Chilean shipping firm Compania Sud Americana de Vapores (CSAV) has revealed a plan to spend $570m to purchase seven new container ships and make a prepayment on its debt.
South Korea’s Samsung Heavy Industries will be responsible for the construction of the new 9,300teu vessels, which are expected to be delivered from the end of 2014.
The new vessels will be used to replace part of CSAV’s chartered capacity and increase its owned fleet capacity to 55% from the current 37%.
The company has an option to order up to seven more vessels on similar conditions.
With the addition of the new vessels, CSAV expects to improve the fuel-efficiency of its fleet and reduce vessel chartering costs.
The company is planning to finance the new vessels with 40% equity (about $230m) and 60% financial debt (about $340m).
CSAV CEO Oscar Hasbún said the investment plan for the new vessels is aligned with the company’s strategic direction of joint operations, achieving economies of scale, getting the right proportion of own fleet and cost efficiency.
"Additionally, this plan will significantly reduce CSAV financial leverage and will allow the company to acquire large and efficient vessels at attractive prices," Hasbún said.
CSAV’s board has also approved the prepayment of $258m in debt with the American Family Life Assurance Company (AFLAC).
According to CSAV, the prepayment makes the company eligible for a 46% discount, which will have a positive impact of around $50m and the release of collateral deposits of $25m.
In order to execute the prepayment, the company will draw a bridge loan of around $140m with Banco Latinoamericano de Comercio Exterior.
The company said a capital increase of $500m to finance the new investment plan and debt prepayment will be approved during the next special shareholders’ meeting, to be held on 29 April 2013.
Image: Compañía Sud Americana de Vapores (CSAV) headquarters in Valparaíso, Chile.