JR Shipping Group has succeeded in involving a credit investment fund in London in the refinancing of JR Fleet Fund CV – a shipping fund which has financed eleven container feeders belonging to the shipping company’s fleet. Under the auspices of the shipping company, the British financier has taken over more than €126 million loan/debt from German HSH Nordbank. On 5 December 2017, the bank’s Executive Board gave its approval; the closing took place on 15 December.
JR Fleet Fund CV is the result of a previous successful restructuring operation which was realised in 2012 in close collaboration between HSH Nordbank, the shipping company and its CV-partners.
By combining the eleven vessels, in which the German bank had been involved as their financier from the start, into one single fund in 2012 the prospects for safely piloting the vessels through the crisis increased. A market recovery was required to make this solution sustainable, but this did not happen. In 2016, unfortunately, the container feeder market even experienced its fourth dip. Although, for a short time now, the market has been improving, JR Fleet Fund CV has not yet sufficiently benefitted from it.
Refinancing is unique in the shipping industry
As far back as in late 2015, the need for refinancing JR Fleet Fund CV manifested itself. Since then, the shipping company and HSH Nordbank have specified various scenarios in detail. On 18 September 2017, the bank indicated it was sympathetic towards any proposals leading to finalising its involvement in the eleven vessels. JR Shipping then decided to take the initiative and contact a credit investment fund in London.
Behind closed doors, with the shipping company acting as an intermediary, preparations were then made for an unparalleled transaction which was desired by JR Shipping: a takeover of the loans/debts relating to JR Fleet Fund CV. This refinancing is considered a historic breakthrough in the shipping industry. In early December 2017, the agreement became final; on 15 December 2017, the official closing materialised. In a meeting shortly before that date, the partners in JR Fleet Fund CV had consented to the transaction.
Long-term partnership for the purpose of long-term refinancing solutions
The outcome which was achieved is beneficial to all parties. It enabled HSH Nordbank to close its file satisfactorily; the investment fund realised a cost-effective acquisition; the shipping company keeps control of eleven major vessels in its fleet; the partners in JR Fleet Fund CV can see some prospects again.
JR Shipping and the credit investment fund are committed to maintaining a long-term partnership which will not only reinforce the foundation beneath the shipping company, but also increase the possibility for banks to structure refinancing solutions for their vessels. The partners’ financial skills and maritime industry expertise complement each other in this context.
Source: JR Shipping