Cosco Shipping Development (CSD) has agreed to a sale-and-lease back deal for four 10,000-teu containerships with a Japanese firm specialised in tax lease arrangements.
In an exchange filing, the Shanghai and Hong Kong-listed financing arm of China Cosco Shipping said the ships will be sold to Financial Products Group (FPG) for $267m.
The deal involves the CSCL Spring, CSCL Summer, CSCL Winter and CSCL Bohai Sea.
All delivered from Dalian Shipbuilding Industry Corp in 2014, the vessels are operated by Cosco Shipping Lines, the container shipping unit of Cosco Shipping.
On a clean sale basis, VesselsValue estimates the total value of those ships at nearly $228m.
However, Tokyo-listed FPG will charter them back to CSD for up to eight years and seven months in a $248m bareboat deal, according to the filing.
CSD has an option to buy the ships four years after the leases start, and another option seven years and three months after.
The vessels will be reflagged to Panama from Hong Kong.
Due to domestic tax incentives, Japanese lease arrangements have been gaining ground in ship finance over the past few years.
“With the sale-and-leaseback deal, we would be able to utilise our fixed assets better, expand our ways of financing, shore up our balance sheet and provide long-term liquidity,” CSD said.
CSD is expected to continue to charter the ships out to Cosco Shipping Lines via separate deals.
The company posted net profits of CNY 806m ($119m) on revenue of CNY 13.1bn during the first nine months of 2018, compared to net profits of CNY 1.14bn on revenue of CNY 11.9bn in the same period of 2017.
Cash reserves stood at CNY 12.9bn as of 30 September.
Meanwhile, CSD announced it would seek to sell a minority stake in wholly owned subsidiary Cosco Shipping Leasing, which controls its parent’s transport assets.
The shares will be sold to “strategic investors” via an open auction on the Shanghai United Assets and Equity Exchange, according to a CSD filing. Further details will be announced in due course.
“This will help develop our leasing business, strengthen our capital structure and management while increasing our long-term profitability,” CSD said.
Total assets of Cosco Shipping Leasing were valued at CNY 27.7bn as of 30 September and liabilities at CNY 23.1bn.
