Narrative
Full Description
Project narrative
On November 11, 2018, ICBC Leasing signed a €165 million EUR sale-and-leaseback agreement with Mystic Invest Holding, S.A — a Portuguese privately-held financial holding company working in travel and tourism — for three expedition cruise ship newbuilds. The borrowing terms included a repurchase obligation. Caixa Geral de Depósitos, Banco Montepio, and Banco Carregosa would ensure financing during the construction period, given that financing under the 'sale and charter-back' regime would only be materialized upon completion of ship construction. The three ships were 2019's "World Explorer", 2020's "World Voyager", and 2021's "World Navigator", and they were to be built at the WestSea Viana shipyard. At the time of signing in November 2018, World Explorer was already in the final phase of construction, but the other two had not yet been started. World Explorer was due for delivery in November 2018, and should have been headed to Antarctica for a seasonal charter by Quark Expeditions. Instead, it would arrive in April 2019, going directly into a sold-out European season for Germany's Nicko Cruises, a Mystic company. Mystic said they had been working on the ICBC deal for a year, and had requested Chinese financing during a road show to Shanghai, Beijing and Hong Kong around March 2018, in which they contacted a dozen Chinese banks and entities interested in financing the ships. Mystic added that the main reason for the financing agreement was that they needed to quickly expand their fleet to respond to large market demand, with World Explorer already fully booked for expeditions through 2023.
Staff comments
1. A lease is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments. Under a capital lease (a financial arrangement where the lessee/borrower uses an asset and pays regular installments plus interest to the lender/lessor), rental payments are usually classified as interest and obligation payments, similarly to a mortgage (with the interest calculated each rental period on the outstanding obligation balance). AidData codes capital leases as loans. 2. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products.