Alfa Nero: Up Schmidt Creek, found a paddle
Former Google CEO Eric Schmidt made the headlines this week with the purchase of the seized superyacht, Alfa Nero for $67.7m after its enforced sale by the Government of Antigua and Barbuda. The year-and-a-half-long saga may seem over now, but with the potential for future litigation and Hurricane Bret on the horizon, is this really the last we’ve heard of Alfa Nero?
The yacht has been in the media for over a year since it was abandoned in Falmouth Harbour, Antigua by its former owner. After seizing the yacht, the government changed the law to claim possession and sold it. The auction closed on Friday, June 16th, with three bids for the 81m (267ft) Oceanco superyacht. The American executive secured the vessel for a below-market value price too. According to Dennis Causier, senior superyacht specialist, VesselsValue the superyacht is worth $79.5m (€75.3m).
“We’re happy because it’s a very reasonable amount of money and will cover all the costs of what is owed to the government and to [Alfa Nero’s] suppliers and for fuel and the crew,” Lionel Hurst, chief of staff, Government of Antigua and Barbuda tells Superyacht Investor.
Schmidt, who headed the multinational technology firm’s holding company, Alphabet, is worth around $24.8bn, according to the Bloomberg Billionaire Index. He now has until the end of this week to pay into the Consolidated Fund in Antigua and Barbuda’s treasury.
The process is a win-win for both buyer and seller. The Antigua and Barbuda government is set to receive a sizeable sum and Schmidt is to take ownership of the superyacht that is now free of any burdens applied to the vessel under the previous owner.
“[A court sale] is a deliberate choice because it is the one form of procedure that removes the boat’s maritime liens,” Paul Dickie, partner, Jaffa & Co tells SYI. “If you just have a private sale, you have the risk that certain types of claims, which are defined as maritime liens, stay with the boat.
“This is why you choose to have court auctions in this situation, to wipe the slate clean for want of a better expression,” adds Dickie.
It took the government a relatively short time to bring the boat to auction, especially considering the obstacles it had to overcome. Darwin Telemaque, CEO, Antigua Port Authority tells SYI: “First, we tried to establish contact with the owner, through our local media and the Lloyds Register, asking them to move the vessel. But the owner did not move the vessel or come forward, for whatever reason.”
The abandoned yacht has caused environmental issues in the Caribbean port for over a year, at the expense of the government and the people of Antigua. “The vessel and its equipment is not working very well so that the waste management system of the vessel is completely destroyed. You have raw sewage leaking directly in our pristine harbour right now,” he says.
This is a huge problem for the small island nation, with the economy relying heavily on tourism, particularly from the superyacht industry. “Yachting brings in three to four times as much income as the cruise sector,” Telemaque continues. “With Alfa Nero, if something was to happen with it in its current position, it would completely block the waterways and prevent ships from leaving and entering.”
There are fears that something could cause the yacht to sink and cause further damage too, a stark reality for a nation used to tropical storms.
“There is a hurricane heading our way and we don’t have an appropriate place to create a safe harbour for the Alfa Nero. Having it here is a risk that we can’t afford,” says Telemaque. “First of all, she’s uninsured. She is not functional, so she can’t travel as well as she probably ought to. She carries a significant drop [deep keel] too, which means that there are fewer safe havens that she can go into. We are finding it really challenging.”
If the government recognises a risk that is not removed, it must act in the country’s best interest, says Telemaque. “The remedial action that was put in place was that the port manager would first issue a notice of seizure.”
The Port Authority took legal ownership via a change in legislation, registered the yacht under the Antigua flag and lobbied the US government to delist it from the sanctions list. The vessel was then brought to auction. Telemaque led the implementation of the Port Authority (Amendment) Act, which gives the country’s port authority the right to take ownership of abandoned, detained or seized ships. The government is also poised to receive all proceeds from the sale, albeit after all creditors to the Alfa Nero are paid.
William MacLachlan, partner, HFW, tells SYI: “The approach adopted by Antigua and Barbuda is a departure from the approach adopted by most jurisdictions, which have, to date, not treated sanctioned assets as being confiscated.
“It is also at variance with suggestions being advanced by politicians and others in a number of jurisdictions that the proceeds of any Russian-owned assets forfeit and sold should be used to reconstruct Ukraine,” he adds.
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