Seaspan Orders Ships, Joins $5 Billion Venture

UPDATED 4:34 PM GMT

Container ship owner-charterer Seaspan joined the Carlyle Group in a joint venture that will have more than $5 billion available for ship purchases, and placed “a significant order” totaling a reported $2 billion for innovative ships that will carry up to 10,000 20-foot-equivalent units.

The new ships will be designed to fit through the larger locks scheduled to open at the Panama Canal in 2014.

CEO Gerry Wang was quoted by Lloyd’s List as saying the “New Panamax” vessels will be about 8 percent lighter and burn 15 to 25 percent less fuel than standard-design 10,000-TEU ships. The initial order is thought to total 22 ships, with additional options, at a cost of about $95 million each, the report said.

By The Numbers: SCFI - Shanghai Containerized Freight Index

Wang has urged shipyards to develop new container ship designs that provide better fuel efficiency and operating savings.

Seaspan announced the vessel order concurrently with formation of a joint venture with the Carlyle Group and Tiger Group Investments and an affiliate of the Dennis R. Washington family. The new company will have more than $5 billion to invest in container, dry bulk, tanker and other vessels.

Seaspan will invest up to $100 million in the joint venture during the next five years. Seaspan will have right of first refusal on any ships acquired by the new venture and the right of first offer on ships the new company sells.

Wang and Seaspan executive Graham Porter will head the new company, which will have up to $900 million in equity capital to invest in container ship assets, “primarily newbuilding vessels strategic to the Greater China Area,” Seaspan said in a statement.

“The company will primarily focus on bringing together Chinese shipbuilders, lenders and state-owned companies to support China’s desire to increase the amount of cargo it controls.” Carlyle said in a statement.

“There is increasing desire among Chinese state-owned entities to control the ships that transport their goods around the world,” Wang said. “We are confident that our long-standing relationships amongst the world’s shipbuilders, charterers and financiers, particularly in the PRC, will allow us to continue to successfully execute our growth model.”

Seaspan and the Washington family, a longtime partner of Tiger, will invest solely in container vessels purchased by the newly-formed company.

Wang said the new company will help Seaspan expand its fleet and “will allow us to realize volume discounts for newbuilding orders, negotiate design improvements from shipyards and obtain more attractive vessel financing than we would otherwise achieve on our own.”

Seaspan owns and charters 57 container ships and has an additional 12 scheduled for delivery during the next year. The company’s vessels are chartered to container lines including Maersk, China Shipping, CSAV, Cosco, Hapag-Lloyd, “K” Line, MOL and United Arab Shipping Co.

Seaspan said its normalized net earnings, excluding interest and financial adjustments, rose 28 percent to $27 million for the fourth quarter, reflecting a 99.7 percent vessel utilization rate. Total net earnings jumped 89.6 percent to $141.6 million, boosted by a $95.5 million increase in the fair value of financial investments, compared with a gain of $46.5 million in the fourth quarter of 2009.

-- Contact Joseph Bonney at jbonney@joc.com.

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Originally posted 2:21PM GMT

Container ship owner-charterer Seaspan and its top executives partnered with The Carlyle Group and Tiger Group Investments in a joint venture that plans to acquire more than $5 billion worth of container, dry bulk, tanker and other vessels during the next five years.

The new company is formed by The Carlyle Group and Tiger Group Investments in partnership with Seaspan Corporation, the Washington Family, and Seaspan executives Gerry Wang and Graham Porter. Wang and Porter will head the company.

“The company will primarily focus on bringing together Chinese shipbuilders, lenders and state-owned companies to support China’s desire to increase the amount of cargo it controls.” Carlyle said in a statement.

By The Numbers: SCFI - Shanghai Containerized Freight Index

“There is increasing desire among Chinese state-owned entities to control the ships that transport their goods around the world,” Wang said. “We are confident that our long-standing relationships amongst the world’s shipbuilders, charterers and financiers, particularly in the PRC, will allow us to continue to successfully execute our growth model.”

Seaspan and the Washington Family, a longtime partner of Tiger, will invest solely in container vessels purchased by the newly-formed company.

Seaspan will have right of first refusal on container ships acquired by the new venture and will have the right of first offer on any container ship the new venture proposes to sell.

Wang said the new company will help the company expand its fleet and “will allow us to realize volume discounts for newbuilding orders, negotiate design improvements from shipyards and obtain more attractive vessel financing than we would otherwise achieve on our own.”

Wang has urged ship builders to develop new container ship designs that provide more fuel efficiency and operating savings.

The venture expects to deploy up to $900 million in equity capital during the next five years, Carlyle said. Additional financial terms were not disclosed.

Seaspan owns and charters 57 container ships and has an additional 12 scheduled for delivery during the next year. The company’s vessels are chartered to container lines including Maersk, China Shipping, CSAV, Cosco, Hapag-Lloyd, “K” Line, MOL and United Arab Shipping Co.

-- Contact Joseph Bonney at jbonney@joc.com.