‘Shipshape 10’ News for Week Ending June 4th, 2017

‘Shipshape 10 List’, a list of news and articles published in the current week that a senior executive in shipping, shipping finance, commodities, energy, supply chain and infrastructure should had noticed; news and articles that are shaping the agenda and the course of the maritime industry.

Sometimes seemingly tangential, periodically humorous, occasionally sarcastic, sporadically artistic, inferentially erotic, but always insightful and topical.

And, this week’s ‘Shipshape 10’:

The biggest story in shipping in the past week, Rickmers Holding Group filing for bankruptcy. A bad market gets to everybody eventually, but again, Rickmers is not your typical shipping name. Effectively shipping royalty with 200+ years of history. Formally established in 1834, opening a rep office in China in 1899, more than a century before China became fashionable in shipping:

1a. Bank Rejects Rickmers Restructure (The Maritime Executive)

1b. German Shipping Firm Rickmers to File Bankruptcy (The Wall Street Journal)

The season’s greatest gathering happened in Oslo this week (Nor-shipping 2017); besides technology and disruption, the hot topic of the event was shipping magnate John Fredriksen:

2a. Shipping tycoon Fredriksen says has succession plan ready (Reuters)

2b. Succession Plan in Place: Fredriksen (Splash 24/7)

2c. Norway’s Frontline in Talks With Gener8 to Create World’s Biggest Tanker Fleet (The Wall Street Journal)

A bright spot in shipping, for now and the future, the LNG market:

3a. U.S. Approves First Offshore LNG Export Application (The Maritime Executive)

3b. U.S. Approves Exports from First Floating LNG Terminal in Gulf of Mexico (gCaptain)

Panama Canal likely one of the biggest beneficiaries of the LNG boom seems to be re-calibrating their pricing model, while Egypt is working on not staying behind and ‘One Belt, One Road’ getting more attraction:

4a. Panama Canal wants to modify tolls structure (Seatrade Maritime News)

4b. Egypt aims to profit from the Suez Canal (Financial Times)

4c. DP World hitches lift on the new Silk Road (Financial Times)

Regulations for shipping still have some time till driving home the message, but given the Trump’s action this week, shipping re-active approach to everything, for once seems appropriate:

5. New shipping fuel regulation set to hit commodities (Financial Times)

And, shipping about shipping and policy, the saga of Greek and German shipping, taxations and policy never seems to miss a chance for some arguing:

6a. Schaeuble ‘proves he does not desire to see Greece on a path to growth,’ says UGS chief Veniamis (Athens News)

6b. Head of Greek shipowners’ union: Schaeuble criticism unfair; Germany has favorable tax regime, too (Naftemporiki)

Shipping banks in the news once again, but again, what’s new?

7a. Worst Offshore Slump Holds Key Lessons for Top Norway Banker (Bloomberg)

7b. Commerzbank moves closer to shedding 4.5 bln euros in toxic ship loans (Reuters)

Seemingly no-news story from a major coal country, but reading through it, miners work on the lowering their stockpiles versus digging and investing; what do they say about their conviction for a brighter coal?

8. Coal India’s Output Declines Amid Focus on Clearing Stockpiles (Bloomberg)

U.S. and Germany have been solid trade partners for decades; recent developments start raising questions on the relationship and trade. What that could mean for shipping?

9a. Trump Paris rejection widens rift with Germany (Financial Times)

9b. Trump’s right about Germany (POLITICO)

9c. Trump Targets German Trade, and the South Grimaces (The New York Times)

9d. On The US-Germany Imbalance (The New York Times)

Shipping is also local:

10. Afloat on the Erie Canal: Sonar Gear, Ferris Wheel Parts and Beer Tanks (The New York Times)

First article is opinion piece in Greek about the death of shipowner Alexandros N Goulandris. Goulandris is a legendary name in the world of shipping, and one of the last few remaining ‘Golden Greeks’ of shipping. Besides his wealth and business success, his life has been characterized by his civic duty to donate generously to cultural and humanitarian causes, mostly in Greece. Something similar cannot be said about the modern way of things which may also explain Greece’s financial and cultural decadence:

11a. Η αφανής κηδεία ενός αφανούς ευεργέτη (Protagon)

11b. Shipowner Alexandros Goulandris Passes Away (Greek Reporter)

Summer sunset on the Port of Piraeus. Image credit: Karatzas Images

© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website.Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

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‘Shipshape 10’ News for Week Ending March 26th, 2017

‘Shipshape 10 List’, a list of news and articles published in the current week that a senior executive in shipping, shipping finance, commodities, energy, supply chain and infrastructure should had noticed; news and articles that are shaping the agenda and the course of the maritime industry.

