Seaspan Corporation announced that it has signed contracts to build four 4250 TEU vessels at Jiangsu New Yangzi Shipbuilding Co., Ltd. in China. These new orders are in addition to the ten 2500 TEU vessels Seaspan previously ordered from Jiangsu Yangzijiang Shipbuilding Co., Ltd., a shipyard affiliated with Jiangsu. The four newbuilding vessels are scheduled to be delivered between March and September, 2009. The total delivered cost is expected to be approximately $66.1m per vessel, subject to certain pre-delivery expenses remaining at budgeted levels.
Seaspan also announced that it has arranged simultaneous six-year charter agreements for these four vessels with Compania SudAmerica de Vapores SA (CSAV) of Chile at a rate of $25,925 per day. CSAV is the largest liner shipping company in South America and is ranked 16th in the world by TEU capacity.
Each new vessel is expected to contribute between $7.5 million and $7.9 million 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.
Seaspan Management Services Limited will
supervise the construction of the new vessels and operate the ships for Seaspan at an estimated fixed rate of $4,725 per day through 2011.
The company will use an existing credit facility to fund the down payments for these vessels. Permanent financing will be arranged in the coming months.