The JOL Returns
Leasing Deal of the Year (East)
By Campbell Houston
Transaction: Hapag-Lloyd Container Sale Leaseback
Winners:

Financial Products Group, FPG Asset & Investment Management

2 012 saw a number of inno-Febr
uary/
Mar
ch

vative financing deals forcontainer boxes as specialty
banks that have historicallyfinanced the market cameunder pressure. DVB arranged
the sale and leaseback of139,941 three- to six-year-old
container boxes for China Shipping Container Lines, representing 20 percent of theircontainer box fleet or 210,000TEU, in a $358 million deal.
The containers were acquiredby CLC Maritime Container
Leasing, which is backed by
CDB Leasing, a significant
foray into the maritime
container leasing industry forCDB. China Development
Bank acted as co-lender in thedeal. In another container deal,
UnitedArabShipping
Company utilized Sinosure
ECA buyer’s coverage and a $78
million facility from ABN
AMRO to order 26,000 standard dry boxes from China.
That deal is covered in depth in
our Export Credit Deal of theYear article.

201
3The Leasing Deal of the Year

40Marine Money

goes to another container deal.
In August, FPG Asset & Investment Management arranged
the sale and leaseback of 34,209
vintage containers from HapagLloyd in a deal valued at $45.5
million. FPG Asset & Investment Management (FPG AIM)
arranged the deal. Financial
Products Group Co. Ltd.
manages the SPC whichpurchased the containers andasset, and fully funded. The
investor/lessor receives tax
benefits from depreciating theassets, which allows thefinancing to be made at rates
lower than a traditional lease.
To qualify for tax benefits, theJapanese Tax Authority requires
investors take on equity risk: amaximum of 90 percent of theacquisition costs may be paid inlease payments over the lifetime

The deal is structured as a Japanese Operating Lease (JOL), which gives 100 percent
financing at a low rate, with low risk andsimple documentation.
underwrote the equity. This
SPC is 100 percent funded byJapanese corporate investors.
The deal is structured as aJapanese Operating Lease(JOL), which gives 100 percent
financing at a low rate, with lowrisk and simple documentation.
JOLs are open to non-public
investors who must be activelyinvolved, familiar with theof the deal. Any residual value
at the expiration of the lease istaken as capital gains by theinvestor. In many JOLs,including this deal, a purchase
option is included. The fixedprice eliminates some risk for
FPG investors and allows
Hapag-Lloyd to capture theresidual value upside at theexpiry of the lease of thecontainer boxes by exercising

the purchase option.
The security package is verystraightforward and allows
Hapag-Lloyd to raise financing
at an attractive rate without
involving any bank debt or anysecurity other than container
boxes. Hapag-Lloyd also benefits from removing thecontainers from its balance
sheet.
The transaction is groundbreaking in being the first 100
percent
Japanese
equityfinanced sale and operatingleaseback transaction in relation
to vintage container boxes
involving Japanese corporate
investors and a German
container shipping company.
At times when container box
financing is scarce, utilizing theJapanese Operating Lease
market for container boxes
provides financing in a sustainable and efficient manner. FPG
AIM has secured a position as aleader of container leasing inJapan.

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