Global Ship Lease (GSL) has bought seven post-panamax boxships that it will lease back to undisclosed liner operators for at least three years with optional two one-year extensions.
The Ian Webber-led owner of 43 boxships with an average age of 13.7 years has bought the 6,000-teu vessels with an average of about 20 years for $116m.
The vessels, which will expand GSL's fleet to 50 ships with a total capacity of 287,280 teu, are expected to make $95m in adjusted operating profit over the average firm period of 3.1 years and $126m if the options are exercised.
The vessels are scheduled for phased delivery during the second and third quarters of 2021, at which time they will be renamed GSL Arcadia, GSL Dorothea, GSL Maria, GSL Melita, GSL MYNY, GSL Tegea and GSL Violetta.
GSL expects to pay for them with about $40m in cash on hand and bank debt.
A boost to earnings during time of undersupply
The ships are expected to add about $29m to the company's annual adjusted operating profit, reflecting a roughly 18% jump from the 12 months to 30 September 2020.
They should also add about $19m to annual profit based on today's Libor, representing a 40% spike in normalised net income compared to the year leading up to 30 September 2020.
The ships are also expected to raise adjusted earnings per share for the year by $0.53, or 40%.
"Years of under-ordering in this critically important and in-demand segment have resulted in structural undersupply, with the negligible orderbook ensuring minimal or even negative net supply growth," executive chairman George Youroukos said in a statement.
"We believe this transaction will deliver attractive financial returns with predictable contracted cash flows and low residual value risk."
GSL in early January committed to a $236m senior secured loan at Libor plus 7% that will pay down that amount in 9.875% secured notes, which mature next year.
The loan, which will come due in 2026 and was provided by Hayfin Capital Management, will reduce annual debt payments to $26m from $35m.
"Having completed the refinancing of our 2022 Notes and our recent equity offering, we are squarely focused on executing our accretive growth strategy and expect to make further progress in that regard," Youroukos said.
GSL shares, which trade on the New York Stock Exchange under the ticker symbol GSL, gained 3.7% to $13.65 within the first half-hour of trading on Tuesday.
