CDB provides $1.632 billion loan to finance 6 LNG Arc7 ice-class vessels chartered to the Yamal LNG Project (Linked to Project ID#67041, 67064, 67062, 67063, 67040, 67068, 67069)

On December 8, 2017, DSME Hull No. 2423 L.L.C., DSME Hull No. 2425 L.L.C., DSME Hull No. 2430 L.L.C., DSME Hull No. 2431 L.L.C., DSME Hull No. 2433 L.L.C. and DSME Hull No. 2434 -- special purpose vehicles (SPVs) that are legally incorporated in the Marshall Islands and and wholly-owned subsidiaries of TC LNG Shipping LLC -- signed a $1,632,000,000 loan agreement with China Development Bank for the acquisition of six 6 LNG Arc7 ice-class vessels from Daewoo Shipbuilding & Marine Engineering Co. Ltd. All six vessels will operate under long-term charter contracts to service the China Eximbank-, China Development Bank-, and the Silk Road Fund-financed Yamal LNG Project, which involves the construction of a liquefied natural gas (LNG) plant in Sabetta in the north-eastern part of Russia’s Yamal Peninsula (captured via Project ID#67041, 67064, 67062, 67063, 67040, 67068, 67069). The vessels will have ice-breaking capabilities (including the ability to break up sea ice up to eight feet thick), which will enable year-round use of the Arctic sea routes and transportation of the gas from the plant in Sabetta. TC LNG Shipping LLC — a joint venture of China LNG Shipping (Holdings) Limited (50% equity stake) and Teekay LNG Operating L.L.C. (50% equity stake) — is a limited liability company that was formed in the Marshall Islands, with its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960. The CDB loan bears interest at LIBOR plus 3.1% and requires semi-annual payments, with balloon payments upon maturity through 2031. It is secured by (i.e. collateralized against) first priority deeds of assignment of the building contracts, refund guarantees, and supervision agreements; first priority pledges of shares in the SPVs; first priority statutory mortgages over the vessels; first priority deeds of assignment of the insurances, earnings, and requisition compensation of the vessels from the borrowers, first priority deeds of assignment of the charters and other assigned documents in respect of the vessels from the borrowers; first priority account security deeds; and a first priority deed of charge over the Master Agreement Proceeds, among other things. The borrowers were expected to use the loan proceeds to finance building contracts that they signed with Daewoo Shipbuilding & Marine Engineering Co. Ltd. on July 8, 2014. The vessel that DSME Hull No. 2431 L.L.C. purchased from Daewoo Shipbuilding & Marine Engineering Co., Ltd. was delivered on November 29, 2019. The vessel that DSME Hull No. 2430 L.L.C. purchased from Daewoo Shipbuilding & Marine Engineering Co., Ltd. was delivered on October 29, 2019. The vessel that DSME Hull No. 2425 L.L.C. purchased from Daewoo Shipbuilding & Marine Engineering Co., Ltd. was delivered on August 31, 2018. The vessel that DSME Hull No. 2433 L.L.C. purchased from Daewoo Shipbuilding & Marine Engineering Co., Ltd. was delivered on October 31, 2019. The vessel that DSME Hull No. 2434 L.L.C. purchased from Daewoo Shipbuilding & Marine Engineering Co., Ltd. was delivered on November 30, 2019. Then, in January 2021, Teekay LNG Partners announced that its joint venture with China LNG Shipping (Holdings) Limited shipping natural gas from Northern Russia to China was ‘blocked’ because of ties to Cosco, a Chinese shipping company accused by the U.S. Government of carrying Iranian crude oil. TC LNG Shipping LLC was termed a ‘blocked person’ under U.S. sanctions (i.e. the rules of the US Treasury Department's Office of Foreign Assets Control) because one of its owners — China LNG Shipping (Holding) — is half-owned by Cosco Dalian.

Additional details

1. The CDB loan agreement can be accessed in its entirety via https://www.sec.gov/Archives/edgar/data/1308106/000162828019003955/loanagreement08122017sea.htm. 2. AidData has estimated the all-in interest rate by adding 3.1% to average 6-month LIBOR in December 2017 (1.768%). 3. TC LNG Shipping LLC is a joint venture of China LNG Shipping (Holdings) Limited (50% equity stake) and Teekay LNG Operating L.L.C. (50% equity stake). 4. Daewoo Shipbuilding & Marine Engineering Co., Ltd is one of the ‘Big Three’ shipbuilders of South Korea, along with Hyundai and Samsung. 5. Section 17.1 details the collateralization arrangement that underpins the CDB loan.

Number of official sources

9

Number of total sources

13