Sunday, October 25, 2020

Shipping: Hong Kong's Seaspan Secures Industry-First Sustainability Linked Loan (ATCO)

We haven't looked at Seaspan since late February when they went with the holding company structure so it will be interesting to see how all the financial engineering put together by Prem Watsa, Bing Chen and David Sokol works out.

From gCaptain, October 21:

Seaspan Corporation, a leading containership owner and operator, says it has secured a $1.8 billion sustainability-linked loan, marking a first of its kind in the containership leasing industry.

The loan consists of a $200 million term loan with a tenor of six years. The expanded Program is comprised of a $300 million revolving credit facility, and approximately $1.5 billion of term loan commitments, with staggered maturities between 2024 and 2026. Proceeds from the loan are intended to pay down the revolving credit facility, bolstering liquidity and capacity for growth opportunities, Seaspan said.

The SLL is the first sustainability-linked loan in the containership leasing industry, according to Seaspan. The framework of the loan inspired by the Poseidon Principles, the global framework by which financial institutions can assess the climate alignment of their ship finance portfolios.

The pricing of the loan will adjusted based on Seaspan’s performance against two key performance indicators. The first is the alignment of the carbon intensity of the collateral vessels with the International Maritime Organization (IMO) 2050 decarbonization goals. The second aims at fostering cooperation with charterers in order to advance the decarbonization agenda by seeking to include sustainability-linked provisions in future charter contracts....


ATCO Atlas Corp. daily Stock Chart


Tough timing for the combination of APR Energy and the shipping business but they actually received their first investment-grade senior secured rating from Kroll in early August.

We have more on Sokol than the other two financial whiz kids, as noted in the intro to this 2019 post:

Former Buffett Heir Apparent David Sokol Gets Into LNG With COSCO and Singapore's Swiber (SSW)

David Sokol, Chairman of Seaspan, was CEO and chair of MidAmerican Energy when Berkshire Hathaway bought the utility. At the time MidAm was running the largest utility-owned wind generation fleet in the U.S., in addition to the hydrocarbon fueled generation. He appeared to have the inside track to replacing Buffet, with Ajit Jain being elevated to God-King of all insurance ops.

Then Sokol decided to trade ahead of a Berkshire acquisition and Buffet did the investigation and fired Sokol. He next showed up on our pages in January 2018's "Former Buffett Heir Apparent David Sokol Resurfaces In the Shipping Business"....