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COSCON signs $1.9bn Seaspan containerships charter deal

Shanghai: China Ocean Shipping Corporation's container subsidiary COSCON has signed a 12-year agreement worth $1.9bn with Canada's Seaspan Corporation for the charter of eight 13,100teu containerships at $55,000 per day. The vessels are to be operated by Seaspan Management Services at an estimated fixed rate of $6,750 per day each.

"Building on the success of our agreement to charter eight new 8,500teu vessels in April of 2007, we are pleased to further strengthen this strategic relationship with COSCON," said Gerry Wang(pictured), Seaspan ceo. "Consistent with our objective to secure our vessels on long-term fixed-rate charters with leading global customers, our 12-year charters for each of the eight newbuildings provide stable cash flows for Seaspan."

The containerships will be built at Hyundai Heavy Industries and its subsidiary, Hyundai Samho Heavy Industries with an expected delivery price of $181m per ship upon delivery between January-October 2011.

The contract comes as container rates are bouncing back from their 2006 low, and are likely to rise on soaring dry bulk rates that are expected to lead to greater use of containers to transport commodities such as grain.

Seaspan has an aggressive newbuild programme, which is expected to substantially boost company revenue. Wang explains, "Currently, we have 34 vessels scheduled to be delivered between 2008 and 2011 which will generate predictable and growing cash flows resulting in annual revenues of $640m and annual EBITDA exceeding $500m by the end of 2011. By significantly expanding our earnings power as we further grow our fleet, we have enhanced our ability to increase distributable cash flow over the long term."   [12/09/07]

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