Seaspan Exercises Option for Four New Vessels

Friday, July 07, 2006
Seaspan Corporation exercised its option to build four 2500 TEU vessels at Jiangsu Yangzijiang Shipbuilding in China. This option was part of the February transaction with YZJ that included the firm order of four 2500 vessels and options to build eight more at the same price. These new orders will increase the company's total fleet to 33 vessels when the vessels are delivered between May and August 2009. The total delivered cost is expected to be approximately $44.7m per vessel, subject to certain pre-delivery expenses remaining at budgeted levels. Seaspan also announced that it has arranged simultaneous 12-year charter agreements for these four vessels with China Shipping Container Lines (Asia) Co. Ltd. at an initial rate of $16,750 per day, increasing to $16,900 per day after six years. These are the same terms and conditions as the charters for the first four vessels in the series. Each new vessel is expected to contribute between $4.4m and $4.8 m in incremental EBITDA per annum upon delivery. For this purpose, EBITDA shall mean net earnings before interest, undrawn credit facility fees, taxes, depreciation and amortization of deferred financing fees. This should result in an increase in distributable cash when the vessels are delivered and operating. The remaining group of four 2500 TEU option vessels are priced at the same level as the eight already ordered. The option to build the remaining four vessels in the series will only be exercised if acceptable long-term charters are arranged. Seaspan has until September 30, 2006 to exercise this final option. Seaspan Management Services Limited will supervise the construction of the new vessels and operate the ships for Seaspan. YZJ, which is building the vessels, is located on the Yangtze River in the Jiangsu Province of China.
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