Seaspan closes $838M loan for 8 new containerships
Seaspan Corporation, a wholly owned subsidiary of Atlas Corp, is proud to announce fulsome details on one of its financing arrangements previously identified in Atlas’ third quarter results released on November 8, 2021. This innovative financing arrangement is a first-of-its-kind vessel financing, combining two existing asset financing structures to add long-dated and attractively priced debt to Seaspan’s capital structure. Proceeds from the Financing totaling approximately $838 million will be used to finance eight previously announced newbuild vessels, consisting of four 12,000 TEU and four 15,000 TEU vessels. Unchanged from Atlas’ third quarter results previously released, financing has been secured for 60 of its 70 newbuild vessels (which includes three vessel deliveries previously announced). Completion of financing for the remaining 10 newbuild vessels continues to be expected prior to year-end.
Transaction Highlights
This first-of-its-kind transaction combines two ship finance structures, an export credit agency (“ECA”) backed loan supported by China Export & Credit Insurance Corporation (“Sinosure”) and sale-leaseback arrangements under special Japanese lease contracts, providing Seaspan with meaningful benefits, including:
– Long tenor – 12-year tenor post-delivery with mortgage style repayment, extends and diversifies Seaspan’s maturity profile
– Low cost – meaningfully lowers pricing relative to existing secured debt
– Fully funded construction cost – Provides partial funding of pre-delivery installment payments, totaling approximately 30% of the contract price, during construction, with full value of construction price funded at delivery
– Diversifies funding sources – Combines Japanese equity (~25% of the Financing) with an ECA backed syndicated loan (~75% of the Financing)
Graham Talbot, CFO of Atlas and Seaspan, commented: “This Financing has been a significant investment in time for our team, laying groundwork over a period of several years, but the reward is a financing with both long tenor and remarkably low-cost, from construction to 12 years post-completion. This was made possible by Seaspan’s position as an industry leader, and an innovator in ship finance. Among other strategic benefits, through this transaction we’ve further developed our relationship with Sinosure – a critical partner in China – and with Japanese equity investors. With this closing, we have concluded financings for 60 of our 70 newbuild vessels, solidifying our long-term liquidity and enabling continued quality growth.”
Transaction Structure
The Financing consists of two parts:
– 12-year syndicated loan backed by Sinosure, China’s state owned ECA (the “ECA Facility”) and
– Sale-leaseback arrangements under special Japanese lease contracts (“JOLCOs”)
This transaction represents the first time an ECA has provided export buyer credit insurance for a JOLCO transaction and involved complex structuring with various parties. The Financing will provide pre-delivery financing under the ECA Facility, which will become a JOLCO financing at delivery, subject to certain conditions.
Shuigen Pan, General Manager of Sinosure Jiangsu Branch, commented: “The successful closing of the Financing represents that the cooperation between Seaspan and Sinosure has reached a new height. As the world leading independent containership lessor, we are committed to long term strategic cooperation and welcome more Chinese newbuild orders from Seaspan. We are also looking forward to exploring new horizons on innovative and win-win project paradigms between us.”
Hisanaga Tanimura, Founder and CEO of FPG, commented: “We are proud to be able to work together with Seaspan again and are delighted to close this groundbreaking structure. This transaction demonstrates our best-in-class capabilities to arrange and structure innovative vessel financing solutions in partnership with our customers. We look forward to continuing to grow our relationship with Seaspan.”
Sam Lippitt, Head of Export & Asset Finance for the Americas at HSBC commented: “We are pleased to have collaborated with Seaspan in order to deliver a market first – a Sinosure wrapped JOLCO facility. Given the importance of China as a maritime exporter, we see enormous potential to roll this structure out in support of Atlas in the future.”
In line with Seaspan’s policies, the Financing documentation incorporates all requirements with respect to the Poseidon Principles.
Advisors, Lenders, and Export Credit Agency
The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) acted as ECA Agent, Global Coordinator and Lead Bookrunner; Citibank, N.A., Deutsche Bank AG, HSBC, Societe Generale, Bank of China Limited, BNP Paribas, and ING Bank, N.V., acted as Mandated Lead Arrangers and as Bookrunners; Bank of Communications acted as Lead Arranger, and Standard Chartered Bank acted as Arrangers for the Financing.
Sinosure provided export buyer credit insurance policies for the ECA JOLCO transaction, FPG-AIM acted as JOLCO Arranger, and FPG acted as JOLCO Equity Underwriter.
Watson Farley Williams acted as lenders counsel, in conjunction with Jun He. White & Case advised FPG, and Squire Patton Boggs acted for Seaspan.