Leaseback deal for Sinoceanic

The deal marks the first step in an urgent restructuring needed at its three subsidiaries ahead of loan repayments due in 2014 and 2015.

SinO I, the subsidiary which owns the MSC Vega, will receive $105m up front for the vessel with the remainder of the purchase price outstanding as pre-paid charter hire on the 15 year bareboat charter of the vessel from Grand Indus Shipping.

A $105m loan from a major Chinese bank at Libor plus 6.45% backs Grand Indus Shipping's end of the bargain, repayments of which will be covered by SinO I's charter payments.

Under the deal, SinO I holds an option to repurchase the vessel at any time for the outstanding amount of the purchase price plus accrued interest on the Chinese loan agreement.

The current financing for the vessel, a junior loan with Oceanus International Investment, will be split into two tranches. Non-interest bearing $20m tranch 1 will be repaid by the sale leaseback agreement, along with SinO I's senior debt to Deutsche Bank. Tranch 2 stands at $61.1m will be repaid quarterly, where cash is available, with interest at Libor plus 10%.

The agreement is yet to be backed by the Chinese bank or Oceanus, but Sinoceanic expects confirmations to be in place before an extraordinary general meeting on 26 June.

"Concluding the negotiations for the refinancing of SinO II and SinO III will require some more time. The refinancing of the junior loans of SinO II and SinO III are however expected to take place by the end of Q3 or in Q4 2013," Sinoceanic said in its press release. The company expects both subsidiaries to secure refinancing ahead of their senior loans maturing in late 2014 and early 2015.

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