MSC Acquires Ships from China, Netting $48.5 Million Profit for BAL!

2024-07-08 09:40By： xinde marine news Chen Yang

Mediterranean Shipping Company (MSC) has secured two 14,000 TEU container ships under construction at Jiangnan Shipyard for a total of $333 million. These vessels were originally ordered by China's BAL Container Line Co., Ltd. (BAL). The transaction yielded a premium of $48.5 million!

BAL's parent company, Leoch Logistics (2490.HK), announced that its wholly-owned subsidiary Lehang Boundless, Jiangnan Shipyard, and China Shipbuilding Trading have separately entered into novation agreements with Laudine Oceanway and Aludra Oceanway. Laudine Oceanway and Aludra Oceanway, both single-ship companies controlled by MSC, will replace Lehang Boundless and take over all rights, responsibilities, and obligations under the respective shipbuilding agreements.

To finalize the deal, Leoch Logistics announced on June 28 the transfer of all rights, responsibilities, and obligations under the shipbuilding agreements for the two vessels from its 99%-owned subsidiary BAL Container Line Co., Ltd. (BAL) to its wholly-owned subsidiary Lehang Boundless, completing a payment of $84.3 million, equivalent to the first two installments (30% of the ship price) paid by BAL to Jiangnan Shipyard and China Shipbuilding Trading.

The order was originally placed by BAL during the pandemic lockdown in 2022 through online communication with Jiangnan Shipyard, a time when the container shipping market was at its peak in years, and the shipbuilding market was also exceptionally hot.

Over the past two years, while the shipping market has experienced V-shaped fluctuations without reaching previous heights, the shipbuilding market has reached new peaks.

This sale brought a book profit of $48.5 million to BAL's parent company.

The specific transaction involved Laudine Oceanway and Aludra Oceanway paying Lehang Boundless a total of $133 million, minus the $84.3 million previously paid to the shipyard, and deducting administrative expenses.

According to the announcement, in addition to the $133 million paid to Leoch Logistics, Laudine Oceanway and Aludra Oceanway will pay $196.7 million to Jiangnan Shipyard (builder) and China Shipbuilding Trading (seller) for the remaining construction costs. Additionally, upon delivery, they will pay BAL $3.3 million for the equipment ordered.

Given BAL's familiarity with the construction status of the vessels, Laudine Oceanway and Aludra Oceanway have signed shipbuilding supervision agreements with BAL, which will represent and supervise the shipbuilding process until Jiangnan Shipyard and China Shipbuilding Trading officially deliver the vessels.

The two ships under construction at Jiangnan Shipyard began building on March 15 (H2789) and May 10 (H2790) this year. They are expected to be completed and delivered next year.

Despite selling the two ship orders to MSC, BAL signed a Letter of Intent in May 2024 with Jiangnan Shipyard for the construction of 2+2 more 14,000 TEU container ships. The market price for the two vessels is $150 million, with the first two expected to be delivered by the end of 2027.

As recently reported by Xinde Marine News in articles like "Over 100 Ships Ordered by Israeli Shipping Tycoon! Leasing to CMA CGM" and "Billion-Dollar Order! Norwegian Shipping Tycoon Joins the Fray," the container shipping market has seen a new wave of shipbuilding orders from the world's top five container shipping companies based on future market predictions.

Clearly, compared to directly ordering new ships from the shipyard, which may not be delivered until 2027 or 2028, purchasing existing orders allows for earlier delivery.

As Xinde Marine News recently reported in "Leading the Way! The World's Largest Container Shipping Company Makes Another Major Breakthrough," after years of massive ship purchases and new builds, MSC now controls a fleet of 837 ships, with a total capacity of about 6 million TEU, accounting for over 20% of the global container shipping market share!

In addition to the newly purchased orders, MSC currently holds 99 new ship orders, totaling nearly 1.2 million TEU in capacity!