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Thursday, January 27, 2022

Seaspan's 70-ship Newbuild Program Fully Financed with $1.4 Billion Deal

Maritime Activity Reports, Inc.

January 5, 2022

© aerial-drone / Adobe Stock

© aerial-drone / Adobe Stock

Containership giant Seaspan Corporation announced on Wednesday that it now has financing lined up for its entire 70-vessel newbuild program.

With the completion of the latest $1.4 billion deal in December, Seaspan said its financing proceeds are approximately $6.9 billion.

Seaspan, a subsidiary of Atlas Corp, said the $1.4 billion will be used to finance ten 15,000 TEU LNG dual-fuel newbuilds, the last of its recent $7.6 billion containership ordering spree, including three ships that have already been delivered. 

Graham Talbot, CFO of Atlas and Seaspan, said, “We have now concluded binding financing arrangements for our full newbuild program, solidifying our long-term liquidity. We have demonstrated consistent success in executing on attractive growth opportunities at the right time while diligently managing associated risk. We do this by ensuring we enter into newbuild contracts only 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 financing the project.”

Seaspan charters its vessels primarily pursuant to long-term, fixed-rate time charters. Its operating fleet consists of 134 vessels with a total capacity of 1,156,800 TEU, plus 67 vessels under construction, increasing total capacity to 1,959,200 TEU, on a fully delivered basis.

Seaspan said the financing combines two ship finance structures: (1) export credit agency (ECA) backed loans supported by two Korean ECAs, the Korea Trade Insurance Corporation (K-Sure), and the Export–Import Bank of Korea (KEXIM), which is additionally providing a direct funding tranche, and (2) sale-leaseback arrangements under special Japanese lease contracts (JOLCOs), providing Seaspan with meaningful benefits, including: i) long-tenor financing covering construction through to 12-years post-delivery; ii) meaningful enhancements in cost of secured debt; and, iii) diversification of funding sources, including Japanese equity and ECA-backed syndicated bank loans. This represents the first time 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 in parallel with a sister transaction announced in December. Creativity and strong global partnerships have allowed us to bring this structure to fruition, improving our credit quality and equity returns through long-tenor and remarkably low-cost funding.”

Shreyas Chipalkatty, Citi Global Head of Shipping, Logistics & Offshore, said, “Over the years, our partnership with Seaspan has yielded a number of innovative and value-added structures. With this transaction, we add yet another successful chapter to Seaspan’s story, and also develop the wider maritime asset financing market. It is a distinct honor to have been part of this journey with the Seaspan team and we look forward to continuing our successful collaboration in the new era that is emerging for the Maritime Logistics space.”

Chris Conway, Citi Global Head of Shipping and Logistics, Export and Agency Finance, said, “After a lengthy development period, this innovative structure has been fully embraced by the Export Agency community as an important tool to help foster exports from the leading shipbuilders. We are very proud to have been able to lead this combination of ECA and JOLCO for the first time in Korea.”

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