Yangzijiang

Yangzijiang: Counter down below the $1.00 mark declining 1.0% today. 3 days after the Company announced that Seaspan has exercised its option to purchase 4 additional unit of 10,000 TEU containerships with the Group, the Company announced on 27 Jan that they have put up 3 abandoned 2,500 TEU containerships for resale. The three vessels were originally ordered by a German owner, with one of the three vessels already completed and the other two to be completed by May. Despite the owner having paid 40% down on the contracts, it has decided to cancel the contract due to sharply lower newbuilding prices. Currently Yangzijiang is looking for new buyers for the three vessels. According to vesselsvalue.com, the price for a 2,500teu containership which is schedule to be completed in 2013 is around US$23.3m. We think the three vessels were originally ordered in 2007; values of such vessels were around US$50m then, but have fallen to about US$24m currently. Two of the five installments for each vessel have been paid up, accounting for 40% of the total contract value. With the 40% deposit, and assuming YZJ is able to sell the vessels at current prices, the difference per vessel is not substantial (~US$6m).