Seaspan ships delivered - more ordered from shipbuilders

Seaspan ships delivered - more ordered from shipbuilders
Container ships delivered and Seaspan orders two more

Seaspan Corporation recently announced the delivery of its 25th and 26th vessels, the Cosco Fuzhou and the Rio de Janeiro Express.

The 3500 TEU Cosco Fuzhou was delivered on March 27, 2007 from Zhejiang Shipbuilding Co. Ltd. in China. The vessel was delivered approximately four weeks after its contractual delivery date after consultation with Seaspan and the vessel's charterer. The Cosco Fuzhou is the first of two Seaspan vessels to be chartered for twelve years to Cosco Container Lines Co., Ltd., a subsidiary of China Cosco Holdings Co., Ltd., a major publicly traded container transport company and the world's seventh-largest liner shipping company in terms of capacity.

The 4250 TEU Rio De Janeiro Express, which was built by Samsung Heavy Industries Co. Ltd., was delivered on March 28, 2007, approximately three weeks ahead of its contractual delivery date. This vessel is the eighth of nine Seaspan vessels to be chartered to Hapag-Lloyd USA, a subsidiary of Hapag-Lloyd AG, the world's fifth-largest liner company.

"After many years of discussions, we are very excited to officially begin working with Coscon," said Gerry Wang (pictured), Chief Executive Officer of Seaspan. "We hope that this is the start of a long cooperation with this major liner operator."

"We are also pleased to take delivery of our eighth vessel for charter to Hapag-Lloyd USA," continued Mr. Wang. "This event is another positive step in the development of our relationship with one of Europe's largest shipping lines."

Seaspan Corporation also announced that it has signed contracts to build two 2500 TEU vessels at Jiangsu Yangzijiang Shipbuilding Co. Ltd. in China. These new orders are in addition to the eight 2500 TEU vessels Seaspan ordered from Jiangsu in 2006. The two newbuilding vessels will be delivered in March and June, 2010. The total delivered cost is expected to be approximately $46.4 million per vessel, subject to certain pre-delivery expenses remaining at budgeted levels.

Seaspan also announced that it has arranged simultaneous ten-year charter agreements for these two vessels with Kawasaki Kisen Kaisha, Ltd. ("K-Line") of Japan at a rate of $17,880 per day. K-Line is Japan's third-largest liner operator and is ranked 13th in the world by TEU capacity.

Each new vessel is expected to contribute between $4.5 million and $4.9 million in incremental EBITDA per annum upon delivery. For this purpose, EBITDA shall mean net earnings before interest, undrawn credit facility fees, taxes, depreciation and amortization of deferred financing fees. This should result in an increase in distributable cash when the vessels are delivered and operating.

"We are very pleased to expand our customer base by adding another major Japanese line to our portfolio," said Gerry Wang, Chief Executive Officer of Seaspan. "This acquisition also expands our relationship with Jiangsu as we now have ten 2500 TEU vessels in line to be delivered over the next three years from this shipbuilder. Given the large number of ships in this series, we expect to realize significant economies of scale in the design, outfitting and construction supervision costs of these vessels."

Seaspan Management Services Limited will supervise the construction of the new vessels and operate the ships for Seaspan at an estimated fixed rate of $4,200 per day through 2011.

The company will use its existing credit facility to fund the down payments for these vessels. Permanent financing will be arranged in the coming months.

Seaspan owns containerships and charters them pursuant to long-term fixed-rate charters. Seaspan's fleet of 43 containerships consists of 26 existing containerships and 17 to be delivered over approximately the next three years. The 17 vessels that Seaspan has contracted to purchase are already committed to long-term time charters ranging from 10 to 12 years. Seaspan's operating fleet of 24 vessels has an average age of approximately five years with an average remaining charter period of approximately eight years. Seaspan's customer base consists of six of the largest liner companies, including China Shipping Container Lines, A.P. Moller-Maersk, Mitsui O.S.K. Lines, Hapag-Lloyd, COSCO Container Lines and K-Line.