Squire Patton Boggs has advised Seaspan Corporation, a wholly-owned subsidiary of NYSE-listed Atlas Corp., on securing two separate ECA-backed Japanese Operating Lease with Call Options (JOLCOs) totaling approximately US$838 million and US$1.4 billion. These innovative, ‘first-of-a-kind’ transactions involved the creation of a unique financing structure by combining ECA-backed debt financing and JOLCOs into one arrangement. The proceeds from the financing will support Seaspan’s 70-vessel newbuild program pre-and post-delivery of the vessels. The transactions have been recognized as “The Export Credit Agency Deal of the Year” in the Marine Money 2021 Deal of the Year Awards.
The first transaction involved securing a syndicated loan backed by China Export & Credit Insurance Corporation (Sinosure), China’s state owned ECA, with sale-leaseback arrangements under JOLCOs. The large syndicate involved HSBC as Global Coordinator and Lead Bookrunner, ECA Agent, Facility Agent and Security Agent; Citibank, Deutsche Bank AG, HSBC, Société Générale, Bank of China Limited, BNP Paribas, and ING Bank, N.V., as Mandated Lead Arrangers and Bookrunners, Bank of Communications a Lead Arranger and Standard Chartered Bank as Arranger. Seaspan will use the proceeds from the financing, which totaled approximately $838 million, to finance eight newbuild vessels, consisting of four 12,000 TEU and four 15,000 TEU vessels pre- and post-delivery.
The US$1.4 billion financing involved loans supported by two Korean ECAs, the Korea Trade Insurance Corporation (K-Sure), and the Export–Import Bank of Korea (KEXIM). In addition to the JOLCO sale and leaseback arrangements under the structured financing, KEXIM provided a direct funding tranche and a buyer credit guarantee whilst K-Sure provided strong support through their LOI. The large syndicate involved Citibank as Global Coordinator, ECA Admin Agent, Mandated Lead Arranger and Bookrunner, Citicorp International Limited as Facility Agent and Security Agent; Bank of America National Association, Bank of China Limited, Deutsche Bank AG, HSBC. The Korea Developmeny Bank and Société Générale as Mandated Lead Arrangers and Bookrunners and E.Sun Commercial Bank and Standard Chartered Bank as Arrangers. Proceeds will be used to finance ten 15,000 TEU LNG dual-fuel newbuild vessels pre- and post-delivery.
In line with Seaspan's policies, the financing documentation incorporates requirements with respect to the Poseidon Principles.
The Squire Patton Boggs team advising Seaspan on both transactions was led by Financial Services partner Kate Sherrard, supported by Chua Aik Hui and Quah Jun Wei (Singapore), Bernice Chia (Hong Kong) and Tomohiko Kamimura (Tokyo).
Ms. Sherrard commented: “We are pleased to have advised Seaspan on these innovative ECA-backed JOLCO financings. The transactions involved complex structuring to take into account the unique arrangement with Japanese lessors and policy and regulatory requirements of each of the various ECAs.
With such complex transactions, the strength of our global network and industry expertise came to the fore, with a dedicated team across several offices and time zones providing integrated services and advice to Seaspan.”
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