Sometimes seemingly tangential, periodically humorous, occasionally sarcastic, sporadically artistic, inferentially erotic, but always insightful and topical.

And, this week’s ‘Shipshape 10’:

Talking about destruction of value for the sellers…
1. Borr Drilling to buy Transocean’s jack-up rig fleet for $1.35bn (Seatrade Maritime)

and, the riskiness of the offshore drilling markets…
2. Shell’s Titanic Bet: Can Deep-Water Drilling Be Done on the Cheap? (The Wall Street Journal)

when, oil majors start thinking beyond oil…
3. Big Oil Replaces Rigs With Wind Turbines (Bloomberg)

But, some shipowners too think cleaner energy
4a. World’s First LNG-Fuelled Aframax Tankers Ordered (The Maritime Executive)

4b. Crowley Launches LNG-Powered Con/Ro for Jones Act Trade (The Maritime Executive)

But, in the mainstream shipping world, another week, another bailout or blowout …
5a. Korean Shipbuilder Seeks Another Bailout (The Wall Street Journal)

5b. Daewoo Shipbuilding: deep water (Financial Times)

or a dugout…
6. Maersk Line, Hapag-Lloyd Among Carriers Subpoenaed in U.S. Price-Fixing Probe (The Wall Street Journal)

But, some publicly listed companies going long the market, but paying in paper mostly, no hard cash…
7a. BW Sells All Its VLCCs to DHT Holdings (Splash 24/7)

7b. Golden Ocean Inks Agreements to Buy Quintana Shipping’s Entire Fleet (Seatrade Maritime)

A highly recommended private equity fund implodes; only noteworthy to shipping since they were the first to enter shipping in JV-style post financial crisis looking for distressed value; Euromar platform with publicly listed Euroseas (Ticker: ESEAS)
8. Eton Park to Shut Down as $3 Trillion Hedge Fund Industry Faces Turmoil (The New York Times)

Looking for maritime college education, look no further than the State University of New York Maritime College at Fort Schuyler, just outside New York City.
9. The Young Mariners of Throgs Neck (The New York Times)

And, finally, a story when passion and avocation turn into a (profitable) vocation. We could not argue against seafood and especially New England lobster!
10. A Restaurant’s Sales Pitch: Know Your Lobster (The New York Times)

Sovcomflot’s Products Tanker MT ‘Anichkov Bridge’ entering the Upper New York Harbor with the Manhattan skyline in the background. Image credit: Karatzas Images.

© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website.Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

‘Shipshape 10’ News for Week Ending February 4th, 2017

‘Shipshape 10 List’, a list of news and articles published in the current week that a senior executive in shipping, shipping finance, commodities, energy, supply chain and infrastructure should had noticed; news and articles that are shaping the agenda and the course of the maritime industry.

Sometimes seemingly tangential, sometimes humorous, occasionally sarcastic, but always insightful and topical.

And, this week’s ‘Shipshape 10’:                                                                                              
One cannot talk about shipping these days without bringing up the topic of bankruptcy, liquidation, Chapter 11, etc but also consolidation, M&A, etc

Rather surprising news that Toisa Ltd and Brokerage and Management Ltd of Gregory Callimanopulos opted to file for bankruptcy protection in New York; the numbers are of the billion-order magnitude, with or without the two Gulfstream private airplanes seeking protection from the creditors:

1. Shipping Fleet Operator Toisa Files for Bankruptcy (from Wall Street Journal)

Just a formality, but after several months through the court system, Hanjin Shipping no more:

2. South Korean Court to Liquidate Hanjin Shipping (from the Maritime Executive)

Eike Batista, the man who allegedly made more money from the PowerPoint than Bill Gates himself, having filed for bankruptcy in Brazil recently, had to take a quick flight back from New York to appear in court in Rio de Janeiro. Mr Batista is the man who was raising tens of billions of dollars on oil fields to be mapped to be explored to be developed to be drilled to produce oil offshore of Brazil in the good days of the $100+/bbl;

3. Eike Batista Says He Will Turn Himself In to Police (from the Wall Street Journal)

A weak market forces shipbuilders too to re-think their business model:

4. Mitsubishi Heavy Industries plans to spin off shipyards (Splash 24/7)

And, on the other aspect of the spectrum, Norwegian shipping tycoon John Fredriksen did what John Fredriksen does best, making an un-solicited all-paper offer to take over a competitor in the VLCC market in the desperate market when prices are cheap and no much of a premium is needed:

