May 14, 2007
Seaspan orders HHI box ships
Seaspan Corporation (NYSE:SSW) today announced that it had signed contracts to build eight 8,500 TEU vessels at Hyundai Heavy Industries Co., Ltd. ("HHI") in South Korea. The eight newbuilding vessels are scheduled to be delivered between the fourth quarter of 2009 and the fourth quarter of 2010. The total delivered cost is expected to be approximately $132.5 million per vessel, subject to certain pre-delivery expenses remaining at budgeted levels.
HHI had announced the eight ship deal earlier, but identified the customer only as a "Marshall Islands shipowner.
Seaspan also announced that it simultaneously entered into twelve-year charter agreements for each of these eight vessels with Cosco Container Lines (Hong Kong) Co., Ltd., an affiliate of Cosco Container Lines Co., Ltd. ("Coscon") of China, at a rate of $42,900 per vessel per day.
The charterer will have three consecutive one year options to charter each of the ships for $43,400 per vessel per day after the twelve year firm charter periods.
Coscon is one of the largest container shipping companies in the world.
"We began working with Coscon last year when we purchased two 3,500 TEU vessels for 12 year charter to this major Chinese liner operator and we are very pleased to expand the relationship at this time by adding another eight vessels that will cost approximately $1 billion," said Gerry Wang, Chief Executive Officer of Seaspan. "The acquisition of these new ships will bring our total fleet to 55 vessels and add over $100 million in annual EBITDA once all eight vessels are delivered and operating. We believe this investment demonstrates the power of our business model to finance large scale vessel acquisitions to meet the needs of the top operators in the liner industry."
Seaspan Management Services Limited will supervise the construction of the new vessels and operate the ships for Seaspan at an estimated fixed rate of $6,000 per day through 2011.
The company will use a combination of proceeds received from a recent equity offering, a drawing under its recently amended and restated $1.3 billion loan facility and cash from operations to fund the down payments for these vessels. Permanent financing for subsequent installments will be arranged in the coming months.