MSC finds funds for fleet-wide scrubber programme

MSC finds funds for fleet-wide scrubber programme

Malcolm Latarche

Malcolm Latarche · 28 January 2019

ShipInsight


Despite recent news of restrictions on using open-loop scrubbers in some areas, liner major MSC has plans to equip 86 vessels in its fleet with scrubbers. An announcement last Friday by law firm Watson, Farley & Williams revealed details of a finance agreement the shipping company with a syndicate of banks.

The statement by the London-based law firm said it had advised BNP Paribas (“BNPP”) as co-ordinating bank and agent, together with a syndicate of four other banks as lenders, in connection with a $439Mn SINOSURE-backed financing of 86 exhaust gas cleaning systems for the MSC Mediterranean Shipping Company (“MSC”) group.

The loan will be used to finance the manufacturing and installation of the scrubbers on board 86 container ships owned by the MSC group in light of the implementation of the International Maritime Organisation’s low sulphur cap regulations in 2020.

The WFW Paris team advising BNPP was led by Finance Partner Alexia Russell, supported by Associates Konstantina Kyprianidou and Parit Patani. WFW Paris were assisted by Alasdair McKenzie of Mourant Ozannes and Clement Neveceral of Schellenberg Wittmer providing Guernsey and Swiss law advice respectively.

Russell commented: “We are very pleased to have advised BNPP and the other lenders on this milestone deal, which marks the first scrubber financing between the parties highlighting MSC’s environmental commitment and its firm support by the lenders in light of the new IMO-2020 sulphur cap.”

Last December MSC notified customers of a new bunker recovery charge that became effective on 1 January. At the time MSC said it had estimated that the cost of the various changes it needed to make to its fleet and fuel supply is in excess of two billion dollars (USD) per year.

In a statement issued at the time MSC said, “After considerable analysis of operating costs and related market factors, MSC has established a new price mechanism – the BRC (Bunker Recovery Charge) – which will be transparent to respective trades. It will reflect the true additional cost that MSC will incur as a result of the regulatory changes we all support in order to protect the environment. The BRC replaces the current Bunker Contribution (BUC), Fuel Adjustment Factor (FAD) and Emergency Fuel Surcharge (EFS), and largely absorbs other pre-existing fuel-related charges. Charges specifically related to coastal Emission Control Areas (ECAs) will remain in place.

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