5. Frontline launches takeover offer for Double Hull Tankers (from the Financial Times)

Speaking of supertankers and VLCCs, one has to always cognizant of OPEC and their present balance equilibrium of oil production:

6. OPEC Convinces Investors That Its Oil Output Cuts Are Real (from Bloomberg)

7. U.S. Senators Should Learn to Love OPEC (from Bloomberg)

and

Traders Rush to Ship U.S. Oil as Window to Asia Opens (from Reuters via gCaptain)

More on commodities:
8. Iron Ore’s Party Is Just Getting Started (from Bloomberg)

img_0658

Fascinating detail of Nedlloyd three-island-arrangement vessel from painting ‘Sydney, December, Midday’ by Craig McPherson, 1990. Oil on linen. In the lobby of the American Express Building (Three World Financial Center) in Downtown Manhattan. Part of our daily commuting to Karatzas Marine Advisors offices at One World Financial Center next door. Image credit: Karatzas Images.

Shipping is about the waves and the open sea and the people who live by the sea, too:

9. New Indonesia tsunami network could add crucial minutes (from the AP)

And if one believes that shipping is uncorrelated to politics, that’s a clear misconception. The most innocent of political stories that we could put on our blog these days!

10. Norway Salmon, Anyone? Stocks to Watch If Russian Sanctions Ease
(from Bloomberg)

And, a nice story about the Chinese New Year; one may wonder why such a story appears on a shipping blog, but again, please bear in mind that China is responsible for 15% of worldwide imports and 20% of worldwide exports. They matter for shipping and knowing a bit about Chinese culture and history and tradition is good for culture and good for business, we would opine. Gong Xi Fa Cai!

Everything you need to know about Chinese New Year (The British Museum)


© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website.Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

S&P, Newbuilding and Demolition Update (September 27th, 2014) – Tanker Market Focus

Since our last week three weeks ago, crude tanker rates have softened with VLCC and Aframax average spot rates at approximately $12,000 pd and Suezmax tankers at approximately $16,000 pd, on the back of weak trading activity. At such levels, crude tanker spot rates stand substantially below the yearly average, and it has to be noted that present VLCC rates are very close to operating break even and far below levels required to pay for the vessel’s financial cost as well. Despite the weakness in freight rates, there has been meaningful activity in the sale & purchase market at strengthening prices, as optimism keeps building that the crude tanker market is well into a structural market recovery, and thus the present weakness in the market is only seasonal. A recent article on Reuters that pressures are building up in the US on allowing crude oil exports can only interpreted as a positive development for the crude tanker markets.

MT SAMCO SUNDARBANS

VLCC Tanker ‘Samco Sundarbans’ sold in en bloc transaction to DHT Holdings (Image source: Samco Shipholding)

Double Hull Tankers DHT Holdings (NYSE: DHT) has finalized the acquisition of Samco Shipholding Pte Ltd in Singapore with ownership of seven VLLC tankers with average age of 4.5 years at approximately $322 million; DHT Holdings also acquired in the same transaction and remuneration Samho’s 50% interest in Goodwood Ship Management.   The vessels are built at Hyundai Samho and they are MT „Samco Sundarbans” and MT „Samco Taiga” (2012, Hyundai Samho, 318,000 dwt), MT „Samco Amazon” and MT „Samco Redwood” (2011, Hyundai Samho, 318,000 dwt), MT „Samco Europe” and MT „Samco China” (2007, Hyundai Samho, 318,000 dwt) and MT „Samco Scandinavia” (2006, Hyundai Samho, 318,000 dwt). This being a corporate transaction rather than a pure asset acquisition, there have been additional considerations, although DHT Holdings appears to be paying approximately $50 mil below the nominal market value of the vessels. On pure asset sales, BW Maritime of Singapore has sold MT „BW Nyssa” (2000, Daewoo, 299,500 dwt) to Smart Tankers in Greece at $29.5 million, probably at a $2 million premium over the market. The price reveals strong buyer’s optimism as the vessel is due drydock and special survey in January 2015 at a cost of several million dollars while she will be turning the dreaded 15th anniversary from delivery that puts her on the second priority list of many charterers. The vessel was reported in January 2014 as tied up to a conversion project at $32 million purchase price which transaction apparently has not materialized.

In the Suezmax tanker market, MT „Aegean Navigator” (2007, Hyundai, 159,000 dwt) has been reported sold at $48 million to undisclosed buyers, while other reports state en bloc deal along with sistership MT „Aegean Horizon” and MT „Aegean Dignity” and MT „Aegean Angel” (2004, Hyundai, 159,000 dwt) to clients of Teekay (likely Tanker Investment Limited) at pricing to be confirmed.

