Leasing as an alternative for Shipping Finance

Marine Money Forum Rio de Janerio Leasing as an alternative for Shipping Finance Luke Lyu Vice President, Shipping ICBC Financial Leasing Co Ltd 15 ...
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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

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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

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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]