Seaspan Corp expects to save hundreds of millions of dollars over five years through a major debt restructuring announced yesterday.
The New York-listed owner closed a $1bn portfolio financing programme made up of a $200m revolving credit facility and an $800m term loan facility.
Seaspan will put $128m toward the loans, set to pay off 12 credit facilities, over two years and another $240m through 2024 before rolling them into a new loan, which will assume the $400m in debt.
This approach could save the company up to $400m in principal debt payments over those first five years, according to chief financial officer Ryan Courson.
"Relative to the current structure now, over the course of those four years, it’s about $400m of movement between the five-year program," he said during a call with analysts today.
"Given that we are focused on deleveraging, we would only defer those payments to the degree that we had better use of this capital but ultimately it provides us a lot of flexibility in sculpting that principal amortization schedule."
The company's shares gained 2.5% to $10.13 by mid-afternoon.
Seaspan plans to double the loan amount to $2bn over the medium-term and use the facilities as a "primary source of secured financing going forward", he said.
"The plan is to move over $3bn of secured debt to this programme and keep a base of unencumbered assets," he said.
The financing has tied up 13 of Seaspan's 37 debt-free ships as collateral, leaving 24 unencumbered vessels in the fleet, he said.
Seaspan expects to have 28 unencumbered ships by the end of June by paying off more secured debt, thus making the amount owed equal to investment yield, he said.
“This portfolio financing is a first in shipping whereby given our scale and diverse portfolio our lenders underwrite Seaspan as a cash-flowing corporate entity rather than a collection of individual vessels and assets," Courson said.
Chairman David Sokol said underpinning the $1bn in financing with a diverse fleet allows for a higher credit quality loan, which turns means lower debt cost for Seaspan.
"From a lease and financing perspective, this is a meaningful and competitive advantage,” he said.
"It’s rare for a new structure to fundamentally change the way business can be done in this space but that’s what we feel we have done here, at least as it relates to Seaspan.”
