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13,100 TEU Ships Financed!

Last week, United Arab Shipping Company (“UASC”) announced that it has inked a KWD 25 million (USD 86.6 million) senior unsecured term bilateral loan from Kuwait’s second largest bank, Gulf Bank. This is the one of a series of facilities sought by UASC that will be invested in its USD 1.5 billion container vessel newbuilding program. Earlier in February, the boxship owner and operator had similarly found success with Middle Eastern lenders in a multi-currency USD 275 million club deal. Appointed mandated lead arranger and coordinating bank Qatar National Bank roped in participants Burgan Bank, Commercial Bank of Qatar and Doha Bank while BNP Paribas was the structuring bank. This facility will be used to finance three out of the nine 13,100 TEU vessels ordered at Samsung Heavy Industries in June 2008.

USAC currently operates 42 container vessels and will expand its capacity to 300,000 TEUs when it takes delivery of the nine 13,100 TEU ships. Suffering from a combination of depressed demand and tonnage oversupply, mega ships are often seen to be inflexible and economically infeasible to operate during the bad times and it remains challenging to secure funds for these vessels. But with its cash rich backers from the governments of Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates, UASC benefits from its pedigree background and the latest loans demonstrate the strong support regional banks are providing to their shipping clients.

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