6,000 TEU containerships to be employed on three to five year charters with leading liner operators
Global Ship Lease, Inc. (NYSE: GSL) (the “Company” or “Global Ship Lease”) announced that it has agreed to purchase and charter back seven 6,000 TEU Post-Panamax containerships with an average age of approximately 20 years for an aggregate purchase price of $116 million. The charters are to leading liner operators for a minimum firm period of 36 months each, followed by two one-year extensions at charterer’s option. The vessels are expected to generate aggregate Adjusted EBITDA of approximately $95 million over the average firm period of 3.1 years, implying a strongly accretive average Purchase Price / Annual Adjusted EBITDA multiple of approximately 4.0x. If all options are exercised, the vessels are expected to generate approximately $126 million of Adjusted EBITDA. With these additions, the Company’s fleet will comprise 50 vessels with a total capacity of 287,280 TEU.
The vessels are scheduled for phased delivery during the second and third quarters of 2021, at which time they will be renamed GSL Arcadia, GSL Dorothea, GSL Maria, GSL Melita, GSL MYNY, GSL Tegea and GSL Violetta. The Company expects to pay for the ships with approximately $40 million of cash on hand, with the balance provided by bank debt.
During the firm period of the contracted charters, the seven ships are expected to add approximately $29 million to annual Adjusted EBITDA, representing an increase of approximately 18% compared to Adjusted EBITDA for the 12 months to September 30, 2020, add approximately $19 million to annual net income, based on today’s LIBOR, representing an increase of approximately 40% compared to normalized net income for the 12 months to September 30, 2020, and add approximately $0.53 to annual earnings per share, an increase of approximately 40% compared to Adjusted earnings per share for the 12 months to September 30, 2020.
George Youroukos, Executive Chairman of Global Ship Lease, commented, “We are pleased to announce the acquisition of these seven Post-Panamax vessels, consistent with the accretive growth strategy we presented during our recent equity offering. Years of under-ordering in this critically important and in-demand segment have resulted in structural undersupply, with the negligible orderbook ensuring minimal or even negative net supply growth. We believe this transaction will deliver attractive financial returns with predictable contracted cashflows and low residual value risk. Furthermore, it illustrates our return to accretive growth, leveraging our competitive advantages of strong industry relationships, track record of delivering safe and reliable service to our customers, and proven ability to manage older ships efficiently. Importantly, these charters also provide multi-year contracted cashflows to ensure strong, long-term coverage of our recently initiated quarterly dividend for common shareholders. Having completed the refinancing of our 2022 Notes and our recent equity offering, we are squarely focused on executing our accretive growth strategy and expect to make further progress in that regard.”
About Global Ship Lease
Global Ship Lease is a leading independent owner of containerships with a diversified fleet of mid-sized and smaller containerships. Incorporated in the Marshall Islands, Global Ship Lease commenced operations in December 2007 with a business of owning and chartering out containerships under fixed-rate charters to top tier container liner companies. On November 15, 2018, it completed a strategic combination with Poseidon Containers.
Excluding the acquisitions announced above, Global Ship Lease owns 43 containerships, ranging from 2,207 to 11,040 TEU, with a total capacity of 245,280 TEU and an average age, weighted by TEU capacity, of 13.7 years as at December 31, 2020. 25 ships are Post-Panamax, of which nine are fuel-efficient new-design wide-beam.
Adjusted to include all charters agreed, and ships acquired or divested, up to January 20, 2021, the average remaining term of the Company’s charters at September 30, 2020, to the mid-point of redelivery, including options under the Company’s control, was 2.4 years on a TEU-weighted basis. Contracted revenue on the same basis was $710.0 million. Contracted revenue was $786.7 million, including options under charterers’ control and with latest redelivery date, representing a weighted average remaining term of 2.7 years.