Dutch containership managing owner JR Ship Investments has completed a EUR 5m ($6.75m) bond issue raised to pay off mortgage loans on two feeder ships with Commerzbank.
JR cut a deal with Commerzbank, which is withdrawing from the ship finance market, to take over the mortgage loans on the 1,050-teu boxships Evidence and Evolution (both built 1996) in a move to improve the solvency position of the vessels.
Commerzbank agreed to accept an average loss of 40% on the ships' loans if JR could raise the EUR5m in secured opportunity bonds to buy out the mortgages.
The new structure means “the interest and repayment obligations are considerably less of a burden than if the original ship mortgage was to be continued,” JR said in a statement. It adds that the vessels “generate reasonable operational revenues”.
Investors will receive interest of 7% for four years on the bonds which were issued by Dutch CV (limited partnership) funds in which owners previously invested equity.
At the end of last year JR promised an extra final payment of EUR 2,500 to every second and subsequent bond issued in order sweeten the deal and take the figure raised beyond EUR3.6m.It means bondholders will share in any profit from the sale of the ships.
The CVs have an option to make an early repayment of the working capital loan which they receive from the bonds.
Late last year group company JR Shipping set up a new CV for 11 of its HSH Nordbank-financed vessels from 750-teu to 1,440-teu.
