Seacon agrees sale and leaseback for bulker newbuild

China’s Seacon Shipping has made significant strides in expanding its fleet. The Hong Kong-listed company recently announced that it has secured financing for one of its handysize bulk carriers currently under construction in Japan. This move highlights Seacon’s commitment to enhancing its shipping capabilities and reflects the ongoing growth in the maritime industry.

Details of the Financing Agreement

Seacon Shipping has entered into a sale and leaseback agreement worth $31.38 million for a 40,000 deadweight ton (dwt) bulker. This deal is with Panama-incorporated Dawn Shipping and its parent company based in Japan, which is ultimately owned by Kohei Kondo. The financing will play a crucial role in the construction of the vessel, which is being built by the renowned Japanese shipbuilder Namura.

In September 2023, Seacon ordered two handysize bulk carriers from Namura for a total of $67 million. The expected delivery dates for these vessels are between August 1, 2025, and October 31, 2025. The proceeds from the recent agreement with Dawn Shipping will be allocated to finance the construction of this specific bulker. This strategic financing approach allows Seacon to manage its capital effectively while expanding its fleet.

Seacon Shipping has a history of utilizing similar financing arrangements for its newbuilding projects. For instance, in June 2022, the company secured a $63.4 million leaseback deal with Suyin Financial Leasing. This agreement involved two 42,200 dwt newbuilds at Japan’s Tsuneishi Shipbuilding, with deliveries scheduled for June and September of this year. Such financing strategies have become a hallmark of Seacon’s operations, enabling the company to grow its fleet while maintaining financial flexibility.

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Long-Term Implications for Seacon Shipping

The latest financing agreement has significant long-term implications for Seacon Shipping. Upon delivery, the vessel will be bareboat chartered for a period of 10 years. This arrangement allows Seacon to operate the vessel while retaining the option to purchase it later. The purchase options range from $17.1 million to $29.2 million, depending on when Seacon decides to exercise them. This flexibility can be advantageous for the company, allowing it to adapt to market conditions and its financial situation.

Seacon Shipping’s approach to financing through sale and leaseback agreements is indicative of a broader trend in the shipping industry. Many companies are opting for similar strategies to manage their capital more efficiently. By leveraging these financial arrangements, Seacon can focus on its core operations while minimizing upfront costs associated with new vessel acquisitions.

As the maritime industry continues to evolve, Seacon Shipping’s proactive approach to fleet expansion and financing will likely position the company for future growth. With a diversified fleet and strategic partnerships, Seacon is well-equipped to navigate the challenges and opportunities that lie ahead in the shipping sector.