Greece's Paragon Shipping Inc. obtains a $69-million credit facility with China Development Bank to partially finance its two 4,800 TEU containerships currently under construction.
The two container ships on order are expected to be delivered in the second quarter of 2014, and the company has granted an option to its subsidiary, Box Ships Inc., until its initial public offering in 2011, to acquire the vessels at any time prior to their delivery to Paragon Shipping.
The CDB Credit Facility, which is available for drawdown upon the delivery of the vessels subject to certain contingencies and conditions, will be used to finance the lower of 60% of the construction cost of the vessels, or 80% of the vessels' market value at delivery. The facility matures ten years after the drawdown date. Under the terms of the credit facility, amounts borrowed will bear interest at LIBOR, plus a margin of 4.00%. The financial covenants and other conditions contained in the CDB Credit Facility are similar to the ones contained in the Company's existing credit facilities. In addition, this facility can be freely transferred to Box Ships Inc. if Box Ships decides to declare its option to acquire these vessels before their delivery.
In addition, the Company has agreed with the syndicate led by Nordea Bank Finland Plc, subject to definitive documentation, to remove the condition precedent under which drawdown of the loan is subject to the prepayment of the Company's loan outstanding to Box Ships Inc. from our syndicated secured loan facility entered into between the Company and Nordea, as Agent.
Commenting on the developments, our Chairman and CEO, Michael Bodouroglou stated, "We are very pleased to start a new relationship with China Development Bank, and appreciate the continuous support of our existing lenders."