Seaspan Corporation has signed contracts to build five new 4,520 TEU container vessels with Samsung Heavy Industries. Concurrent with the signing of the newbuilding contracts, the Company has signed 12-year time charters with Kawasaki Kisen Kaisha, Ltd. ("K-Line"), Japan's third-largest liner operator and ranked 13th in the world by TEU capacity.
The 12-year contracts are secured at strong rates. The Company also announced debt financing for these newbuildings will be provided from a portion of its more than $900 million of new debt financings that were completed today.
The five newbuildings, which include the latest in design innovation to enhance each vessel's cargo carrying capabilities, are scheduled to be delivered between September 2010 and October 2011. With these five newbuildings, Seaspan's contracted fleet will grow to 68 vessels, including 29 vessels currently in operation that have an average remaining charter coverage of approximately 8 years. The 39 newbuildings have time charters averaging approximately 11 years in duration from delivery.
Gerry Wang, Chief Executive Officer of Seaspan, stated "We are excited to once again grow our modern fleet and enhance our leadership in the container ship industry in a disciplined manner that best serves our shareholders. First, concurrent with this transaction, we are pleased to have secured more than $900 million in debt financing under favorable terms for our entire fleet of 68 vessels. Second, by expanding our relationship with K-Line, we have secured our newbuildings on attractive long-term time charters with another leading publicly traded liner company with one of the strongest credits in the industry. Third, this accretive transaction meets our strict return criteria and positions the Company to significantly increase both its EBITDA and distributable cash flow over time, a top priority for Seaspan. Finally, we continue to diversify our revenue base as we seek to further take advantage of our integral role in the global infrastructure for the delivery of consumer and industrial goods from areas of production to areas of consumption. Going forward, we will maintain our commitment to draw upon our strong balance sheet and capitalize on attractive growth opportunities as we have done in expanding our fleet by 243% on a TEU basis since our initial public offering in August 2005."
Under terms of the Company's new $900 million debt financings, the long-term fixed interest rate will be less than 6% with an interest margin of 55 basis points over LIBOR. Seaspan plans to fund the acquisition of its five new 4,520 TEU container vessels as well as the Company's previously announced acquisition of eight new 13,100 TEU container vessels through borrowings under its new expanded debt facilities. Upon completing these acquisitions, Seaspan's potential available debt capacity will total approximately $1 billion, of which $550 million is available immediately.
Seaspan also announced it has accelerated its newbuilding delivery schedule for 2008. The Company expects to take delivery of six 2,500 TEU newbuildings this year, up from two as originally planned. The six vessels, which represent 15% of the Company's order book, are expected add a total of $7.4 million and $5.6 million in incremental annual revenue and EBITDA, respectively, for 2008.
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