Containership owner and operator Seaspan Corporation, part of Atlas Corp., has entered into a note purchase agreement to issue, in a private placement, $500 million principal amount of fixed rate, sustainability-linked senior secured notes.
Of that amount, $450 million was issued and sold on 21 May 2021 and $50 million is expected to be issued and sold on 12 August 2021, subject to customary closing conditions.
The private placement, which involved over 20 investors, was completed as part of Seaspan’s amended and upsized $2.5 billion vessel portfolio financing program and constitutes the largest reported sustainability-linked US private placement, the company said.
The program, which was initially established in 2019, is now comprised of $2 billion of bank credit facilities and $500 million of the notes.
The net proceeds of the private placement and the upsize are intended to be used to finance or refinance the acquisition of vessels and for general corporate purposes. Proceeds of the private placement may also be used to repay a portion of the bank credit facility debt under the program, according to Seaspan.
“This transaction both further solidifies our balance sheet and provides competitive and flexible long-term funding to facilitate our … quality growth throughout market cycles,” Bing Chen, President and CEO of Atlas, commented.
“Closing of these transactions marks a major milestone in the evolution of our capital structure. While the road started years ago, in the last six months alone we have diversified our capital sources into multiple new institutional markets through three issuances of senior unsecured notes and have now completed the first sustainability linked US private placement in the transportation sector,” Graham Talbot, CFO of Atlas, said.
“We now have over $1 billion in liquidity to allocate between our capex program and further balance sheet optimization.”
Pricing of the program debt, including the notes, is subject to adjustment based on Seaspan’s achievements relative to two key performance indicators (KPIs).
Specifically, the first indicator aims at measuring the alignment of the carbon intensity of the collateral vessels with the International Maritime Organization (IMO) 2050 decarbonization trajectory. The structure is inspired by the Poseidon Principles, the global framework by which financial institutions can assess the climate alignment of their ship finance portfolios.
The second aims at fostering cooperation with charterers in order to advance the decarbonization agenda, by seeking to include sustainability-linked provisions in future agreements.
As at 31 March 2021, Seaspan’s fleet consisted of 127 containerships representing total capacity of approximately 1,073,200 TEU. On 19 May 2021, the company announced the delivery of two second-hand vessels.