In the Aframax tanker market, there has been the sale of coated tanker (LR2) MT „SC Laura” (2001, Dalian New Yard, 109,000 dwt) at $14.5 mil by KGAL to South East Asian buyers rumored to be Indonesians. The price seems to be softer than average which is mostly attributed to the Chinese-built of the vessel and the nature of the seller / transaction, while a week ago, similar tonnage from the same shipbuilder achieved $23.5 mil collectively for MT „Beach 3” and MT „Beach 4” (2000/1999, Dalian New Yard, 109,000 dwt). The Japanese-built vessel MT „SC Sara” (2001, Sumitomo, 105,500 dwt) was sold at $17 million earlier this month to Singaporean-based buyers (Zodiac Maritime), a noticeable ‘premium’ for the Japanese pedigree of the vessel. The still Japanese built MT „Song Lin Wan” (2002, Namura, 106,000 dwt) has been sold by CSDC at $19.5 million to again Zodiac Maritime. For more modern tonnage, it has been reported the sale of Daewoo Hulls 5402 and 5403 with 2015 delivery for coated tankers (LR2) 115,000 dwt at $57 million each to US-based buyers.

As we have mentioned in the past, despite the increased buying interest in the crude tanker market, buyers keep being very price sensitive with strong preference for Japanese or Korean built tonnage, and usually for vessels built in a year starting with ‘2’ getting more of the attention. Given that most banks would not provide mortgage financing for older than ten-year-old tankers, independent tanker buyers paying cash have been very opportunistic on their approach, and any urgency in the sale or other transaction handling mishaps or limitations from the sellers usually end up costing a lower sale price.

The products and chemical tanker market has been selectively active as well, with focused interest in the coated panamax (LR1) tankers and MR pumproom design tonnage. The LR1 tanker MT „Holy Victoria” (2008, Minami Nippon, 75,000 dwt) has been sold at $29 mil to Greece based Prime Marine; the smaller and older MT „Moonlight Venture” (2006, Sumitomo (Yokosuka), 61,000 dwt) achieved $22.5 million by unnamed Greek interests.

MT BRITISH HARMONY

BP’s MR2 Tanker ‘British Harmony’ at anchor (Image source: shipspotting)

The MR2 tanker MT „St. Nikolai” (2005, Onomichi, 47,000 dwt) achieved $17.5 million by Indonesian buyers (technical details on the vessel are conflicting, but it seems she’s ‘pumproom design’ which would make her price in line with the market). The older but seemingly more sophisticated tanker MT „High Nefeli” (2003, STX, 47,000 dwt) achieved $15 mil by Greek buyers (Benetech Shipping). MT „British Harmony” and MT „British Chivalry” (2005, Hyundai Mipo, 47,000 dwt) were sold by BP at $19 each with bareboat back to the sellers for two years at undisclosed rate ($8,000 pd bareboat rate some wishfully well-placed reports mentioned) on an operating lease basis. MT „Topaz Express” and MT „Diamond Express” (2009, Minami Nippon, 45,700 dwt) were sold at $22 million each by Daichi Chuo to Island Navigation in Hong Kong. The older MR2 tanker MT „Hellas Progress” (1999, Hyundai Heavy, 46,000 dwt) has been reported sold by Latsco (London) Ltd. to West African interest at $10 million. For modern tonnage, publicly traded companies have also been active with acquisitions in the sector with Scorpio Tankers (Nasdaq: STNG) acquiring from Ceres Hellenic SPP Hull No S5126 on resale basis (2014, SPP, 50,000 dwt) at $37.10 million. Aspiring to soon to file for a public listing, Singapore based Navig8 acquired at $41 million each six MR2 tankers from Wilmar MT „Polaris” (2014, Hyundai Vinashin, 49,000 dwt) and sistership Hull Nos S401, S402, S403, S404 and S405 (2014/2015 delivery, Hyundai Vinashin, 49,000 dwt); the Scorpio acquisition seems to be in-line with prevailing market levels while the Navig8 acquisition seems to be a 10% premium to the market, which is especially interesting given that the shipbuilder is not considered top tier name.

