UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

Commission File Number 333-229312

 

ATLAS CORP.

(Exact name of Registrant as specified in its Charter)

 

23 Berkeley Square

London, United Kingdom

W1J 6HE

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F      Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(1).     Yes      No  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b)(7).     Yes      No  

 

 


 

Item 1 — Information Contained in this Form 6-K Report

This report on Form 6-K of Atlas Corp., or this Report, is hereby incorporated by reference into: the Registration Statement of Atlas Corp. filed with the Securities and Exchange Commission, (the “SEC”), on May 30, 2008 on Form F-3D (Registration No. 333-151329), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on March 31, 2011 on Form S-8 (Registration No. 333-173207), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on June 20, 2013 on Form S-8 (Registration No. 333-189493), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on April 24, 2012 on Form F-3 (Registration No. 333-180895), as amended on March 22, 2013 and February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on April 29, 2014 on Form F-3 (Registration No. 333-195571), as amended on March 6, 2017, April 19, 2017 and February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on November 28, 2014 on Form F-3 (Registration No. 333-200639), as amended on March 6, 2017, April 19, 2017 and February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on November 28, 2014 on Form S-8 (Registration No. 333-200640), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on March 12, 2015 on Form F-3D (Registration No. 333-202698), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on June 24, 2016 on Form S-8 (Registration No. 333-212230), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on August 25, 2017 on Form F-3 (Registration No. 333-220176), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on December 21, 2017 on Form S-8 (Registration No. 333-222216), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on April 13, 2018 on Form F-3D (Registration No. 333-224291), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on April 13, 2018 on Form F-3 (Registration No. 333-224288), as amended on May 3, 2018, May 7, 2018 and February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on September 28, 2018 on Form F-3 (Registration No. 333-227597), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on January 18, 2019 on Form F-3 (Registration No. 333-229312), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on March 27, 2019 on Form F-3 (Registration No. 333-230524), as amended on February 28, 2020, the Registration Statement of Atlas Corp. filed with the SEC on May 11, 2020 on Form F-3 (Registration No. 333-238178), as supplemented on December 7, 2020, the Registration Statement of Atlas Corp. filed with the SEC on June 30, 2020 on Form S-8 (Registration No. 333-239578), the Registration Statement of Atlas Corp filed with SEC on March 19, 2021 on Form F-3 (Registration No. 333-254536) and the Registration Statement of Atlas Corp. filed with SEC on March 19, 2021 on Form F-4 (Registration No. 333-254537).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

ATLAS CORP.

 

 

 

 

Date:  May 7, 2021

By:

 

/s/ Graham Talbot

 

 

 

Graham Talbot

 

 

 

Chief Financial Officer

 

 

 

(Principal Financial and Accounting Officer)

 

 

 

 

 

i

 


 

EXHIBIT I

ATLAS CORP.
REPORT ON FORM 6-K FOR THE QUARTER ENDED MARCH 31, 2021

INDEX

 

 

 

 

Unless we otherwise specify, when used in this Report, (i) the terms “Atlas”, the “Company”, “we”, “our” and “us” refer to Atlas Corp. and its subsidiaries, (ii) the term “Seaspan” refers to Seaspan Corporation and its subsidiaries and (iii) the term “APR Energy” refers to Apple Bidco Limited and its subsidiaries, including APR Energy Ltd. and APR Energy Ltd.’s subsidiaries.

 

 

 


 

 

ATLAS CORP.

PART I — FINANCIAL INFORMATION

ITEM 1 — INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ATLAS CORP.

Interim Consolidated Balance Sheets

(Unaudited)

(Expressed in millions of United States dollars, except number of shares and par value amounts)

 

 

March 31,

 

 

December 31,

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

337.5

 

 

$

304.3

 

Accounts receivable

 

80.1

 

 

 

75.9

 

Inventories

 

58.3

 

 

 

60.2

 

Prepaid expenses and other

 

34.7

 

 

 

33.9

 

Net investment in lease (note 6)

 

12.5

 

 

 

10.7

 

Acquisition related assets

 

100.3

 

 

 

99.3

 

 

 

623.4

 

 

 

584.3

 

 

 

 

 

 

 

 

 

Property, plant and equipment (note 7)

 

6,813.4

 

 

 

6,974.7

 

Right-of-use asset (note 8)

 

810.5

 

 

 

841.2

 

Net investment in lease (note 6)

 

501.6

 

 

 

418.6

 

Goodwill (note 2)

 

75.3

 

 

 

75.3

 

Deferred tax assets

 

19.6

 

 

 

19.3

 

Derivative instruments (note 19(c))

 

3.1

 

 

 

 

Other assets (note 9)

 

559.3

 

 

 

375.7

 

 

$

9,406.2

 

 

$

9,289.1

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

$

125.1

 

 

$

134.1

 

Deferred revenue

 

28.0

 

 

 

28.2

 

Income tax payable

 

115.5

 

 

 

110.4

 

Long-term debt - current (note 10)

 

345.7

 

 

 

332.1

 

Operating lease liabilities - current (note 11)

 

159.1

 

 

 

160.9

 

Other financing arrangements - current (note 12)

