Seaspan Corp is raising $500m from a US private placement that has been described as the largest of its kind in the shipping sector.
The Hong Kong-headquartered shipowner issued $450m of the fixed rate, sustainability-linked senior secured notes late last week, with a further $50m expected to be issued and sold in August.
The placement received “significant interest” with more than $1bn in demand and involved over 20 “prominent investors” within the insurance industry, predominately in North America.
The $500m of notes comprise four series, each ranking on the same footing as existing and future debt in the programme, the shipowner said.
The weighted average maturity of the notes, which are non-amortising, is around 12 years, and the weighted average initial interest rate is about 4.1%.
Seaspan said the private placement was completed as part of its amended and upsized $2.5bn vessel portfolio financing programme.
Sustainability-linked
The programme, which was set up in 2019, now comprises of $2bn of bank credit facilities and $500m of notes, and is reported to be the largest reported sustainability-linked US private placement.
Seaspan said the enhanced terms of the bank credit facilities under the programme include reduced pricing by about 20%, maturities extended by two years, improved advance rates against assets and increased revolver to $400m, among other improvements.
The net proceeds of the private placement and the upsize are intended to be used to finance or refinance the acquisition of vessels and for general corporate purposes.
Bing Chen, president and chief executive of New York-listed parent Atlas Corp, said the transaction further solidified Seaspan’s balance sheet and provided long-term funding to facilitate the company’s growth throughout market cycles.
“The notes were oversubscribed by a strong group of prominent global investors, which clearly demonstrates the increasing interest and growing sponsorship Atlas is receiving within the global investment community,” he said.
Major milestone
Atlas chief financial officer Graham Talbot described the transactions as a major milestone in the evolution of Seaspan's capital structure.
“While the road started years ago, in the last six months alone we have diversified our capital sources into multiple new institutional markets through three issuances of senior unsecured notes and have now completed the first sustainability-linked US private placement in the transportation sector,” he said.
The pricing of the debt, including the notes, is subject to adjustment based on Seaspan’s achievements in two key performance indicators.
The first measures the alignment of the carbon intensity of the collateral vessels with the International Maritime Organization's 2050 decarbonisation trajectory.
The structure is inspired by the Poseidon Principles, the global framework by which financial institutions can assess the climate alignment of their ship-finance portfolios.
The second aims at fostering cooperation with charterers to advance the decarbonisation agenda, by including sustainability-linked provisions in future agreements.
Citigroup Global Markets acted as sole structuring agent for the programme, while Societe Generale acted as lead sustainability coordinator.
The bank portion of the programme includes a syndicate of lenders, led by Citibank, Societe Generale, Bank of Montreal, National Australia Bank Limited, Wells Fargo Bank, BNP Paribas and Bank of America, as mandated lead arrangers and joint book runners.