MT TI EUROPE

Euronav’s ULCC ‘TI Europe’ taken for storage purposes by China’s Unipec at reportedly $25,600 pd for six months. (Image source: Shipspoting)

Crude oil has been trading in contango recently and a number of crude oil tankers have been reported chartered for storage, including Euronav’s 442,000 dwt ULCC MT „TI Europe” taken by China’s Unipec for six months plus options at $25,600 pd. The level of discount for present delivery of the commodity is still weak to justify a massive storage play and absorption of crude oil tanker supply from the market which hopefully would boost freight rates. The recent strength of the US Dollar reflecting the Fed’s statements about increasing interest rates in the US has had a negative impact of commodities, in part causing the contango, but making commodities less attractive as a storage medium, especially in an increasing interest rate (costlier) environment thus putting a limit to the storage play. On the other hand, increased refining capacity by Middle East refineries seems finally to be having a positive impact on larger product tankers (LR1 and LR2), a story hyped to ethereal existence for several years now. There are hopes that finally there will be impact on the market which could improve asset pricing. The waiving of export taxation on certain palm oil gradients by Southeast Asian countries, most notably Indonesia, in an effort to win market share on the world markets in a bumper crop season for palm oil, hopefully will have a positive effect on IMO III / veg oil chemical tankers.

Honestly, shipping can use all the help it can get in improving freight rates by contango and storage, to increasing refining capacity in Middle East, or fiscal strategy to move around record levels of vegetable oils.


© 2013-2014 Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website.Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

Is the crude oil tanker market dead?

The dry bulk market seems to be bouncing along, the containership market has been trading sideways, the product tanker market seems to keep attracting ever more attention on the back of the shale oil developments in the US and the bringing online of refineries in the Middle East, Indian and Asia, and the crude tanker market has been left for dead.

The truth of the market is that the dynamics of the market, whether for VLCCs, Suezmax or aframax tankers doesn’t seem very inspiring. Smaller quantities of oil will have to be transported in the future with the US less dependable on imports and the Chinese positively discriminating in favor of their own-flagged or –controlled tonnage. No great surprise that asset prices for crude oil tankers have been in a free fall in the last few months, to say the least.

In the last month, there have been a few transactions in the crude tanker market that at the very least are noteworthy. The transactions refer to modern tonnage, newer than ten years of age maximum, vessels coming from top quality shipbuilders and also from sellers / managers / operators with solid credentials, good ‘stables’ as we say in the business.  Also, the buyers were top quality Greek owners with solid track record of picking the bottom of the market, and having made both by operating the vessels and also by playing the simple, old advice of ‘buy low, sell high.’

A couple of the noteworthy transactions: American Eagle Tankers or AET for short (a wholly-owned MISC subsidiary in Malaysia) just sold the VLCC MT „EAGLE VIENNA” built at Hyundai Samho in 2004 to Alpha Tankers (Kanellakis) in Greece for US$ 40 mil. The last comparable transaction in the VLCC market took place at the end of May 2013 for the Mitsui-built and controlled MT „KAIMON II” to interests of Altomare (Greece) at US$ 29 mil. The estimated newbuilding contract of a VLCC is about US$ 90 mil with estimated salvage value of more than US$ 20 mil, and an estimated economic life of 25 yrs.  The steep depreciation line is obvious, but the sale of the MT „EAGLE VIENNA” shows a relative improvement over the sale of the MT „KAIMON II”; also, AET did well on the trade given that their VLCC entrance was backed by multi-year COA to transport heavy oil (coiled VLs) for PDVSA from Venezuela to Singapore for power generation and they have fully recovered their investment.

Also, DSD (Det Stavangerske Dampskibsselskab) of Norway seems to be in a divesting mode of modern, high quality aframax tankers following the charter default of Sanko Shipping: the 2010-built at Sumitomo Heavy aframax MT „STAVANGER BELL” was sold to interests of Eastern Mediterranean Maritime (East-Med controlled by Thanassis Martinos) in Greece at reportedly $31.5 million, and a couple of weeks earlier, same seller and buyers exchanged the 2004-built aframax tanker MT „STAVANGER BAY” at US$ 20 million.  EastMed has a solid reputation as a reference account of spotting market inflection points and buying opportunities. A newbuilding aframax tanker would be priced at US$ 50 million at present, so the level of the pricing and the discount thereof is apparent. Estimated scrap price at present stands at about US$ 7 million.  Of course, aframax rates are at about $13,000 pd with vessel daily operating expenses at US$ 8,000.   No much room for leverage, but definitely cash flows are positive; the vessels are very good quality and under good management, and theoretically 15+ years remaining economic life.

Strangely, neither Alpha Tankers nor EastMed have bothered with the hot product tanker market for acquisitions, and most definitely have not bothered with equally good vessels older than ten years of age.

This is a bifurcated market, and the smart money seem to show the way…

© 2013 Basil M Karatzas & Karatzas Marine Advisors & Co.

No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders.