Seaspan turns a profit in Q3 2017

The Hong Kong-based containership leasing giant has also appointed Bing Chen to serve as its next chief executive officer, effective January 2018, following the retirement of co-founder and longtime CEO Gerry Wang.    Seaspan Corp. reported net earnings of $48.4 million for the third quarter of 2017, a sharp turnaround from a net loss of $184 million for the third quarter of 2016, the company’s latest financial statements revealed.
   However, the Hong Kong-based containership leasing giant’s revenues for the third quarter of 2017 dropped 6.2 percent year-over-year to $211 million, mainly due to lower average charter rates for vessels that were on short-term charters, partially offset by the delivery of newbuilding vessels in 2016 and 2017.
   During the quarter, Seaspan accepted delivery of three, 11,000-TEU vessels, which are each on a 17-year fixed-rate bareboat charter with Mediterranean Shipping Co. (MSC). The three vessels – the MSC Shuba B, MSC Shreya B and MSC Nitya B – were constructed at HHIC-PHIL Inc. The deliveries were financed with previously committed lease facilities. Once the bareboat charter period ends, MSC is obligated to purchase the vessels for a pre-determined amount, Seaspan said.
   In addition, Seaspan entered into time charter contracts with CMA CGM during the quarter for two, 10,000-TEU newbuildings currently under construction at New Jiangsu Shipbuilding Co., Ltd. and Jiangsu Xinfu Shipbuilding Co., Ltd. The two vessels, which are scheduled for delivery in 2018, will commence three-year fixed rate time charters upon delivery, with options to extend for up to an additional three years. Seaspan has entered into advanced discussions on financing these two vessels with a financial institution, Seaspan said.
   During the quarter, Seaspan also entered into vessel sale agreements for four, 4,250-TEU vessels – the Seaspan Alps, Seaspan Grouse, Seaspan Kenya and Seaspan Mourne – for gross proceeds of approximately $37 million. In the third quarter of 2017, Seaspan closed on the sale of the Seaspan Alps and Seaspan Kenya, recording a gain on sale of $6.6 million. In October 2017, the sale of the Seaspan Mourne closed for gross sale proceeds of about $9.6 million, and the sale of the Seaspan Grouse is expected to close this quarter.
   Currently, 19 vessels in Seaspan’s operating fleet are unencumbered, including two, 3,500 TEU vessels; 14, 4,250-TEU vessels; two, 4,500-TEU vessels; and one, 9,600-TEU vessel; and excluding the one remaining 4,250-TEU vessel subject to a sale agreement.
   Seaspan revealed Tuesday that that Gerry Wang, the company’s current chief executive officer, co-chairman and co-founder, will be retiring Nov. 3, while Bing Chen has been hired to serve as CEO and on the company’s board of directors, effective January 18.
   Wang revealed back in July he would be stepping down in order to focus on family business investments as well as his ongoing charitable efforts.
   Chen has held executive positions in China, Europe and the United States, throughout his 25-year career, most recently serving as CEO of BNP Paribas (China) Ltd., where he led the bank’s growth strategy in China.
   Seaspan Executive Vice President and Chief Operating Officer Peter Curtis will serve as Seaspan’s interim CEO until Chen’s arrival, after which he will continue in his current role.