Credit Agreement
Seaspan Holdco III Ltd. (“Borrower”), a wholly owned subsidiary of Seaspan Corporation (the “Company” or “Guarantor”), entered into the Credit Agreement, dated as of May 15, 2019 (the “Credit Agreement”), with the Company as Guarantor, the several lenders from time to time party thereto (“Lenders”), Citibank, N.A., as Administrative Agent and Lead Bookrunner, Citigroup Global Markets Inc., as Sole Structuring Agent, Citibank, N.A., Bank of Montreal and Wells Fargo Bank, N.A., as Mandated Lead Arrangers and Bookrunners, BNP Paribas, National Australia Bank Limited and Société Générale, Hong Kong Branch, as Lead Arrangers, and Bank Sinopac, asCo-documentation Agent. Capitalized terms used, but not otherwise defined in this Report on Form6-K, shall have the meanings ascribed to such terms in the Credit Agreement.
The Credit Agreement provides for a secured credit facility (the “Facility”) of up to US$1 billion comprised of (i) a revolving loan and revolving letter of credit facility in an aggregate principal amount of US$200 million (“Revolving Loan Commitments”) and (ii) a term loan facility in an aggregate principal amount of US$800 million (“Term Loan Commitments”). In addition, Borrower may request an increase in the Term Loan Commitments or Revolving Loan Commitments (each such increase, an “Incremental Commitment”) by an aggregate amount of up to US$1 billion for all such requests, subject to certain conditions set forth in the Credit Agreement. Lenders do not have any obligation to provide an Incremental Commitment, and any election to do so will be in the sole discretion of the Lenders.
The proceeds of the Facility are intended to be used (i) to finance the acquisition of Collateral Vessels and refinance existing indebtedness in relation to the Collateral Vessels described below and (ii) for general corporate purposes of Borrower and Guarantor, including, but not limited to, repaying certain existing credit facilities. The maturity date for the Facility is May 15, 2024.
Borrower’s obligations under the Credit Agreement will be guaranteed by the Guarantor and by subsidiaries of Borrower that own Collateral Vessels (the “Vessel Owners”) pursuant to the Intercreditor and Proceeds Agreement, dated as of May 15, 2019 (the “Intercreditor Agreement”), by and among Borrower, Guarantor, the Vessel Owners, the other secured parties from time to time party thereto, UMB Bank, National Association, as Security Trustee, and Citibank, N.A., as Administrative Agent. Borrower’s obligations under the Credit Agreement and Guarantor’s and the Vessel Owners’ obligations under the Credit Agreement and the Intercreditor Agreement will be secured by, among other things, the Collateral Vessels, the charters in respect of the Collateral Vessels, the equity interests of the Vessel Owners and Borrower and other assets of Borrower and the Vessel Owners. The initial portfolio of Collateral Vessels consists of 36 vessels, including eight 2500 TEU vessels, eleven 4250 TEU vessels, nine 10000 TEU vessels, five 14000 TEU vessels, one 13100 TEU vessel and two 9600 TEU vessels. The Credit Agreement permits the substitution of a Collateral Vessel with one or more vessels, including upon the sale or disposition of a Collateral Vessel, so the Collateral Vessels securing the Facility may change from time to time. Under the Intercreditor Agreement, Borrower may incur additional secured debt in connection with the issuance of private placement notes or entering into other secured loan facilities, subject to certain conditions, including, without limitation, that the total amount of the aggregate of the secured obligations under the Credit Agreement and such additional secured obligations does not exceed US$2 billion.
Borrower will repay the Term Loan in installments on each Payment Date (the “Term Loan Required Payments”). Borrower may prepay any borrowing of Loans, in whole or in part, at any time without premium or penalty, provided that each partial prepayment shall be in an amount not less than US$1 million or a larger multiple of US$1 million. Each optional prepayment of a borrowing shall (i) in the case of an optional prepayment of the Revolving Loan, reduce the outstanding principal amount of the Revolving Loan, and (ii) in the case of an optional prepayment of the Term Loan, be applied to reduce all Term Loan Required Payments pro rata. Any amounts of the Revolving Loans that are repaid may be reborrowed in accordance with the terms of the Credit Agreement. Amounts repaid or prepaid with respect to the Term Loan may not bere-borrowed. Borrower will be required to prepay the outstanding Loans under certain circumstances, including, but not limited to, upon the occurrence of a Change of Control.
The Credit Agreement requires payment of interest on the outstanding Loans at a rate per annum equal to the LIBO Rate plus 2.25% per annum. The Credit Agreement also requires payment of a commitment fee of 0.25% per annum calculated on the unused portion of the Facility (or, during any period where less than 50% of the aggregate Term Loan Commitments or aggregate Revolving Loan Commitments are utilized, 0.50% per annum).
