Dubai: United Arab Shipping Company (UASC), the Gulf’s largest container shipping line, has placed orders for 10 large container ships with an option for additional seven vessels valued at Dh8.8 billion ($2.4 billion) to South Korea’s Hyundai Heavy Industries.
The order, the largest in the GCC, involves the construction of five 18,000 twenty-feet-equivalent units (TEU) vessels and five 14,000 TEU vessels valued at around $1.3 billion (Dh4.8 billion). The order includes options for one 18,000 TEU and six 14,000 TEU vessels, with a potential value of $1.1 billion.
A contract to this effect was signed by Dr Abdul Aziz Al Ohaly, UASC Board Member and O.H. Kim, President and Chief Operating Officer of Hyundai Heavy Industries (HHI) on August 29 in Dubai. The ships are scheduled for delivery between 2014 and 2015.
Shareholders
UASC was established in 1976 by the governments of Saudi Arabia, UAE, Kuwait, Qatar, Bahrain and Iraq — shareholders in the company. It currently operates a fleet of 53 container ships, 27 of them owned by the company while the rest are on long-term charters. The fleet serves 200 ports in 75 countries employing 3,500 people.
“This is the largest ever shipbuilding order in the Gulf and a landmark deal for UASC. Once delivered, the total fleet will make UASC one of the world’s ten largest container lines,” Shaikh Ali Bin Jasem Al Thani, UASC Board Director, told Gulf News. “The new ships will help us to expand business as European and American economies are showing signs of growth.”
He said, the UASC has been performing in line with the global shipping industry, which is going through rough weather.
Green ship
The latest order comes five years after the company had placed a $1.5 billion order for 9 A13 (13,100 TEU) container ships in 2008, equipped with Waste Heat Recovery Systems (WHRS), making them some of the greenest ships in the market.
Jorn Hinge, President and Chief Executive Officer of UASC, told Gulf News, that the orders have been financed through a debt-equity combination. “In these type of deals, you usually put 20 per cent equity and the rest are debt financing,” he said.
“These new generation vessels will be powered by LNG (Liquified Natural Gas) — environmentally friendly and will reduce cost of operations drastically.”
The financing also involves Korean export credit as well debt financing by a consortium of lenders. “This is almost equally split between export credit and bank loan facilities,” Basil A. Al Zaid, UASC’s Chief Financial Officer, told Gulf News. “Deutsche Bank and Qatar National Bank are the mandated lead arrangers that involves a consortium of ten lenders.”
Targets
HHI, which has delivered 45 ships to UASC since its inception, had an order book of $19.57 billion last year. This year, the targets were set for new orders at $29.7 billion. The latest order will help it to achieve its target.
“These vessels will be the first large container vessels that will be ‘LNG ready’ at delivery,” O.H. Kim said. “In an environment where fuel oil remains the largest cost driver in the industry, our cutting-edge vessel designs have been developed with a clear focus on improving cost efficiency and enhancing environmental friendliness.”
