Seized Russian Superyacht Goes Up for Auction, Without Reserve

Get your bids ready because the first seized Russian superyacht is going up for auction on August 23. The 240-foot Axioma is the first Russian-owned superyacht to be listed for sale after its owner, Dmitry Pumpyansky, was placed on the sanctions list.

Axioma will be sold on August 23 by the Admiralty Court in Gibraltar under an “as is, where is” private auction, with Howe Robinson handling the sale. The auction will close on the same day (subject to KYC checks). This is no reserve on the auction so the boat will be sold to whoever has the highest bid.

In most cases, authorities cannot sell a seized superyacht without going through a years long legal process. This saddles the country with running and maintenance costs that can amount to between 10% to 15% of the vessel’s value per year. For example, the US has already spent $400,000 in fuel just to sail Amadea from Fiji to the United States. So how did Axioma came up for auction so fast? You can thank investment bank JPMorgan.

JPMorgan was involved in the seizure of Axioma after Dmitry Pumpyansky was added to the sanctions list. US banks are not allowed to do business with anyone sanctioned by the United States.

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Although the $75 million superyacht is owned by the Pumpyansky, it is run by a management company called Pyrene Investments. JPMorgan had lent $22 million to Pyrene Investments and Pumpyansky’s inclusion on the sanctions list meant the loan agreement was breached.

Being on the sanctions list means Pumpyansky’s bank accounts outside of Russia were frozen so he can’t make payments on the loan. He can’t wire money from Russia either because his Russian bank was cut off from SWIFT. Even if he could wire the money, the payment would be frozen the instant it lands. Even if he bought a suitcase full of cash, JPMorgan can’t accept it.

Since Pumpyansky beached the loan agreement, JPMorgan felt the best way to get their money back was to seize the boat, so this is more of a bank repo than a government action against a sanctioned individual. Before you think it was smart that JPMorgan added a sanctions clause into the loan agreement, it’s standard for all loans. Check the fine print in your car loan or mortgage and you’ll see it.

It is highly unlikely that Axioma will go for her $75 million market value. JPMorgan is just hoping to get their $22 million back. However, the fact that the auction has no reserve means JPMorgan is just hoping to get back whatever they can. While the winning bidder will get a whale of deal, you have to wonder how safe is it to own a yacht that was seized from a Russian oligarch.

Axioma was built in 2013 by Dunya Yachts. Originally known as project Red Square, her luxurious interior is designed by the renowned Alberto Pinto while Sterling Scott is responsible for her exterior styling.

Her top speed is 18 knots and she has a maximum range of 5000 nautical miles when navigating at cruising speed, with power coming from two Caterpillar diesel engines. She can accommodate up to 12 guests in 6 staterooms, and is serviced by crew of 20. Before she was seized, she was available for charter at $475,000 a week.


Source: jhonchow

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