GSL to acquire four ultra-high reefer containerships on multi-year charters
5,470 TEU containerships with best-in-class reefer capability to be employed on three-year charters with leading liner operator
Global Ship Lease, Inc. has agreed to purchase four 5,470 TEU Panamax containerships with an average age of approximately 11 years for an aggregate purchase price of $148 million.
On delivery, the ships will be chartered to a leading liner operator for a firm period of three years each, with a charterer’s option for a period of an additional three years. During the three-year firm period, the vessels are expected to generate aggregate Adjusted EBITDA of approximately $124.4 million, implying a strongly accretive average Purchase Price / Annual Adjusted EBITDA multiple of approximately 3.6x. If the options are exercised, the vessels are expected to generate approximately $42.2 million of additional Adjusted EBITDA. With these additions, the Company’s fleet will comprise 66 vessels with a total capacity of 344,650 TEU.
The ships are scheduled for delivery during the third quarter of 2021. The Company expects to fund the purchase price with cash on hand and senior secured debt.
Based on the existing charters, the newly acquired ships are expected to contribute approximately $42.5 million of Adjusted EBITDA in the first 12 months. This represents an increase of approximately 25.2% on Adjusted EBITDA for the 12 months ended March 31, 2021. The ships are anticipated to add approximately $0.88 of earnings per share in the first 12 months, based on today’s outstanding share count, today’s LIBOR, and other assumptions, representing an increase of approximately 56.4% compared to Adjusted earnings per share for the 12 months ended March 31, 2021.
George Youroukos, Executive Chairman of Global Ship Lease, commented:
“These ships are excellent examples of our strategic focus on ultra-high refrigerated container capacity. Each ship has existing capacity for 1,200 refrigerated containers – double the average for ships in the 5,000-7,000 TEU size segment – and electrical power available for more than 2,000 refrigerated containers; so, these are top-tier ships offering clear upside potential following the initial charters.
To put things in perspective, adding these four ships to our existing high-reefer ECO 6,900 TEU ships means that Global Ship Lease will control over a quarter of the global high-reefer fleet up to 7,000 TEU capable of carrying 1,200 or more refrigerated containers. With this acquisition and our recently announced purchase of 12 feeder and handy size vessels, we have in just over a week added $103.0 million of expected Adjusted EBITDA and $1.97 of expected earnings per share in the first 12 months following delivery, representing increases of 61.1% and 126.3% respectively, compared to the 12 months ended March 31, 2021.
Looking ahead, we see strong indications that the fundamental supply and demand drivers for this fantastic market are sustainable through the medium term, and we continue to believe that GSL is well positioned to execute our disciplined accretive growth strategy of expanding our long-term earnings while strictly limiting our downside risk and creating further value for our shareholders.”