A series of kamsarmax newbuildings is in the works for Chinese state-owned Shandong Shipping for charter to trading giant Bunge.
The Shandong Shipping board has approved performance guarantees to back seven-year time charters of four kamsarmax newbuildings to commodities major Bunge.
The deal is the first long-term arrangement between the Chinese provincially-owned company and the trader, although the two outfits have been counterparties on smaller deals in the past.
Li Maizhong, dry bulk general manager at Shandong Shipping, told TradeWinds through a spokesman that yards have not yet been selected for the 82,000-dwt kamsarmaxes. But the company expects that it can secure delivery slots for 2020.
Contracts have been negotiated in general-outline form but not yet signed, so the company said it cannot quote terms for the seven-year time charter contracts to Bunge, nor for lease financings with ICBC Leasing. The outfit believes signings are likely to take place next month.
But financial filings with China's New Third Board over-the-counter stocklisting system indicate that Shandong Shipping will offer Bunge a performance guarantee of nearly $2.85m per year over a term of seven years to back the time charter.
Letter of intent
Chinese newbuilding brokers believe Shandong Shipping has been working on the deal for some time and already has letters of intent in place with state-owned shipbuilders at a level of $27m per ship or somewhat above that.
Given the commercial quality of the names associated with the contract, brokers believe the deal could be done quickly at that pre-agreed level.
The Bunge time-charter deal will enable Shandong Shipping to secure a 10-year leasing arrangement from ICIL Maritime Leasing, an arm of ICBC Leasing, under a special purpose vehicle (SPV) to be named Hai Kuo 1916B Ltd. Financial disclosures indicate that Shandong Shipping will hold 30% of equity in the SPV.
Shandong Shipping sources expressed enthusiasm for the deal as a possible stepping-stone to further newbuildings.
They underscored that the order is being done through the parent company and not SDTR Shipping, Shandong Shipping's Singapore-based joint venture.
That outfit has been working for some time on a long series of larger 85,000-dwt bulkers based on SDTR's own design.
TradeWinds recently reported that SDTR had placed an order for such vessels at Dalian Shipbuilding Industry Co.
Qingdao-based Shandong Shipping is controlled indirectly by a consortium of provincially-owned companies in Shandong province.
It began as a dry bulk-orientated company but has grown to encompass three partial or wholly-owned shipping subsidiaries in dry bulk and tankers (Shandong Shipping), offshore decommissioning (Shandong Offshore Engineering), and LPG (Pacific Gas).
