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Foreign funds back yachts construction

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Broward Superyachts laid the keels in late August of two vessels that just might become the first of their kind: funded mostly by investors seeking immigration status in the United States.

The yachts — hull No. 1201 M/Y Challenger and hull No. 1202 M/Y Voyager — are being built for WorldSea Yachting, a Belgian company who plans to merge yacht chartering with cruise ship operations and offer individual cabins on yachts for vacations.
Construction of the two Broward yachts is being funded, in part, by the EB-5 visa program, a job creation and foreign investment program created to encourage high net worth individuals from other countries to migrate to the United States and stimulate the U.S. economy through business and job growth.
In this scenario with Broward Shipyard, 12 foreign nationals will invest $1 million each to build these two 135-foot (41m) tri-deck motoryachts. Additional financing for the construction will come from personal investors, and bank financing.
The individual investors are not building the yachts; they are investing in Broward Superyacht 1201 and 1202, two companies created to build each yacht.
For each $1 million investment, 10 U.S. citizens will be employed and the investor receives a two-year conditional U.S. visa translatable to permanent residency status once the investment proves successful, that is that 10 jobs have been created.
Ultimately, the construction of each vessel must employ 60 people, or 120 people total at Broward Shipyard.
“At the end of the day, you have to be creative, especially when financing from the bank is not coming,” said Larry Behar, a Ft. Lauderdale immigration attorney who wrote the legal documents for the foreign-national investment plan.
The plan falls under the U.S. Customs and Immigration Service program called EB-5. The EB-5 (employment-based fifth preference) Immigrant Investor structure was created in 1990, but it wasn’t fully explored until after 2001. It offers no more than 10,000 visas to foreign nationals who invest $1 million in either starting their own business or in an existing business looking to expand.
Behar, known in some circles as the godfather of EB-5, said this platform is different than any other he’s created before. He’s established the legal platforms for tourism resorts, shopping centers, gold mines, land development projects, a hospital and retail hotels across the United States.
This, he said, is the first time the EB-5 program has been used to build and operate a yacht.
Behar wrote all the legal documents for it, written in such a way as to be a template for another vessel or another company, he said. He started working on it in February and finished it the day before the keels were laid.
“It’s the first time it’s been used for a yacht, to my knowledge,” he said. “Now we’re in the fun part, attracting investors.”
Once the financing is secured, the yachts are expected to take about two years each to complete and will be built at the Broward Shipyard property in Dania Beach. With steel for the hull coming from Holland and with project management coming from its Amels-experienced project director, Broward is calling the yachts “Dutch-built in the United States.” The steel for the keels came from the U.S.
“We are confident we can do it, and we are confident we can do it on time and on budget,” said Philippe Brandligt, project and sales director with Broward Shipyard. Brandligt is also a naval architect and worked on Amels new builds before moving to South Florida.
These two yachts, which will have aluminum superstructures, will be classed by Bureau Veritas. They will be U.S. flagged and employ U.S. crew, all part of the EB-5 scenario.
Though construction won’t begin until the financing is secured, the keels were laid now to allow the vessels to be built under existing regulations. Under the ILO, new regulations will go into effect next summer.
“When the keel is laid, you comply with the rules for today,” Brandligt said. “It’s not unusual for keels to be laid 6-9 months before construction begins.”
Broward hopes to begin construction of the first boat this fall.
WorldSea Yachting hasn’t yet begun its activities of attracting clients to its member-driven club.
“Building these two vessels will take two years, so the problem is when do we start our activities,” said Philippe Swolfs, managing director of WorldSea Yachting. “If we start when they are delivered, it’s too late. If we start now, it’s too early.”
The company was incorporated in Belgium in March and expects activities of signing up members to begin in the first quarter of 2013. Its Web site was expected live this fall, with marketing to begin next summer.

Lucy Chabot Reed is editor of The Triton. Comments on this story are welcome at lucy@the-triton.com.

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