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-12-Year Charters Arranged with CSCL Asia
- Company Also has Uncommitted Option for Four Additional 2500 TEU Vessels
Seaspan Corporation announced that it exercised its option to build four 2500 TEU vessels at Jiangsu Yangzijiang Shipbuilding ("YZJ") 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 $44.7 million per vessel, subject to certain pre-delivery expenses remaining at budgeted levels.
Seaspan also announced that it has arranged simultaneous twelve-year charter agreements for these four vessels with China Shipping Container Lines (Asia) Co. Ltd. ("CSCL Asia") 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. CSCL Asia is a subsidiary of China Shipping Container Lines Co. Ltd. ("CSCL"), the world's seventh largest liner company. CSCL will guarantee CSCL Asia's performance under the charter parties. Each new vessel is expected to contribute between $4.4 million and $4.8 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. "The exercise of this option is consistent with our practice of expanding our fleet by constructing series of sister vessels," said Gerry Wang, Chief Executive Officer of Seaspan. "This will bring to eight the number of 2500 TEU ships we have ordered at Yangzijiang Shipbuilding and we still hold an option to order a further four vessels. The long-term charters agreed with CSCL Asia expand our relationship with this very important customer and will contribute to the growth and stability of our cash flow." 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 ("SMSL") 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. The yard has been in business for over 30 years and is one of the largest private shipyards in China. Predecessor companies of SMSL successfully built barges and tug hulls at the yard in the 1990s. The SMSL technical team will, as with other newbuilding orders, manage the ship design and oversee the construction, to ensure uniformity with the existing fleet. A credit facility recently arranged through DnB Nor will provide the debt financing for the first four option vessels as well as the first four vessels in this series and the two 3500 TEU vessels Seaspan is currently building at Zhejiang Shipyard. Source: Press Release
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