H Line Shipping Secures $23.4 Million Ship Financing for Glovis Car Carrier Vessel

[Asia Economy Reporter Lim Jeong-su] H Line Shipping (H Line Shipping) secured $23.4 million (270 billion KRW) in ship financing by ordering vessels under a long-term charter contract with Hyundai Glovis. Hana Bank, a subsidiary of Hana Financial Group that invested equity in the H Line Shipping acquisition fund, acted as the lead arranger for the financing.

According to the investment banking (IB) industry on the 2nd, 'ORION1 S.A.' and 'ORION2 S.A.' recently received subordinated loans of $11 million each, totaling $22 million, under the lead management of Hana Bank. ORION1 and ORION2 are special purpose companies (SPCs) established by H Line Shipping in Liberia, Africa. The loan maturity is 8 years and may be flexibly adjusted according to the vessel delivery schedule.

During the ship financing process, H Line Shipping ordered a 7,000 CEU (Car Equivalent Unit) class vessel capable of carrying 7,000 vehicles from a Chinese shipyard and provided it as collateral for the ship financing. The lead arranger reportedly raised a lending syndicate divided into senior loans of $15.6 million and subordinated loans of $7.8 million according to collateral and repayment priority.

Simultaneously, H Line Shipping signed a Bareboat Charter with Conditional Purchase (BBCHP) contract with ORION1 and ORION2. BBCHP is a ship lease contract where the charterer agrees to acquire the vessel after the charter period ends. The charterer pays the charter fee, which is the ship lease cost, in installments along with the vessel price and acquires the vessel at the end of the charter period.

H Line Shipping entered into a 15-year time charter contract with Hyundai Glovis for the ordered vessels. Hyundai Glovis will lease the vessels long-term and pay charter fees to ORION1 and ORION2. The funds raised through this method will be used to pay for the construction of the car carrier vessels ordered from the Chinese shipyard.

H Line Shipping was established when Hahn & Company spun off and acquired Hanjin Shipping’s bulk exclusive vessel division in June 2014. In 2016, as part of a bolt-on acquisition strategy, it additionally acquired Hyundai Merchant Marine’s exclusive vessel division, growing into the largest domestic specialized exclusive vessel operator with a fleet of about 50 vessels. It has a stable business foundation through long-term transportation contracts with POSCO, Korea Electric Power Corporation, Hyundai Glovis, Korea Gas Corporation, and Brazil’s Vale.

Currently, Hahn & Company’s subsidiary, Hahn & Co Marine Infrastructure Holdings Ltd., which was established for the acquisition of H Line Shipping, holds 100% of the shares. Hana Financial made a large-scale equity investment in the project fund holding H Line Shipping during the fund recapitalization process in 2020.