Solidifies Seaspan's Industry-Leading
Position as Largest Independent
Containership Owner Operator
Acquisition Increases Seaspan's Fleet
Exposure in 10,000 TEU and 14,000 TEU
Eco-Class Vessels
Transaction Significantly Accretive to
Seaspan's Earnings per Share
Fairfax Financial to Invest an Additional
$250 Million in 5.5% Debentures and
Warrants, Increasing Total Fairfax Investment in Seaspan to
$500 Million
HONG KONG, March 14, 2018 /CNW/ - Seaspan Corporation
("Seaspan") (NYSE:SSW), the world's largest independent
containership owner operator, announced today that it has acquired
the remaining 89% it did not own of Greater China Intermodal
Investments LLC ("GCI") from affiliates of The Carlyle Group
("Carlyle") and the minority owners of GCI.
This acquisition solidifies Seaspan's industry-leading position
as the world's largest independent containership owner operator,
and highlights Seaspan's strength and ability to achieve sustained
growth and drive consolidation in the fragmented containership
sector. By expanding Seaspan's fleet and deepening its customer
relationships, Seaspan is well-positioned to offer its customers,
the world's leading container liners, enhanced service and
capabilities.
The implied enterprise value of GCI is approximately
$1.6 billion, including assumed third
party net debt of approximately $1.0
billion and $140 million of
future vessel payments. The consideration to selling shareholders
will be cash of approximately $330
million and a $50 million
issuance of Seaspan Series D preferred shares. Seaspan financed the
cash consideration with cash from its balance sheet and a
$16 million reinvestment by the
Washington family in Seaspan common equity. Seaspan has also closed
on a $100 million secured credit
facility from Citi.
Bing Chen, President and Chief Executive Officer of Seaspan,
stated, "This significantly accretive acquisition materially
increases our contracted future revenues and enhances our ability
to provide our customers with modern, state-of-the-art
containerships. With GCI's fleet now under our ownership, we are
strengthening our partnerships with customers and enhancing our
scalable integrated platform for sustained growth and future
consolidation. As the container shipping industry is beginning to
show signs of a recovery, we are taking decisive actions to
capitalize on compelling opportunities in our market."
GCI's fleet of 18 modern containerships is comprised of high
quality 10,000 TEU and 14,000 TEU eco-class vessels, representing a
total of 204,000 TEU. Of these 18 vessels, there are currently 16
on-the-water vessels with the remaining two newbuild vessels
scheduled for delivery during the second quarter of 2018. Seaspan
has been involved in the design, construction, delivery and
operations of all 18 of GCI's vessels since inception. All of these
vessels are sister ships to Seaspan's current fleet. Given
Seaspan's operating history of GCI's fleet, there is no operational
integration risk.
GCI's current fleet will contribute approximately $1.3 billion towards Seaspan's contracted future
revenues, increasing Seaspan's total contracted future revenues to
approximately $5.6 billion. In
calendar year 2019, with an 18 vessel fleet, GCI is expected to
generate $185 million to $200 million in annual EBITDA.
The Combined Fleet of SSW and GCI
|
Seaspan
|
GCI
|
Combined
|
Vessels (including
newbuilds)
|
94
|
18
|
112
|
Fleet TEU
(including newbuilds)
|
701,900
|
204,000
|
905,900
|
TEU-Weighted Avg.
Remaining Charter Period
|
5.2
years
|
5.4 years
|
5.2 years
|
TEU-Weighted Avg.
Vessel Age
|
6.1 years
|
2.6 years
|
5.4 years
|
Avg. Vessel
Size
|
7,500 TEU
|
11,333 TEU
|
8,100 TEU
|
Future Contracted
Revenue (US$)
|
$4.3B
|
$1.3B
|
$5.6B
|
Citi acted as financial advisor to Seaspan. Deutsche Bank
Securities Inc. served as financial adviser to GCI.
