Seacon Shipping Group Announces Major Expansion and Financing: Novation of Six Shipbuilding Contracts and Finance Lease Arrangements

Key Highlights for Investors

• Acquisition of Six New Bulk Carrier Vessels: Seacon Shipping Group Holdings Limited has entered into agreements to acquire six newly constructed 63,800 dwt bulk carrier vessels. The total consideration for the vessels is USD198.6 million.
• Novation Agreements: The Previous Buyer (a joint venture 50% owned by Seacon) transferred all rights and obligations under the original shipbuilding contracts to Seacon Shipping at nil consideration. The Previous Buyer had not made any payment under those contracts.
• Seller Information: The vessels are being constructed by Qidong XMXYG Shipbuilding & Offshore Engineering Co., Ltd., a major Chinese shipbuilder with over RMB320 million in paid-up capital and 2,000 employees. The Seller is majority-owned by Xiamen Xiangyu Co., Ltd., a Shanghai-listed company (stock code: 600057).
• Finance Lease Arrangements: Seacon Shipping agreed to sell the vessels to six Owners (Hong Kong-incorporated subsidiaries of Minsheng Financial Leasing Co., Ltd.) at USD28,135,000 per vessel, and immediately charter them back under bareboat charters for a period of 180 months (15 years).
• Financing Structure: The lease arrangements feature a mix of fixed and variable hire payments, including a balloon payment of USD11 million per vessel at the end of the charter period. The applicable variable interest rate is SOFR + 1.85%.
• Guarantees and Security: The Company has provided a Deed of Guarantee to the Owners, ensuring payment and performance by Seacon Shipping and the Charterers.
• Strategic Fleet Expansion: The acquisition aligns with Seacon’s strategy to modernize and expand its fleet, phase out older vessels, and enhance its competitiveness for larger contracts and environmentally regulated operations.
• Shareholder Approval: The Closely Allied Group, holding 57.75% of the Company’s shares, has provided irrevocable written approval for both the Novation and Finance Lease Arrangements, satisfying Listing Rules without a general meeting.
• Financial Impact: The expansion is expected to increase the Group’s non-current assets by USD198.6 million, with a corresponding increase in liabilities due to new financing. The Directors expect a positive impact on future earnings as new vessels come into operation.
• Working Capital: The Directors affirm sufficiency of working capital for at least 12 months post-circular, supported by ongoing negotiations for further finance lease arrangements totaling USD32.5 million for an additional vessel.
• No Material Adverse Change: As of the latest practicable date, no material adverse change has occurred since the last audited accounts.
• No Material Loans or Contracts: No material loan arrangements or contracts exist between the major parties or their ultimate beneficial owners, nor are there competing interests or litigation that could materially affect the Group.

Detailed Transaction Structure

Novation of Shipbuilding Contracts

On December 26, 2025, Seacon Shipping (Singapore-incorporated, indirect wholly-owned subsidiary) entered into Novation Agreements with the Seller, Seller’s Agent, and Previous Buyer. The Previous Buyer’s rights and obligations under the shipbuilding contracts for six bulk carriers were transferred to Seacon Shipping at nil consideration. The vessels are expected to be delivered between January 30 and November 30, 2027. Payment to the shipbuilder will be made in four instalments per vessel, with the final instalment due upon delivery. The acquisition price was determined through arm’s length negotiations, benchmarking against industry pricing and shipbroker reports.

Finance Lease Arrangements

• Seacon Shipping sells each vessel to the Owner for USD28,135,000, payable in four instalments tied to construction milestones.
• Each Owner charters the vessel back to a Charterer (Liberia-incorporated, indirect wholly-owned subsidiaries) for 15 years.
• Lease payments include: pre-delivery hire (interest on pre-delivery instalment balance), fixed hire (USD285,583.33 per quarter), variable hire (interest on outstanding Owner’s Cost), and a balloon payment (USD11 million) at the end of the lease.
• Charterers have the option to purchase the vessel during the lease at a price based on outstanding costs plus fees; purchase is obligatory at the end of the lease.

Security & Guarantees

• Deeds of assignment and charge over Charterer earnings, insurances, and shares.
• Pre-delivery assignment of shipbuilding contract rights and manager’s undertakings.
• The Company’s Deed of Guarantee ensures payment and performance.

Implications for Shareholders

• Fleet Modernization: The acquisition and lease of new, fuel-efficient vessels positions the Group for long-term growth and compliance with environmental regulations, likely enhancing competitiveness and market share.
• Financial Leverage: The Group’s assets and liabilities will increase materially, reflecting both the expanded fleet and new financing obligations. This may impact financial ratios, but is expected to support revenue and earnings growth.
• Shareholder Approval: The Closely Allied Group’s written approval means no shareholder vote will be required, but other shareholders should note the material scale of these transactions and their potential impact on future results.
• Potential Share Price Sensitivity: The successful execution and delivery of these six new vessels, coupled with the strategic expansion, may be viewed favorably by the market, potentially affecting the share price. Conversely, risks include delivery delays, financing costs, or changes in shipping industry conditions.
• No Other Material Contracts or Litigation: The absence of competing interests, material contracts outside normal business, or litigation reduces uncertainty for investors.

Financial Information Summary

• As at December 31, 2025, Group indebtedness totals USD1,130 million (including borrowings, lease liabilities, and guarantees).
• Working capital is deemed sufficient for at least 12 months, taking into account internal resources and finance lease proceeds.
• No material adverse change since December 31, 2024.

Outlook

Seacon Shipping Group’s continued strategy to expand and modernize its fleet, leverage capital market access, and invest in digital and operational improvements is expected to create long-term value for shareholders. The Directors anticipate strong financial position and steady growth following the completion of the transactions, with enhanced ability to secure larger contracts and meet industry requirements.

Directors’ Interests and Corporate Governance

• Directors and substantial shareholders’ interests are disclosed, with main shareholdings concentrated in the Closely Allied Group and associated trusts.
• No directors or close associates have competing interests, material interests in Group assets, or service contracts not terminable within one year.

Documents Available for Review

Key transaction documents, including Novation Agreements, Shipbuilding Contracts, Bareboat Charters, Memoranda of Agreement, Deed of Guarantee, and Security Documents, will be published for 14 days on the Company and HKEX websites.

Conclusion

The Novation and Finance Lease Arrangements represent a major strategic move for Seacon Shipping Group, enabling significant fleet expansion, modernization, and future earnings potential. Investors should monitor progress on vessel construction and delivery, as well as any changes in industry conditions or financing costs, for potential impacts on share value.

Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell shares of Seacon Shipping Group Holdings Limited. Investors should conduct their own research and consult professional advisers before making investment decisions. All information is based on official Company disclosures as of the stated dates, and future developments may alter the outlook or financial impact.

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