SINGAPORE (Oct 3): Seaspan Corporation, one of the world’s largest owners and operators of containerships, has agreed to a proposed US$200 million investment deal that could pave the way for the recovery of Swiber Holdings.

On Wednesday, Seaspan and Swiber, the SGX-listed offshore construction and services group, signed a binding term sheet on Wednesday.

Under the terms, Seaspan will invest up to US$200 million in two stages.

The first stage is an initial US$20 million ($4 million) in cash for new ordinary shares in Swiber which will give it control of 80% of Swiber’s enlarged share capital, taking into account shares to be issued to unsecured creditors under a debt restructuring scheme.

The remaining US$180 million will be invested by way of subscription of new preference shares to be issued by Swiber’s wholly-owned subsidiary, Equatoriale Energy.

This will be subject to Swiber meeting certain milestones relating to the development of a US$1 billion LNG-to-power project in Vietnam.

The proposed transaction is subject to, among others, creditor, shareholder and regulatory approvals.

Swiber intends to use the US$20 million towards funding the development of the Vietnam power project, while the remaining US$180 million will be deployed to fund the construction, operation and maintenance of the power project or for other purposes as may be agreed between Swiber and Seaspan.

Judicial manager Bob Yap says: “The conventional oil and gas sector has faced difficult conditions in recent years. However, with growing demand for power in Southeast Asia, there are substantial opportunities for companies to develop clean energy solutions such as power generated from LNG. Against this backdrop, we are delighted that a reputable and established company like Seaspan has chosen to invest in Swiber. We believe that this deal offers a step forward in reviving Swiber as a going concern, and delivering a positive outcome for creditors and shareholders.”

Swiber, which is under trading suspension, was placed under the care of court-appointed judicial managers after the firm withdrew a bid to liquidate its business.

Singapore’s High Court has approved Swiber’s last application to extend its judicial management period till June 30, 2019.

Swiber’s executive chairman Raymond Goh and his team, in efforts to diversify the group’s business, have spent the last three years focussing on LNG-to-power opportunities in the region.

Bing Chen, Seaspan’s president and CEO, says: “We are excited to partner with Swiber. Together, with Swiber’s operational and engineering capabilities, Seaspan’s leading maritime asset management platform, and our Chairman David Sokol’s energy-related expertise, we will unlock substantial value.”

Seaspan, listed on the New York Stock Exchange, is a leading independent owner and operator of containerships with industry leading ship management services.

It charters vessels primarily on long term, fixed rate, time charters to the world’s largest container shipping liners including Maersk, COSCO, K-Line, MOL and ANL Singapore. Seaspan has offices in Hong Kong, Canada, India, United States, and Marshall Islands.

Its operating fleet consists of 112 containerships with a total capacity of more than 900,000 TEU. Last year, it reported revenue of US$831.3 million and net earnings of US$175.2 million.