Fairfax Financial Holdings Investment
Seaspan also
announced that Fairfax Financial Holdings Limited, through certain
subsidiaries (collectively, "Fairfax"), has entered into definitive
agreements for an additional $250
million investment in Seaspan Debentures (the "Debentures")
and Warrants (the "Warrants"). The $250
million investment will be funded in January 2019. Fairfax's investment is on
substantively the same terms as Fairfax's February 14, 2018 investment (as disclosed in
Seaspan's 2017 20-F).
The term of the Debentures and Warrants will be seven years from
the expected funding date of January
2019. The Debentures are a 5.5% interest bearing security,
which will be guaranteed by certain of Seaspan's subsidiaries.
Seaspan will have the right to redeem the Debentures at face value
plus all accrued but unpaid interest at any time after the fifth
anniversary of issuance. Seaspan has also agreed to issue
38,461,539 Warrants, each exercisable into one Class A common share
of Seaspan at $6.50 per share,
subject to adjustment. Seaspan can elect to require early exercise
of the warrants, at any time after the fourth anniversary of
closing, if the volume weighted average price of Seaspan's common
shares, averaged over a 20-day period, equals or exceeds
$13.00 per share, subject to
adjustment.
David Sokol, Chairman of
Seaspan's Board of Directors, said, "We are very pleased to
announce the expansion of our partnership with Prem Watsa-led Fairfax through this investment.
Fairfax has an exceptional investment track record and reputation
for creating shareholder value. We believe this investment is a
validation of Seaspan's industry-leading platform and has been
instrumental in facilitating our acquisition of GCI."
Mr. Sokol continued, "The acquisition of GCI has always been
strategically compelling for Seaspan. We now have the right team in
place to execute on this opportunity, as well as strong support
from both Fairfax and the Washington family. Under Bing's
leadership, Seaspan is growing its fleet with high-quality young
vessels and building a platform for growth, while taking actions to
create shareholder value for many years to come."
Prem Watsa, Chairman and Chief
Executive Officer of Fairfax, said, "We are delighted to grow our
partnership with the Seaspan team. Building an even greater
relationship with a company guided by proven leaders like
David Sokol and Bing Chen, and
sponsored by the experienced and successful Dennis Washington, represents a tremendous
opportunity for Fairfax. We are very excited to continue supporting
Seaspan in the execution of its long-term vision."
Larry Simkins, a member of the
Board of Directors and Executive Committee of Seaspan and
President, Chief Executive Officer and Director of The Washington
Companies, commented, "As Seaspan's largest shareholder, the
Washington family is thrilled with Seaspan's rapid progress under
David's oversight as Chairman and Bing's leadership as CEO. We
remain committed to supporting Seaspan's future growth and look
forward to benefiting as the market continues to recover and this
management team capitalizes on increasingly attractive
opportunities around the globe."
Investor Conference Call and Webcast
Presentation:
Seaspan will host a conference call and
webcast presentation for investors and analysts to discuss the
transaction, with details as follows:
Date of Conference
Call:
|
Wednesday, March 14,
2018
|
Scheduled
Time:
|
8:30 a.m. ET / 7:30
a.m. CT / 6:30 a.m. MT / 5:30 a.m. PT
|
Participant Toll Free
Dial In #:
|
1-877-246-9875
|
International Dial In
#:
|
1-707-287-9353
|
Audience
Passcode:
|
2078058
|
To access the live webcast of the conference call, go to
www.seaspancorp.com and click on "News & Events" then "Events
& Presentations" for the link. The webcast will be
archived on the site for one year.
A replay of the conference call will be available from
11:30 a.m. ET on March 14, 2018 to 11:59
p.m. ET on March 28, 2018. The
replay telephone numbers are: 1-855-859-2056 or 1-404-537-3406 and
the replay passcode is: 2078058.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. This press release is
not an offer of securities for sale in the United States, and the securities may not
be offered or sold in the United
States absent registration or an exemption from the
registration requirements. The securities have not been registered
under the United States Securities Act of 1933, as amended.
