Middle East

UASC closes landmark $1.25bn loan facility

Dubai: United Arab Shipping Company (UASC) has closed a $1.251bn multitranche syndicated loan facility for the partial financing of seven 14,000 teu containerships and five 18,000 teu containerships. The facility is part of a larger $1.744bn  debt financing related to UASC’s announced $2.3bn capital expenditure program for 17 newbuilding container vessels. Deutsche Bank’s London branch acted as global coordinator to UASC for the entire $1.744bn 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 in South Korea. 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 $439m commercial bank tranche, a $300m equivalent to Saudi Riyal tranche and a $512m tranche benefiting from 95% commercial and political risk insurance from Korea Trade Export Insurance Corporation. All tranches are fully repaid within 12 years from drawdown. The transaction was closed in an accelerated time frame within three months of formal launch. The landmark deal is one of the largest ship financing deals of 2013.

DB and Qatar National Bank acted as joint lead underwriters and lead bookrunners for the facility.
Basil Al-Zaid, UASC cfo, 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.”

Jorn Hinge, UASC president and ceo, 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 $493m debt financing for the remaining five vessels is expected to be closed shortly under separate facilities.  [20/12/13]

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