarised transfer, witnessed by a representative of the bank who would then issue the scrip for the share certificates to the proud new owner of the shares.

 

[Rick]

Until the balance of the loan is paid off, the ship is not considered to be the full property of the ship-owner - whoever owns the loan is basically a silent partner, and if the ship-owner defaults on the loan, the silent partner repossesses the ship to recover the loan. The silent partner will not allow any 'other parties' to 'part-own' the ship while the loan is not paid off, and the 'other parties' won't want to hand over the money for a promise of shares once the loan is paid off, without any collateral in their hands. The only way to do it would be to sell the ship outright to this consortium of 'other parties' and pay off the loan from the silent partner, in full, from the proceeds.

 

[F33D]

Paying a few million in cash might not reduce the mortgage; the bank would just put the money in as credit on mortgage payments yet to be made.

That's not how most the vast majority of those types of loans work now, so ...

 

[CosmicGamer]

From the title I thought you were going to suggest a means for a GM to give characters ship shares similar to those gained in chargen. But these would be made available by the GM after chargen but before acquiring a ship. For example the characters first job for a patron goes well and they say "I'll put a good word in for you when you buy a ship."

I'm feeling a bit puzzled as to what is being suggested or perhaps the confusion is that you are calling it "ship shares" when it is something else.

You've got extra credits on hand?
It is done at some point after a ship has already been financed?
So you are trying to somehow use these credits to lower monthly payments?

From reading your follow up post, it appears you are discussing selling ownership in your ship to raise funds to reduce the mortgage. It kind of sounds like a "I've got this bridge to sell you" scheme. Certainly it can be different in YTU, but in mine there is a lien on that ships title and the lien needs to be satisfied before there can be a legal change in ownership.

It sounds more like you need to incorporate with the ship being an asset of the business then sell shares in the corporation or find a silent partner or whatever.

If any case, might I suggest you not call it "ship shares". It does not appear to have anything to do with the same "ship shares" as defined in the rules.

 

[Condottiere]

Wait for an interest rates cut and refinance.

 

[Reynard]

Or do what my group of cutthroats have in mind....

Oh look, a free ship!

 

[Tom Kalbfus]

There's a difference between something having "no cash value" and something that is "not redeemable for cash."

Paying a few million in cash might not reduce the mortgage; the bank would just put the money in as credit on mortgage payments yet to be made. If you paid in the equivalent of 12 months' mortgage payments, the bank would just tell the captain she would not have to make any mortgage payments for the rest of the year - but the following year, the monthly mortgage payments would be exactly the same size.

If you deposited 12 monthly payments of the mortgage, and the bank only applied it to future mortgage payments, wouldn't it have to pay interest to the depositor for keeping the money in the bank account? So you would basically subtract interest earned in the savings account from the interest to be paid to the bank in mortgages. It would seem to be less work if the bank simply reduced the morgage by that amount and recalculated all the subsequent mortgage payments.

A ship share would actually lead to an ongoing reduction in the monthly mortgage payments for the balance of the duration of the mortgage. I was thinking that ship shares would be used to offset the value of the principal part of the loan, reducing the amount that would need to be repaid monthly in the form of the mortgage repayments - and the cost would be the certificate, which represents the owner relinquishing a percentage of ownership of the vessel to the bearer of the ship share certificate.

So X ship shares would reduce the principal by X%, which in turn reduces the mortgage payment by X% - and the price is that the person who invested the necessary money now owns X% of the ship.

It doesn't have to be the ship's owner - anyone could invest their money and create ship shares, even for remote vessels, taking the certificates and sequestering them (perhaps in the very bank itself), giving the owner of the ship shares at least a small say in what each ship does, and where it goes. All that is needed is for the majority shareholder to agree, and carve off the necessary X% ownership in a notarised transfer, witnessed by a representative of the bank who would then issue the scrip for the share certificates to the proud new owner of the shares.

 

[F33D]

From reading your follow up post, it appears you are discussing selling ownership in your ship to raise funds to reduce the mortgage. It kind of sounds like a "I've got this bridge to sell you" scheme. Certainly it can be different in YTU, but in mine there is a lien on that ships title and the lien needs to be satisfied before there can be a legal change in ownership.

It sounds more like you need to incorporate with the ship being an asset of the business then sell shares in the corporation or find a silent partner or whatever.

If any case, might I suggest you not call it "ship shares". It does not appear to have anything to do with the same "ship shares" as defined in the rules.

+1

 

[DickTurpin]

What you are describing sounds like paying down the principle which could be used to reduce the number of remaining payments, but would not affect the monthly mortgage payment. To reduce the actual payment, you would need to refinance the loan instead.

To find the remaining principle balance, subtract 1/2 of the value of payments made to date from the initial loan amount. Further reduce that amount by the extra payment you want to make to get the remaining principle balance.

To reduce the term of the loan, divide that amount by 1/2 the current monthly mortgage to find the number of months remaining on the loan. Note that you may end up with a fractional month at the end, just round up to find the number of payments and multiply the monthly payment by the remaining fraction to find the amount of the last month's payment.

To refinance, just figure the new payment for a 40 year loan using the reduced principle balance as the ship purchase price. The GM would probably tack on a few thousand credits as a refinance fee to discourage players from refinancing frequently.

 

[F33D]

The GM would probably tack on a few thousand credits as a refinance fee to discourage players from refinancing frequently.

Also, as equipment it is subject to depreciation. Once you "drive it off the lot" it may lose an immediate 20% value...

 

[dragoner]

I was just wondering if it was possible for a ship's owner to convert cash into ship shares and thereby reduce the monthly mortgage.

Easily enough, just refinance the ship; the "ship share" resembles, or was based off of, ship mortgages. I would allow admin plus int or edu DM, maybe to shave points on the mortgage even.