Seaspan’s 70-vessel newbuild program fully funded by
Container ship giant Seaspan Corporation announced on Wednesday that it now has funding for its entire 70-vessel construction program.
With the closing of the last $1.4 billion transaction in December, Seaspan said its financing proceeds were approximately $6.9 billion.
Seaspan, a subsidiary of Atlas Corp, said the $1.4 billion will be used to fund ten new 15,000 TEU LNG dual-fuel builds, the latest in its recent $7.6 billion containership order spree. dollars, including three ships that have already been delivered.
Graham Talbot, Chief Financial Officer of Atlas and Seaspan, said: “We have now entered into binding financing agreements for our comprehensive newbuild program, strengthening our long-term liquidity. We have demonstrated consistent success in executing attractive growth opportunities at the right time while diligently managing the associated risks. We do this by ensuring that we only enter into new construction contracts once a long term lease is in place with one of our high quality counterparties, and that we have a clear line of sight. to fund the project.
Seaspan charters its vessels primarily on long term fixed rate charters. Its operating fleet consists of 134 vessels with a total capacity of 1,156,800 TEUs, plus 67 vessels under construction, bringing the total capacity to 1,959,200 TEUs, on a fully delivered basis.
Seaspan said the financing combines two vessel financing structures: (1) Export Credit Agency (ECA) guaranteed loans backed by two Korean ECAs, the Korea Trade Insurance Corporation (K-Sure) and the ‘Export-Import Bank of Korea (KEXIM), which additionally provides a tranche of direct financing, and (2) sale-leaseback agreements under Japanese Special Leases (JOLCO), providing Seaspan with significant benefits , including: i) long-term financing covering construction up to 12 years after delivery; (ii) significant improvements in the cost of secured debt; and, (iii) diversification of funding sources, including Japanese equities and syndicated bank loans supported by ECA. This is the first time that Korean ECAs have provided export buyer credit insurance and a guaranteed tranche for a JOLCO transaction.
Talbot said: “This financing is our second ECA-JOLCO transaction, and only the second of its kind, which was developed with our partners at Citi, K-Sure and KEXIM alongside a sister transaction announced in December. Creativity and strong global partnerships have enabled us to leverage this structure, enhancing our credit quality and equity returns through long-term, remarkably low-cost financing.
Shreyas Chipalkatty, Global Head of Shipping, Logistics and Offshore at Citi, said, “Over the years, our partnership with Seaspan has produced a number of innovative and value-added structures. With this transaction, we are adding yet another successful chapter to Seaspan’s history and also developing the broader maritime asset finance market. It is a distinct honor to have been part of this journey with the Seaspan team and we look forward to continuing our fruitful collaboration in the new era that is emerging for the maritime logistics space.
Chris Conway, global head of shipping and logistics, export and agency finance at Citi, said, “After a long period of development, this innovative structure has been fully embraced by the agency community. as an important tool to promote the exports of major shipbuilders. We are very proud to have been able to lead this combination of ECA and JOLCO for the first time in Korea.