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Carlyle exits Asia-focused maritime investment joint venture GCI

The Carlyle Group has exited its joint venture Greater China Intermodal Investments (GCI), an Asia-focused maritime assets investor, by selling its stake to partner US-based Seaspan Corporation. As per the deal, Seaspan Corp acquired the remaining 89 per cent it did not own in GCI. “The consideration to selling shareholders will be cash of approximately $330 million and a $50 million issuance of Seaspan Series D preferred shares,” an announcement by Seaspan said last week.

It further added that the implied enterprise value of GCI is approximately $1.6 billion, including assumed third party net debt of approximately $1 billion and $140 million of future vessel payments. In 2011, The Carlyle Group and Tiger Group Investments Partner along with Seaspan Corporation, the Washington Family, Gerry Wang and Graham Porter had come together to acquire over $5 billion in container, dry bulk, tanker vessels and other shipping assets to capitalize on increasing demand in the shipping sector. The joint venture – Greater China Intermodal Investments LLC or GCI – was aimed at bringing together Chinese shipbuilders, lenders and state-owned companies to support China’s desire to increase the amount of cargo it controls.

The company aimed to deploy up to $900 million in equity capital during the next five years starting 2011. The recent acquisition by Seaspan of the entire stake in the joint venture is a bid to solidify its position as the world’s largest independent containership owner operator, it said. For the deal, the company financed the cash consideration from its balance sheet and a $16 million reinvestment by the Washington family in Seaspan common equity. It also closed on a $100 million secured credit facility from Citi. Further, Seaspan also announced that Fairfax Financial Holdings is providing an additional $250 million investment in Seaspan Debentures and Warrants. GCI’s fleet of 18 modern containerships comprises 10,000 TEU and 14,000 TEU eco-class vessels, representing a total of 204,000 TEU. Of these 18 vessels, there are currently 16 on-the-water vessels with the remaining two new build vessels scheduled for delivery during the second quarter of 2018.

The company has been involved in the design, construction, delivery and operations of all the 18 of GCI vessels since inception. All of these vessels are sister ships to Seaspan’s current fleet. Given Seaspan’s operating history of GCI’s fleet, there is no operational integration risk. The current fleet of GCI will contribute approximately $1.3 billion towards Seaspan’s contracted future revenues, increasing the latter’s total contracted future revenues to approximately $5.6 billion. Further, in 2019, with an 18 vessel fleet, the company is expected to generate $185 million to $200 million in annual EBITDA.
Source: Deal Street Asia

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