About Seaspan
Seaspan provides many of the world's
major container shipping liners with alternatives to vessel
ownership by offering long-term leases on large, modern
containerships combined with industry-leading ship management
services. Seaspan's operating fleet, including 4 newbuilding
containerships on order for delivery to Seaspan by mid-2018,
consists of 112 containerships representing a total capacity of
over 900,000 TEU. Excluding newbuilds, Seaspan's operating fleet of
108 vessels has an average age of approximately 5 years and an
average remaining lease period of approximately 5 years, on a TEU
weighted basis.
Seaspan has the following securities listed on The New York
Stock Exchange:
Symbol:
|
Description:
|
|
|
SSW
|
Class A common
shares
|
SSW PR D
|
Series D preferred
shares
|
SSW PR E
|
Series E preferred
shares
|
SSW PR G
|
Series G preferred
shares
|
SSW PR H
|
Series H preferred
shares
|
SSWN
|
6.375% senior
unsecured notes due 2019
|
SSWA
|
7.125% senior
unsecured notes due 2027
|
About Fairfax Financial Holdings Limited
Fairfax is a
holding company which, through its subsidiaries, is engaged in
property and casualty insurance and reinsurance and investment
management.
Cautionary Note Regarding Forward-Looking Statements
This release contains certain forward-looking statements (as such
term is defined in Section 21E of the Securities Exchange Act of
1934, as amended) concerning future events and our operations,
performance and financial condition, including, in particular, the
likelihood of our success in developing and expanding our business.
Statements that are predictive in nature, that depend upon or refer
to future events or conditions, or that include words such as
"expects", "anticipates", "intends", "plans", "believes",
"estimates", "projects", "forecasts", "will", "may", "potential",
"should", and similar expressions are forward looking statements.
These forward-looking statements reflect management's current views
only as of the date of this release and are not intended to give
any assurance as to future results. As a result, you are cautioned
not to rely on any forward-looking statements. Forward-looking
statements appear in a number of places in this release. Although
these statements are based upon assumptions we believe to be
reasonable based upon available information, including operating
margins, earnings, cash flow, expected 2019 annual EBITDA from GCI,
working capital and capital expenditures, they are subject to risks
and uncertainties. These risks and uncertainties include, but are
not limited to: future operating or financial results; our
expectations relating to dividend payments and forecasts of our
ability to make such payments; pending acquisitions, business
strategy and expected capital spending; operating expenses,
availability of crew, number of off-hire days, drydocking
requirements and insurance costs; general market conditions and
shipping market trends, including charter rates and factors
affecting supply and demand; our financial condition and liquidity,
including our ability to obtain additional financing in the future
to fund capital expenditures, acquisitions and other general
corporate activities; estimated future capital expenditures needed
to preserve our capital base; our expectations about the
availability of ships to purchase, the time that it may take to
construct new ships, or the useful lives of our ships; our
continued ability to enter into long-term, fixed-rate time charters
with our customers; our ability to leverage to our advantage
Seaspan's relationships and reputation in the containership
industry; changes in governmental rules and regulations or actions
taken by regulatory authorities; changes in worldwide container
demand; changes in trading patterns; competitive factors in the
markets in which we operate; potential inability to implement our
growth strategy; potential for early termination of long-term
contracts and our potential inability to renew or replace long-term
contracts; ability of our customers to make charter payments;
potential liability from future litigation; conditions in the
public equity markets; and other factors detailed from time to time
in our periodic reports and filings with the Securities and
Exchange Commission, including Seaspan's Annual Report on Form 20-F
for the year ended December 31, 2017.
We expressly disclaim any obligation to update or revise any of
these forward-looking statements, whether because of future events,
new information, a change in our views or expectations, or
otherwise. We make no prediction or statement about the performance
of any of our securities.
For Investor Relations Inquiries:
Mr. David
Spivak
Chief Financial Officer
Seaspan Corporation
Tel. 604-638-2580
Mr. Michael
Sieffert
Director, Corporate Finance
Seaspan Corporation
Tel. 778-328-6490
For Media Inquiries:
Mr. Leon
Berman
The IGB Group
Tel. 212-477-8438
SOURCE Seaspan Corporation