China Eximbank provides $29.9 million loan for construction and acquisition of a 53,100 dwt handymax bulk carrier (known as ‘Karim’) (Linked to Project ID#95762, 95764, 95779. 95781, and 95782)

On April 24, 2007, Islamic Republic of Iran Shipping Lines (IRISL) — an Iranian state-owned enterprise — signed six separate loan agreements with China Eximbank and other unspecified banks: a $29,950,000 loan agreement for the construction and acquisition of a 53,100 dwt handymax bulk carrier (known as ‘Rahim’, see project ID#95762) with Hull No. DY109; a $29,950,000 loan agreement for the construction and acquisition of a 53,100 dwt handymax bulk carrier (known as ‘Karim’, see project ID#95763) with Hull No. DY110; a $22,462,500 loan agreement for the construction and acquisition of a 53,100 dwt handymax bulk carrier (known as ‘Azim’, see project ID#95764) with Hull No. DY111; a $22,462,500 loan agreement for the construction and acquisition of a 53,100 dwt handymax bulk carrier (known as ‘Alim’, see project ID#95779) with Hull No. DY112; a $22,462,500 loan agreement for the construction and acquisition of a 53,100 dwt handymax bulk carrier (known as ‘Salim’, see project ID#95781) with Hull No. DY113; and a $22,462,500 loan agreement for the construction and acquisition of a 53,100 dwt handymax bulk carrier (known as ‘Hakim’, see project ID#95782) with Hull No. DY114. China Eximbank served as both the ‘facility agent’ and the ‘security trustee’ for the loan. The borrower was expected to use the proceeds from each loan to finance a $180 million commercial contract that it signed with Yangzhou Dayang Shipbuilding Co, Ltd on March 13, 2006 in order to construct and acquire the six bulk carriers. The borrowing terms that applied to the loans are unknown. However, it is known that each loan was collateralized against a mortgage over a 53,100 dwt handymax bulk carrier (vessel) and security over the earnings of the vessel. Yangzhou Dayang Shipbuilding Co, Ltd was the contractor responsible for the construction of the ships, while China National Aero-Technology Import and Export Corporation (CATIC) was the contractor responsible for the delivery of the ships to IRISL. The first of six ships was originally scheduled for delivery in February 2008 with the remaining five ships following at two monthly intervals (April 2008, June 2008, August 2008, October 2008, and December 2008). Construction of the vessels began in 2008, but their precise completion and delivery dates are unknown.

Additional details

1. The Islamic Republic of Iran Shipping Line Group (IRISL or گروه کشتیرانی جمهوری اسلامی ایران‎), also known by the business name IRISL Group, is a shipping line based in Iran. Its fleet comprises 115 ocean-going vessels with a total capacity of 3.3 million tons deadweight (DWT), with 87 ocean-going vessels owned by IRISL while the remaining 28 ships owned under the flag of subsidiaries such as Khazar Shipping, Valfajr as well as Iran-India Shipping Companies. They are manned by 6,000 personnel who work under the flag of the Islamic Republic of Iran in the Caspian Sea, Persian Gulf, international waters and various ports of the world. 2. IRISL has been sanctioned by the United States, United Nations, European Union, and other parties for its role in assisting Iran's nuclear and ballistic missile development programs. However, the return of the line to the world market was expected by early winter 2016, as a result of the Iran nuclear deal between Iran, the P5+1/EU3+3 powers, and the EU in August 2015. Since the USA pulled out of the Iran Nuclear Deal, the IRISL was added back to the U.S Treasury’s sanctions list on June 8, 2020. 3. Each of the six original loan agreements was amended by a side letter on August 6, 2008 and supported by the signing of a supplemental loan agreement on the same date. This issue warrants further investigation. The March 13, 2006 commercial contract gave IRISL the option of buying four additional ‘sisterships’, so one possibility is that the August 6, 2008 loan agreements and side letters allowed for the financing of these four additional vessels. 4. Given that the underlying commercial contract being financed by the loan was issued to a Chinese state-owned company, AidData assumes for the time being that all of the members of the loan syndicate were Chinese state-owned banks. This issue warrants further investigation. 5. The security deed supporting the loan agreement can be accessed in its entirety via https://www.dropbox.com/s/15g6k2ecidok0fa/Security%20Deed%20for%20Karim%20Ship%20Loan%20Agreement.pdf?dl=0. The deed of covenant supporting the loan agreement can be accessed in its entirety via https://www.dropbox.com/s/uawpt9vtlpiy8pq/Deed%20of%20Covenant%20for%20Karim%20Ship%20Loan%20Agreement.pdf?dl=0. The mortgage supporting the loan agreement can be accessed in its entirety via https://www.dropbox.com/s/7gfbbrya4exw9rv/Mortgage%20for%20Karim%20Ship%20Loan%20Agreement.pdf?dl=0. 6. CATIC was eventually renamed as AVIC.

Number of official sources

5

Number of total sources

9