CMA CGM 13,830-TEUer sale includes charter, repurchase options
FRENCH container shipping line CMA CGM is selling two 13,830-TEU vessels for US$171 million each to Ship Finance International Limited (SFIL) with a subordinated seller's credit of $55 million per vessel. Sunday, 27.Mar.2011, 22:25 (GMT+3)
FRENCH container shipping line CMA CGM is selling two 13,830-TEU vessels for US$171 million each to Ship Finance International Limited (SFIL) with a subordinated seller's credit of $55 million per vessel.
SFIL will charter back the ships that were built in 2010 to CMA CGM under 15-year time charters. The time charter includes a compensation clause to compensate Ship Finance for any increase in operating expenses, reports The Journal of Commerce online.
The acquisition of the two box ships, the Magellan and Corte Real, by SFIL will be financed through a French tax lease structure, with SFIL's investment limited to $25 million per vessel, or $50 million in total, and secured by junior mortgages.
The deal also offers the carrier several purchase options to buy back the vessels during the charter period, starting from 2014. The purchase options include a profit sharing arrangement enabling Ship Finance to receive extra amounts upon the exercise of such purchase options provided certain undisclosed conditions are met.
The report said it anticipates the transaction will generate an annual free cash flow in excess of US$7 million, after operating costs and debt service.
The acquisition is likely to be wrapped up within the next couple of weeks.
An earlier report by Alphaliner said the ships are part of a series of eight identical vessels built by South Korean shipbuilder Daewoo that were originally scheduled for delivery by the end of last year. However, financial difficulties arising from the global financial crisis in 2008-09 forced CMA CGM to delay the deliveries.
So far five of the eight ships have been delivered, with the last three slated for delivery next year. The first five ships in the sister series are being used to operate the CMA CGM-Maersk FAL 5/AE-8 service, it said.