2007

What Do The US Government And Seaspan Have In Common? Answer: Each Owns A Navy.

It was a busy Monday for Seaspan Corporation. First the company announced the amendment of its original credit facility entered into at the time of its initial public offering. Not only did they increase the borrowing limit from $1 billion to $1.3 billion (funny how trivialized these amounts have become), they converted what was originally a term loan to a more flexible revolving credit that will allow them to borrow, re-pay and re-borrow.

Somewhat atypically, the loan is collateralized by the original 23 vessels in Seaspan’s initial fleet as well as the four vessels purchased from A.P. Moller-Maersk last year. The company has full availability until August 2012 provided the loan to value is below 70% of the pledged vessels. Subsequently, the borrowing limit is reduced by $32.5 million per quarter until May 2014 at which time the balance will be due and payable. Should the company wish to maintain access to the full commitment, it has the option of adding collateral vessels.

Reflecting their performance as well as the collateral, Seaspan was able to replace the grid pricing formula, based upon loan to values, with a single competitive rate of LIBOR + 0.70% for the term of the loan. In addition the company has entered into interest rate hedges for approximately $750 million of the total exposure.

This is only an excerpt of Debt – 05/17/2007

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