POLL:
WORLD SHIPBUILDING COMPETITIVENESS

You're ordering a ship tomorrow. Where will you get the best price?

Japan
S. Korea
China
Vietnam
India
Other

Marine Log

September 11, 2007

Seaspan orders eight 13,100 TEU box ships

Seaspan Corporation (NYSE:SSW) has signed contracts to build eight 13,100 TEU container vessels with Hyundai Heavy Industries Co., Ltd. and its subsidiary, Hyundai Samho Heavy Industries Co., Ltd. Contract price per vessel is approximately $165 million resulting in an expected delivered cost per vessel of approximately $181 million.

The eight newbuildings are scheduled to be delivered between January 2011 and October 2011. With these agreements, Seaspan has expanded the company's contracted fleet to a total of 63 vessels. Currently, 20 of Seaspan's 34 vessels on order are with HHI.

All eight newbuildings have been simultaneously signed to 12-year time charters with COSCO Container Lines Co., Ltd. ("Coscon") of Shanghai, one of the largest container liner shipping companies in the world. The time charter rate is $55,000 per vessel per day for the duration of the contract, again with no commissions or broker fees.

Seaspan Management Services Limited will supervise the construction of the vessels and then operate the ships at an estimated fixed rate of $6,750 per day per vessel from delivery.

Upon delivery, based on these operating fees, each new vessel is expected to contribute more than $17 million in incremental EBITDA per annum for a total exceeding $136 million for all eight vessels. EBITDA is a non-GAAP measure defined as net earnings before interest, undrawn credit facility fees, taxes, depreciation and amortization of deferred financing fees.

Seaspan CEO Gerry Wang stated: "Building on the success of our agreement to charter eight new 8,500 TEU vessels in April of 2007, we are pleased to further strengthen this strategic relationship with Coscon. Their position as the largest China-based container line and seventh largest in the world combined with their stellar credit quality adds considerable value to this investment. In addition, we believe this transaction for super-sized container vessels demonstrates Seaspan's ability to conduct large-scale, cost-efficient deals in this important asset class."

Wang added, "Consistent with our objective to secure our vessels on long-term fixed-rate charters with leading global customers, our 12-year charters for each of the eight newbuildings provide stable cash flows for Seaspan. With 22 newbuilding contracts already announced to date in 2007, Seaspan continues to successfully execute its growth strategy."

"Currently, we have 34 vessels scheduled to be delivered between 2008 and 2011 which will generate predictable and growing cash flows resulting in annual revenues of $640 million and annual EBITDA exceeding $500 million by the end of 2011. By significantly expanding our earnings power as we further grow our fleet, we have enhanced our ability to increase distributable cash flow over the long term."

Seaspan plans to initially fund the first installments of its eight new 13,100 TEU container vessels through its existing $1.3 billion revolving credit facility. Permanent financing is expected to be concluded in the following months.

MORE NEWS STORIES