[260112.EN.SEA] Norway: SinOceanic Shipping Takes Delivery of VLCV MSC Vega

SinOceanic Shipping ASA, took delivery of Very Large Container Vessels (VLCV) MSC Vega  (13,100 TEU) today and she is placed on a 15 year charter with MSC, the 2nd largest container line in the world.

The second vessel (“MSC Altair”) will be delivered in late February 2012, and the third vessel (“MSC Regulus”) in April 2012. Upon delivery, both of these vessels will also be placed on 15 year charters with MSC.

The three vessels, together with YM Portland, a 4.400TEU vessel presently owned by the Company, will generate a total gross freight income of approximately USD 1 billion over the course of the Charter periods, with an EBIDTA of USD 60 million per year.

As previously communicated, the agreed purchase price for each vessel is approximately USD 155 million, of which a total of approximately USD 62 million has already been paid as partial consideration prior to delivery. The USD 62 million pre delivery and deposit installments paid for the three new vessels have been financed by way of shareholder loans from the sponsor and largest shareholder in SINO, Oceanus International Investment AS. (“Oceanus”). Oceanus is owned by HNA Group Co. Limited, China (“HNA”) which is the ultimate owner of 33.33% of the shares in the Company.

The remaining part of the purchase price for the vessels which falls due on delivery, and the refinancing of the loans from Oceanus (HNA), was intended to be financed by raising new debt and equity.

Due to the present challenging times in the world’s equity markets, the Board of the Company has decided that the Company should postpone entering the equity markets to raise capital to finance the delivery of the new vessels provided that alternative financing is available. An equity raising now, even if it could be successfully achieved, would be dilutive to existing shareholders of the Company, as the terms and conditions at this time would be particularly onerous.

As a consequence, “MSC Vega” is financed by a USD 80 million eight years senior secured loan facility arranged by Deutsche Bank AG and a subordinated loan of USD 80 million from Oceanus (HNA). The subordinated loan has a tenor of 8 years and carries a margin of 8% over Libor the first year and 10% over Libor the remaining 7 years. No upfront fee has been charged. 

The loan from Oceanus (HNA) is without recourse to the Company. The loan will be re-financeable and it is the Company’s intention to seek to re-finance this loan once the equity markets normalise. In the meantime, however, the financial benefits which would otherwise accrue for the benefit of shareholders will be required to service debt obligations. Oceanus (HNA) has confirmed that it intends to continue its support of the Company as far as possible so that it can fulfill its contractual obligations.

In addition, senior debt commitments of a total of USD 160 million from major international shipping banks are in place to finance the debt portion of the remaining two vessels upon delivery.

With the support of Oceanus (HNA), the Company will therefore be positioned to grow going forward once markets normalise in accordance with the original plan communicated to the shareholders earlier in the year provided that it is able to procure the equity portion or similar alternative financing for the acquisition of “MSC Altair” and MSC Regulus”.

Source : SN-TR, 11.01.12.