Marine Money Forum Rio de Janerio
Leasing as an alternative for Shipping Finance
Luke Lyu Vice President, Shipping ICBC Financial Leasing Co Ltd 15 October 2014 Rio
Contents
• ICBC Leasing and Chinese Leasing Companies • Why Leasing provides solution? • How did we do it? – Case Study
2
Leasing Companies in China Foreign & Domestic Leasing Companies administered by Ministry of Commerce Financial Leasing Companies approved & regulated with China Banking Regulatory Commission (“CBRC”) under the “Measures for the Administration of Financial Leasing Companies” effective 1 March, 2007 2007
2008
2009
2010
2011
2012
2013
Financial Leasing Co
11
13
13
17
18
20
23
Domestic Leasing Co
26
37
45
66
66
80
123
Foreign Leasing Co
56
68
90
120
200
460
600
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Chinese Leasing Companies Financial Leasing Companies – lead the industry Total number: 746 Total registered capital: $38.8 billion Leasing assets exceeding: $323 billion Financial Leasing Companies Total Registered Capital: $12.4billion Total assets: $121 billions
100%
80%
60%
40%
ICBC Financial Leasing Co Ltd Totally owned by ICBC Group 20% Registered capital: $2 billion Total Assets: $35 billion 0% Moody’s: A3 Foreign leasing company Domestic leasing company S&P: AFinancial leasing company
No.
Registered Capital
Total Asset
80%
49%
28%
17%
19%
34%
3%
32%
38%
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ICBC Leasing - Shipping This image cannot currently be displayed.
3% 2%
4% 2%
32% 26%
27%
DRY BULK
RIG
OSV
GAS CARRIER
TANKER
CONTAINER SHIP
•
As of September 2014, ICBCL own 286 vessels, including bulker, tanker, OSV, rig, cruiser, PCTC and containership;
•
The total portfolio of shipping department reached 40bn Yuan, equivalent to USD6.5bn.
OTHERS
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Offshore projects executed in 2014 • Ezra Holdings (EMAS): one DP-2 Derrick-pipelayer, off-balance sheet finance • China Oilfield Service Ltd (COSL) one 300ft Jack-Up, off-balance sheet finance one 400ft Jack-Up, off-balance sheet finance • Schahin Oil and Gas Ltd. Two 6th Generation Semi-submersible Rigs, financial lease This image cannot currently be displayed.
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Why Leasing provides Solution Operating Lease Hand over Legal Ownership but maintains Economic Ownership; Unlock equity made; Relief of on balance sheet debt (off-balance sheet); Capital gain; No threat of loosing the capacity
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Why Leasing provides Solution (cont.) Financial Lease Equivalent to a bank term loan; The Lessor (the Leasing companies) can setup the SPVs in most of the common jurisdictions, so no threat to work in special area; The leasing companies can act as sole underwriter, and thus reduce maintain cost; Unlock equity made; No threat of loosing the capacity 8
Why Leasing provides Solution (cont.) Joint Investment JV based investment with partner; A perfect combination of market sense and source of fund between the experienced shipowner and leasing companies in the volatile market; Less capital injection and increased creditworthiness leverage the size of investment and the return; Structured exit and voting mechanism smooth the operation;
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Case Study: Operating Lease USD1.5 billion involving 51 OSVs, believed to be the single largest sale and lease back transaction concluded globally in 2013 The operating leasing is solely underwritten and executed by ICBC Financial Leasing Company Limited Deliver a viable solution for Bourbon in realization of its important transformation plan for its future growth
10
Case Study: Finance Lease USD1.08 billion involving 2 UDW Semisubmersibles, believed to be the first and largest sale and lease back transaction concluded by a Chinese Leasing Company The leasing project is solely underwritten and executed by ICBC Financial Leasing Company Limited Deliver a viable solution for Schahin as the first and most important phase in realization of its important Refinancing plan
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Case Study: Finance Lease (cont.) Groupo Schahin 100% through several Holding Entities
Lessee Two SPVs
Two Rigs
Legal Ownership
One Drillship
Sale and Leaseback
Corporate Guarantee
Lessor Two SPVs Assignment of Earnings
Oil Company End User
Comfort Letter Service Agreement
Charter Agreement
• •
Mortgage Before renewal
Guarantor/Manager
More like an asset finance before the renewal and a project finance after the renewal; Provide a flexible way to deal with the contract mismatch 12
ICBC LEASING
Thank you for your attention ! ICBC Financial Leasing Co Ltd Mr. C.K. YANG, Managing Director, Shipping Email:
[email protected] Mr. Luke Lyu, Vice President, Shipping Email:
[email protected]