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Rickmers Maritime gets financing for newbuilding plan

By Marcus Hand in Kuala Lumpur - Thursday 10 April 2008

RICKMERS Maritime has finally secured debt financing, via two separate facilities, for just under half of its $1.3bn newbuilding programme.

Rickmers Maritime, a Singapore-listed shipping trust, has secured $627m in credit facilities amidst what it described as a “demanding credit environment”.

With the growing global credit crunch, analysts and investors had become increasingly concerned that the shipowner did not have finance in place for its extensive newbuilding programme.

The debt financing comes in the form of a $497.5m facility from seven major shipping banks, led by BNP Paribas. It also arranged a $130m top-up facility on its existing initial public offering credit with HSH Nordbank, DBS and Citibank.

Interest rates for the facilities range from 0.95 to 1.2 percentage points above the US$ London Interbank Offered Rate.

Rickmers Maritime said that with $45m of an existing credit line undrawn, it has $672.5m of debt in place, which will be used to partially fund nine 4,250 teu panamax boxship newbuildings.

“Despite the challenging financial environment, we have now proven to our investors as well as our clients that the credibility of Rickmers Maritime is as strong in global financial markets as it is in the shipping market,” chief executive of Rickmers Trust Management, Thomas Preben Hansen, said.

As the US dollar continues to depreciate, the company will be hedging much of the debt. “A significant portion of the credit facilities will be hedged thereby fixing its future cost of debt financing,” Rickmers Maritime said.

Beyond the nine 4,250 teu newbuildings, the company still has to arranged financing for a quartet of 13,100 teu boxships due to be delivered in 2010 for long term charters with Maersk.

At some point over the next two years, Rickmers Maritime will have to raise around 20% of the $1.3bn total required from additional equity issues, with debt financing only normally extended to up to 80% of the vessel’s value. Given current market conditions, the company is not planning to raise further equity at this time.