Seaspan Corporation has returned to the Japanese Operating Lease with Call Option (Jolco) market with a US$1.17 billion financing for fifteen 7,000 TEU dual-fuel newbuild container vessels, backed by China Export & Credit Insurance Corporation (Sinosure).
BNP Paribas acted as export credit agency (ECA) agent, facility agent and security agent. BNPP and Société Générale acted as mandated lead arrangers and bookrunner, while HSBC, Standard Chartered Bank, Bank of China, Citibank and Bank of Communications acted as mandated lead arrangers. Development Bank of Japan and Sumitomo Mitsui Banking Corporation acted as lead arrangers.
Tokyo-based Financial Products Group unit FPG-AIM acted as Jolco arranger, and FPG as Jolco equity underwriter on the transaction. Watson Farley & Williams (WFW) advised BNPP, while Global Law Office acted as BNPP’s Chinese law counsel, supporting the WFW team on aspects of the deal involving Sinosure elements. Squire Patton Boggs acted for Seaspan.
Seaspan, a Hong Kong-headquartered container line subsidiary of NYSE-listed Atlas Corp, will use the proceeds to fund fifteen 7,000 TEU dual-fuel newbuild container vessels, which further strengthens its long-term liquidity while growing its fleet within its ESG framework and policies.
Under the Jolco structure, groups of Japanese tax-incentivized investors (typically unlisted small and medium-sized enterprises) acquire a vessel for 12 years, and lease it back to the shipping line. At the end of the 12-year lease, the shipping line has an option to aquire the vessel at a fixed price.
The WFW assets and structured finance team that advised BNPP was led by Asia group head and Hong Kong partner Madeline Leong. “We are delighted to have advised BNPP on these Sinosure-backed Jolcos, which are not only cutting-edge financial structures at the vanguard of innovation in the maritime space but also embrace ESG values and make a substantial contribution towards funding a large number of newbuildings for Seaspan’s fleet,” Leong says.
This is the third major transaction for Seaspan in the Jolco market in a space of 12 months. Late last year a 12-year syndicated loan backed by Sinosure was signed, combined with Jolcos. The proceeds, amounting to US$838 million, were used to finance eight previously announced newbuild vessels, consisting of four 12,000 TEU and four 15,000 TEU vessels.
This transaction represented the first time an ECA has provided export buyer credit insurance for a Jolco. The financing provided pre-delivery financing under the ECA facility, which became a Jolco financing as ships were delivered.
In parallel, Seaspan worked on a US$1.4 billion Jolco and financing with official support from South Korea, for 10 15,000 TEU LNG dual-fuel newbuild vessels. This financing was backed by Korea Trade Insurance Corporation (K-Sure) and the Export–Import Bank of Korea (Kexim), which additionally provided a direct funding tranche. This was also the first time that Korean ECAs provided export buyer credit insurance and a guaranteed tranche for a Jolco transaction.
Seaspan said at the time that the Jolco sale-leaseback arrangements provided it with benefits, including long-tenor financing covering construction through to 12 years post-delivery, meaningful enhancements in cost of secured debt, and diversification of funding sources, including Japanese equity and ECA-backed syndicated bank loans.