United Arab Shipping Company (“UASC”) closed a US$ 1.25 bln multi-tranche syndicated loan facility (“Facility”) for the partial financing of seven 14,000 TEU container ships and five 18,000 TEU container ships.
The Facility is part of a larger US$ 1.74 bln debt financing related to UASC’s announced US$ 2.3 bln capital expenditure program for 17 newbuilding container vessels including, in total, eleven 14,000 TEU and six 18,000 TEU vessels. Deutsche Bank AG, London Branch (“DB”) acted as Global Coordinator to UASC for the entire US$ 1.74 bln debt financing. The 17 vessels include ten vessels for which shipbuilding contracts were signed in August 2013 with the remaining seven vessels being option vessels. The process of option vessels is still continuing.
UASC has ordered the ultra large container ships from Hyundai Heavy Industries Co. Ltd. (“Hyundai”) shipyard in South Korea. The giant box-ships, which are state of the art vessels capable of running on conventional fuel and liquefied natural gas, are scheduled for delivery between November 2014 and January 2016. The vessels will be deployed as part of a 10 year strategic vessel sharing agreement between UASC and China Shipping Container Lines.
The Facility finances 75% of the cost of the vessels and is comprised of a US$ 439 mln commercial bank tranche (“USD Commercial Tranche”), a US$ 300 mln equivalent to Saudi Riyal tranche (“SAR Commercial Tranche”) and a US$ 512 mln tranche (“K-sure Tranche”) benefiting from 95% commercial and political risk insurance from Korea Trade Export Insurance Corporation (“K-sure”). All tranches are fully repaid within 12 years from drawdown. The transaction was closed in an accelerated time frame within 3 months of formal launch. The landmark deal is one of the largest ship financing deals of 2013 and is testament to the excellent relationships that UASC enjoys with K-sure and its lenders.
DB and Qatar National Bank S.A.Q. (“QNB”) acted as Joint Lead Underwriters and Lead Bookrunners for the Facility. The USD Commercial Tranche lenders include QNB, Arab Banking Corporation (B.S.C), Ahli United Bank B.S.C., and Deutsche Bank AG Filiale Deutschlandgeschäft, each acting as a Mandated Lead Arranger while DVB Group Merchant Bank (Asia) Ltd. (“DVB”) and BNP Paribas each acted as an Arranger.
Bank Saudi Fransi (“BSF”) underwrote the SAR Commercial Tranche and acted as SAR Bookrunner, Coordinating Mandated Lead Arranger, SAR Facility Agent and SAR Account Holder.
Lenders in the $512 mln K-sure Tranche included Credit Suisse AG who acted as Coordinating Mandated Lead Arranger, Bank of America, National Association, ING Bank N.V., London Branch and Societe Generale, each of which also acted as a Mandated Lead Arranger. Standard Chartered Bank (“SCB”) acted as Lead Arranger while Deutsche Bank AG, Hong Kong Branch, BNP Paribas Seoul Branch and DVB Group Merchant Bank (Asia) Ltd each acted as an Arranger.
In addition, DB acted as Documentation Agent for the Facility, SCB acted as global Agent and USD Facility Agent, DVB acted as Security Agent, BNP Paribas Seoul Branch acted as K-sure Agent while BNP Paribas (Suisse) SA acted as USD Account Holder.
Mr. Basil Al-Zaid, UASC Chief Financial Officer, commented on the occasion of the closing of the syndicated loan facility: “In a capital intensive industry like container shipping, it is critical to invest in new assets to keep up with market growth and to expand. The unwavering commitment of our shareholders as well as the excellent support from our regional and international lenders has been fundamental to the successful closing of this Facility. The oversubscription to the Facility by 2.2 times also shows the financial strength of UASC.”
Mr. Jorn Hinge, UASC President & Chief Executive Officer, also remarked: “We are first-movers with these ‘Green’ newbuildings that will be equipped for LNG duel fuel for the first time in the long haul container trades. UASC is proud to continue its commitment to energy efficiency and environmental friendliness. As the UASC vision is ‘Linking the Middle East to the World’ we appreciate especially that numerous regional Middle East banks have been involved in supporting this Facility.”
The US$ 493 mln debt financing for the remaining five vessels is expected to be closed shortly under separate facilities.
UASC, December 19, 2013