Following the recent announcement of a newbuild a few days ago, the container ship owner Global Ship Lease is also taking a significant financial step: a syndicated loan of $1 billion, in which the German state-owned KfW Ipex-Bank is also a participant.
The US-listed shipping company with Greek roots announced the move publicly following the completion of the transaction: the syndicated loan facility for the world’s seventh-largest shipping company is reportedly structured with an interest rate of SOFR + 1.5% and a term of seven years.
The capital is to be used for the shipping company’s extensive new-build programme, which was only recently expanded to 17 container ships following the exercise of an option for two additional vessels. The statement says the company intends to “draw down the loan funds in tranches linked to the delivery of the 15 newbuilds announced in June this year”. The planned delivery dates fall between the end of 2028 and 2030. For each of these vessels, it has been agreed that operation under a time charter agreement will commence immediately upon delivery – unlike with the two most recent orders.
The eight-member consortium is led by Bank of America, which acts as bookrunner, mandated lead arranger, facility agent and security agent; the Bank of China (Hong Kong), Germany’s KfW IPEX and ABN Amro from the Netherlands are also involved as mandated lead arrangers. Also involved are CTBC, CaixaBank, Bocom and First Citizens Bank.
The GSL fleet currently comprises 71 small and medium-sized container ships with an average age of 18.4 years. The GSL’s market share amongst non-operating container ship owners (NOOs) or tramp shipping companies is reported by the industry service Alphaliner as 3.5 per cent. This places it behind market leaders Seaspan, Shoei Kisen, Zodiac Maritime, Eastern Pacific Shipping (EPS), Costamare and Danaos. GSL is followed by Nissen Kaiun and the German Döhle Group (including the vessels owned by Ernst Russ).
Tassos Psaropoulos, Chief Financial Officer of Global Ship Lease, said that the syndicated loan agreement reduces the risk associated with the newbuild programme and secures “extremely attractive financing terms” for the shipping company from a diversified group of first-class lenders. “Leading banks from three continents are participating in the oversubscribed facility; this underlines the widespread recognition of GSL’s balance sheet strength, which is based on prudent debt levels and a solid, multi-year charter utilisation rate. The ability to draw down the funds in tranches that are directly aligned with the delivery of the vessels and the start of their multi-year charter contracts is ideal from both a risk and a cash flow perspective, and offers us security and planning certainty,” the Chief Financial Officer continued.
