Yang Ming Confirms Time Charter Extensions for 14,000 TEU Seaspan Containerships

Seaspan's SAVER hull design was developed with a low cost profile in mind. Image courtey Seaspan Corp.
Seaspan’s SAVER hull design was developed with a low cost profile in mind. Image courtey Seaspan Corp.

New York-listed Seaspan Corporation (NYSE:SSW) announced today that Yang Ming Marine Transport Corp. has confirmed a ten year fixed-rate time charter extension for five 14,000 TEU SAVER design containerships currently under construction at CSBC Corporation in Taiwan.

Two of these vessels previously have been allocated to Seaspan and three have been allocated to Greater China Intermodal Investments LLC under the right of first refusal agreement among Seaspan, GCI and Blue Water Commerce LLC. The agreement with Yang Ming for the five vessels includes one two-year option.

Seaspan also announced the expiration of an option that Yang Ming held to purchase up to five 14000 TEU newbuilding vessels currently being constructed at Hyundai Heavy Industries, and therefore all five of these 14000 TEU newbuilding vessels will also be time chartered to Yang Ming for ten years with one two-year option. Three of these vessels previously have been allocated to Seaspan and two have been allocated to GCI under the right of first refusal agreement.

Gerry Wang, Chief Executive Officer, Co-Chairman and Co-Founder of Seaspan, commented, “With today’s agreement, Yang Ming confirmed Seaspan will build and manage a total of 15 SAVER design vessels for Yang Ming under 10+2-year fixed-rate time charters. This will further increase Seaspan’s contracted revenue stream, enhance its earnings power, and strengthen Seaspan’s relationship with one of the premier liner companies.”

In August 2013, Seaspan announced that it had signed a Letter of Intent with CSBC Corporation calling for the construction of the five 14,000 TEU ships for a purchase price of $550 million. The vessels were expected be chartered to Yang Ming under long-term, fixed-rate time contracts and are scheduled for delivery in 2016. Seaspan said at the time that it expected to complete the definitive contracts “shortly”.

Seaspan’s managed fleet consists of 109 containerships representing a total capacity of over 840,000 TEU, including 30 newbuilding containerships on order scheduled for delivery to Seaspan and third parties by the end of 2016. Seaspan’s current operating fleet of 75 vessels has an average age of approximately seven years and an average remaining lease period of approximately five years.