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SinOceanic on the Road

At the beginning of last week, SinOceanic Shipping ASA began marketing its new senior secured bond offering. The bonds were to be issued by Sin Oceanic II AS and SinOceanic III AS, the single purpose ship owners and guaranteed by parent SinOceanic Shipping in order to provide a ring-fenced structure. The company intended to sell $200 to $220 million of 3-year 10% bonds at par. Proceeds, split 50-50, will be used to finance pre- and post-delivery payments owed to the shipyard for the construction of the MSC Altair and MSC Regulus, two newbuild 13,100 TEU containerships scheduled for delivery in February and April. The total amount represents an advance rate of 65-70% of the vessels’ acquisition price of ~$154 million. Equity of approximately $50-$60 million consists largely of subordinated loans from HNA Group Co. Ltd, the parent company, while they wait for the equity markets to reopen. These 2nd mortgage loans have a tenor of three years and are interest only. The interest rate steps-up increasing from LIBOR + 8% in year one to LIBOR + 10% thereafter. To date, HNA has invested $120 million into the business and has a 33% interest.

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