A quick sale and the negative press surrounding the superyacht Equanimity could encourage potential buyers to lower their bids for the vessel, according to a report in The Star today.

Sam Tucker, the superyacht division head of London-based ship valuation firm VesselsValue was quoted in the report explaining the process of selling such a vessel.

The company valued the vessel at US$175 million, with Tucker saying that the Equanimity could fetch an equal or approximate price provided that it is well cared for.

“If the vessel is sold quickly, for example, via auction, we should expect to see a lower achieved price than if this vessel was marketed and sold organically.

“The fact that this vessel has been in the press recently and not necessarily for the right reasons, might encourage buyers to put in lower offers,” he was quoted as saying.

The report also stated that Prime Minister Dr Mahathir Mohamad had indicated that the government intends to invite bids for the vessel.

No change in yacht market

As Tucker told The Star, the sale process usually begins with the seller engaging a broker, who then markets the vessel via media outlets and emails to counterparts.

“If buyers present themselves, then the survey and negotiation processes begin,” he said.

Tucker reportedly said currently there is no change in market sentiment for superyachts – those more than 24m in length – which have relatively few buyers. The Equanimity is 91.5m long.

He said that the Anastasia, which was built by the same shipbuilders but measuring slightly smaller at 76m, recently sold for €67.5 million (RM321 million) in line with market sentiment.

According to the report, the value of yachts depreciate 20 percent in its first year, another five to ten percent in the second year, another five to seven percent in its third year, and then about five percent in each subsequent year.

Previously, the US Department of Justice (DOJ) had alleged that fugitive financier Low Taek Jho had siphoned over US$250 million from 1MDB to finance the purchase of the vessel, after passing through multiple intermediaries in order to conceal the origin of the money.

The government and 1MDB had cited DOJ’s allegations when filing its own suit at the Kuala Lumpur High Court to claim the vessel.

Selling the yacht

The Equanimity was built by the Netherlands-based shipbuilder Oceanco in 2014, but it is unclear from the DOJ allegations how much of the misappropriated fund had actually been spent on the vessel and its furnishings.

The Kuala Lumpur High Court had granted the Malaysian government and 1MDB’s request for an urgent sale of the vessel while the case proceeds.

In its application, the plaintiffs asked the court to order the sheriff (acting registrar) to appraise and sell the Equanimity and its consumables, such as bunkers, fuel and lubricants, whether by public or private tender if an offer equal to or more than the appraised value of the vessel is received.

Thereafter, if necessary, the vessel will be sold by public tender.

The sheriff would then be authorised to appoint appraisers, security guards, a skeleton crew, and other services to facilitate the sale of the vessel and its safekeeping pending the sale.

The proceeds of the sale are to be placed in an interest-bearing account controlled by the court at a reputable bank in Malaysia, and would be disbursed to whomever successfully claims the money in court after deducting the sheriff’s expenses.

The yacht’s registered owner Equanimity (Cayman) Ltd had claimed that the vessel’s condition is deteriorating due to mishandling by the Malaysian government.

“Due to the Malaysian government’s precipitous, ill-conceived, and misguided actions, the yacht is running 24 hours per day, seven days a week on generator power, which is unsustainable and harmful to the vessel.

“Moreover, Malaysia has currently docked the yacht in a hazardous environment, in which toxins such as water pollution and nearby smoke are greatly damaging it.

“Because Malaysia apparently does not have – or does not want to spend – the necessary funds to properly maintain the vessel while it is prepared for a value-maximising sale, Malaysia has instead proposed a 'fire sale', in which the yacht is to be sold for a fraction of its true value," it said.

'No mishandling'

However, Tucker dismissed such concerns.

He said a vessel like Equanimity would need up to three generators plus an emergency generator, and running these 24 hours a day would not be an issue as long as they are maintained as per manufacturer specifications. Thus, the resale value would not be affected.

A vessel like the Equanimity would also struggle to find adequate supply of shore power to meet its electricity demand, and would run on its generators regardless, he said.

As for the alleged smoke and air pollution, Tucker said it could harm the paintwork if left uncleaned, but there would be no long-term problems if the crew routinely cleans the vessel.

The alleged water pollution would mean the Equanimity’s engineering department would have to clean the vessel’s see strainers, sea chest, and filters more frequently, while the deck crew would have to regularly clean the waterline.

Again, however, he stressed that this would not cause much harm to the vessel, saying that the cleaning of the waterline is a routine procedure.