Seaspan expands fleet with takeover of GCI in US$450m deal

Hong Kong-based shipowner Seaspan Corporation has boosted its fleet in a US$450 million deal to acquire the remaining 89 per shares of Greater China Intermodal Investment (GCI) it did not own.

The New York-listed Seaspan Corp announced that it was buying the shares from affiliates of Carlyle Group and the minority owners of GCI for $450 million in cash and stock. It explained that it was financing the deal with $330 million in cash and $50 million in new shares. It sourced the capital for the purchase from its own balance sheet, plus a $100 million credit facility from Citi and a $16 million reinvestment by the Washington family.

A new $250 million investment by Fairfax Financial Holdings will also facilitate the purchase, Seaspan Corp said in a press release announcing the acquisition. The new investment increases Fairfax's total investment in Seaspan to $500 million.

The deal has an implied enterprise value $1.6 billion.

GCI's fleet consists of 18 modern "eco-class" containerships of 10,000 TEU and 14,000 TEU, representing a total of 204,000 TEU. Of the eighteen vessels, sixteen are currently on-the-water while the remaining two are newbuilds vessels scheduled for delivery during the second quarter of 2018.

Seaspan has been involved in the design, construction, delivery and operations of all 18 of GCI's vessels since inception. All of these vessels are sister ships to Seaspan's current fleet. Given Seaspan's operating history of GCI's fleet, there is no operational integration risk, the company said, reports gCaptain of California.

"GCI's current fleet will contribute approximately $1.3 billion towards Seaspan's contracted future revenues, increasing Seaspan's total contracted future revenues to approximately $5.6 billion. In calendar year 2019, with an 18 vessel fleet, GCI is expected to generate $185 million to $200 million in annual EBITDA," the company said in the press release.

Bing Chen, president and Chief Executive Officer of Seaspan, stated: "This significantly accretive acquisition materially increases our contracted future revenues and enhances our ability to provide our customers with modern, state-of-the-art containerships.

"With GCI's fleet now under our ownership, we are strengthening our partnerships with customers and enhancing our scalable integrated platform for sustained growth and future consolidation. As the container shipping industry is beginning to show signs of a recovery, we are taking decisive actions to capitalise on compelling opportunities in our market."

Insurers face multi-million-dollar claims from Maersk ship fire

The fire-damaged 15,262 TEU Maersk Honam has rocked the insurance industry with a repair bill to the tune of hundreds of millions of dollars, although some shippers will not have been insured, according to the UK's Loadstar.

According to AIS signals received from one of the salvage tugs in attendance, the vessel was still-smouldering while being towed to port of refuge, heading slowly in the direction of Mumbai.

The 2017-built Maersk Honam caught fire on March 6 in the Arabian Sea en route to the Mediterranean, via the Suez Canal, claiming the lives of four seafarers with a further crew member presumed lost.

According to the Indian coastguard pictures, hundreds of containers in the fore section of the mega ship appeared to be a total loss, but boxes stowed behind the superstructure and in the aft section looked intact.

Maersk declared a general average (GA) on March 9 and appointed Liverpool-based average adjuster Richards Hogg Lindley to collect the necessary GA security. It said it had advised cargo owners, including 2M partner MSC, of its decision to declare GA.

MSC requested its customers to contact their insurance company "so that your cargo can be released without delay," adding: "We have not received any reliable information regarding the condition of your cargo, but we will be sure to inform you after we are notified."

However, many of the shippers may not have arranged any marine cargo insurance and will be in for a shock when the average adjusters require a substantial deposit before the release of undamaged containers. The basic concept of GA is that all losses, including salvage, port and transfer costs are shared between surviving cargo.

For cargo that was insured, marine reinsurance branches are bracing for an avalanche of claims. Insurers have for some time expressed their concerns about their exposure in the event of a major incident to a mega containership.

EU and Japan unite to seek exemption from US steel, aluminium tariffs

The European Union and Japan are pushing for exclusion from the Trump Administration's tariffs on steel and aluminum imports into the United States, a move that will go into effect on March 23.

US Trade Representative Robert Lighthizer met with European Commissioner for Trade Cecilia Malmstrom and Minister for Economy and Industry of Japan Hiroshige Seko in Brussels last week as part of discussions to address the global overcapacity of steel and find potential solutions to curb the trade-distortive practices that led to the overcapacity issues, American Shipper reported.

Mr Lighthizer and Ms Malmstrom had their own bilateral follow-up meeting afterwards to further discuss the issue, but no final decision has been announced regarding a potential exemption.

(Source:HKSG-GROUP)

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