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Overview

BoCom Leasing enters into a $99.5 million USD sale-and-leaseback agreement with TORM A/S to finance three second-hand LR2 vessels

Commitments (Constant USD, 2023)$103,279,755
Commitment Year•2019Country of Activity•DenmarkDirect Recipient Country of Incorporation•DenmarkSector•Transport And StorageFlow Type•Loan

Status

Project lifecycle

Pipeline: Commitment

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Dec 19, 2019
Last repayment (originally scheduled)
Jul 15, 2029

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Commercial Banks

  • China Bank of Communications Financial Leasing Co., Ltd. (BoCom Leasing)

Receiving agencies

Private Sector

  • TORM A/S (now TORM plc)

Loan description

BoCom Leasing enters into a $99.5 million USD sale-and-leaseback agreement with TORM A/S to finance three second-hand LR2 vessels

Interest rate (t₀)•4.91625%Interest type•Variable Interest RateMaturity•10 years

Narrative

Full Description

Project narrative

On December 19, 2019, Bank of Communications Financial Leasing Co, Ltd. (BoCom Leasing) entered into a $99.5 million USD financial sale and lease-back agreement with TORM A/S to finance three second-hand LR2 vessels. The agreement carried a maturity period of ten years with a final maturity date in July 15, 2029 and a floating interest rate of LIBOR plus a margin of 3.00% (effective interest rate of 7.8% in 2022, 4.9% in 2021) and a bareboat charter hire payable in monthly installments. This agreement had no financial covenants. The agreement included three vessels built in 2015 and 2018. TORM is the bareboat charter and BoCom Leasing the owner of vessel. TORM had a purchase option on the vessels.

Staff comments

1. Torm A/S is based in Copenhagen, Denmark. It is a shipping company that owns and operates product tankers. The company's product tankers carry refined oil products such as gasoline, jet fuel, naphtha and diesel oil. 2. 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. 3. Sale and leaseback (or sale-leaseback) agreements are generally considered to be off-balance-sheet hybrid debt products.