K3's Chris Lee shares how a hectic few months led to a major win for Auckland, the environment and his client
There is nothing like $27m of funding on the line to add pressure.
When commercial lawyer Chris Lee at K3 Legal got the call from co-founder and chief executive of electric boat designer EV Maritime Michael Eaglen in November last year, he knew he was in for busy few months.
“It was immediately full-on: first with the terms sheet and then the main agreement,” said Lee.
The start-up EV designer needed a three-way agreement between itself, Auckland Transport (AT), and leading private boatbuilder McMullen & Wing to supply two 200-person capacity commercial electric ferries as part of the government’s drive to decarbonize public transport and support the rapidly developing maritime clean technology sector in New Zealand.
The project was supported by $27m in funding administered by the Energy Efficiency and Conservation Authority (EECA) as part of the government’s COVID Response and Recovery Fund, but that funding came with a firm deadline that was just a few months away.
AT had no history of ferry ownership and EV Maritime was a relatively untested start-up working in an area of technological novelty. Rather than having EV Maritime as its lead contractor, AT wanted the extra security of having McMullen & Wing as one of the directly contracted supplying parties.
There was also the experimental nature of the project to consider as all parties sought to examine the technical and operational implications of de-carbonising inner and mid-harbour ferry journeys.
In addition, the deal came against a background of some unmanageable variables such as the impact of the war in Ukraine on the price of crucial components, challenging international supply chains and an economy still grappling with the pandemic.
“These complexities meant nearly three months were spent negotiating an extremely detailed terms sheet – a document that in other deals might have taken less than a week,” said Lee.
Quotes had been obtained from international suppliers in what was becoming a very large document and the prices needed to be maintained in the deal adding further pressure.
“After working long days and some nights for an extended period, we were relieved, and more than a little exhausted, to get the deal completed just a day or two before the deadline,” said Eaglen.
This meant that the government money for the project was secure and would cover approximately 75% of the construction costs.
AT will operate the two electric fast ferries across all major inner and mid-harbour services, and the new ferries will provide a pathway for further ferry electrification in the future.
Regular ferries that currently operate on Auckland harbour contribute about 20% of Auckland’s public transport emissions, but the electric ferries were expected to displace approximately 1000 tonnes of carbon emissions annually.
The standout of the hectic few months for Lee was the complexity of the deal but still being able to get it across the line in time to make sure the project and sector had a viable future.
“There were so many aspects to this deal which had to be considered – the relationships with: AT, McMullen & Wing, EECA, EV Maritime’s suppliers and the certifying regulators – with the overriding concerns being delivering a successful project and protecting and growing EV Maritime’s intellectual property,” he said.
Eaglen said the political capital with the government was significant as the deal needed so much public money to get it moving. When everything suddenly came together, he was grateful that Lee could get up to speed on a difficult deal so quickly.
“It’s always challenging starting a new relationship when the pressure is on: you’re trying to get the job done while each learning how the other works and what they need,” he said.
He commended Lee on knowing not only when to step in but also when to step back in an area that is highly technical and in a deal where Eaglen was so personally “invested” as a company founder.
“Chris managed to strike a really good balance.”
Chris Lee is a trusted adviser for a range of exciting NZ and international clients, helping them to grow their businesses faster by securing strategic partnerships through strong commercial agreements; protecting and enhancing IP; navigating shareholder and director issues and assisting with regulatory compliance.