 

64.8

 

 

 

64.1

 

Other liabilities - current (note 13)

 

21.6

 

 

 

24.8

 

 

 

859.8

 

 

 

854.6

 

 

 

 

 

 

 

 

 

Long-term debt (note 10)

 

3,334.6

 

 

 

3,234.0

 

Operating lease liabilities (note 11)

 

640.5

 

 

 

669.3

 

Other financing arrangements (note 12)

 

800.7

 

 

 

801.7

 

Derivative instruments (note 19(c))

 

50.6

 

 

 

63.0

 

Other liabilities (note 13)

 

41.7

 

 

 

40.9

 

Total liabilities

 

5,727.9

 

 

 

5,663.5

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Share capital (note 15):

 

 

 

 

 

 

 

Preferred shares; $0.01 par value; 150,000,000 shares authorized (2020 – 150,000,000);

   33,335,570 shares issued and outstanding (2020 – 33,335,570)

 

 

 

 

 

 

 

Common shares; $0.01 par value; 400,000,000 shares authorized (2020 - 400,000,000);

  246,811,376 shares issued and outstanding (2020 - 246,277,338);

  727,351 shares held in treasury (2020 – 727,351)

 

2.4

 

 

 

2.4

 

Additional paid in capital

 

3,846.2

 

 

 

3,842.7

 

Deficit

 

(150.3

)

 

 

(199.2

)

Accumulated other comprehensive loss

 

(20.0

)

 

 

(20.3

)

 

 

3,678.3

 

 

 

3,625.6

 

 

$

9,406.2

 

 

$

9,289.1

 

 

Commitments and contingencies (note 18)

Subsequent events (note 20)

See accompanying notes to interim consolidated financial statements.

1

 


 

ATLAS CORP.

Interim Consolidated Statements of Operations

(Unaudited)

(Expressed in millions of United States dollars, except per share amounts)

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

Revenue (note 4)

$

372.6

 

 

$

308.4

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Operating expenses

 

76.2

 

 

 

59.8

 

 

Depreciation and amortization

 

87.3

 

 

 

72.2

 

 

General and administrative

 

23.0

 

 

 

10.4

 

 

Operating leases (note 11)

 

36.1

 

 

 

38.5

 

 

 

 

222.6

 

 

 

180.9

 

 

Operating earnings

 

150.0

 

 

 

127.5

 

 

Other expenses (income):

 

 

 

 

 

 

 

 

Interest expense

 

46.8

 

 

 

49.5

 

 

Interest income

 

(0.5

)

 

 

(1.4

)

 

Loss (gain) on derivative instruments (note 19(c))

 

(8.7

)

 

 

24.8

 

 

Other expenses

 

8.1

 

 

 

0.8

 

 

 

 

45.7

 

 

 

73.7

 

 

Net earnings before income tax

 

104.3

 

 

 

53.8

 

 

Income tax expense

 

6.7

 

 

 

1.9

 

 

Net earnings

$

97.6

 

 

$

51.9

 

 

Earnings per share (note 16):

 

 

 

 

 

 

 

 

Common share, basic

$

0.33

 

 

$

0.15

 

 

Common share, diluted

$

0.31

 

 

$

0.15

 

 

 

See accompanying notes to interim consolidated financial statements.

 

2

 


 

 

ATLAS CORP.

Interim Consolidated Statements of Comprehensive Income

(Unaudited)  

(Expressed in millions of United States dollars)

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

Net earnings

$

97.6

 

 

$

51.9

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

Amounts reclassified to net earnings during the period

   relating to cash flow hedging instruments (note 19(c))

 

0.3

 

 

 

0.3

 

 

Comprehensive income

$

97.9

 

 

$

52.2

 

 

 

See accompanying notes to interim consolidated financial statements.

3

 


 

 

ATLAS CORP.

Interim Consolidated Statements of Shareholders’ Equity

(Unaudited)

(Expressed in millions of United States dollars, except number of shares and per share amounts)

Three months ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

Number of

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Accumulated other

 

 

Total

 

 

 

 

common

 

 

preferred

 

 

Common

 

 

Preferred

 

 

paid-in

 

 

 

 

 

 

comprehensive

 

 

shareholders’

 

 

 

 

shares

 

 

shares

 

 

shares

 

 

shares

 

 

capital

 

 

Deficit

 

 

loss

 

 

equity

 

Balance, December 31, 2020

 

 

 

246,277,338

 

 

 

33,335,570

 

 

$

2.1

 

 

$

0.3

 

 

$

3,842.7

 

 

$

(199.2

)

 

$

(20.3

)

 

$

3,625.6

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

97.6

 

 

 

 

 

 

97.6

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.3

 

 

 

0.3

 

Issuance of common shares from unissued acquisition related equity consideration (note 2)

 

 

 

173,819

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends on common shares

($0.125 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31.5

)

 

 

 

 

 

(31.5

)

Dividends on preferred shares

(Series D - $0.50 per share;

Series E - $0.52 per share;

Series G - $0.51 per share;

Series H - $0.49 per share;

Series I - $0.50 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16.8

)

 

 

 

 

 

(16.8

)

Shares issued through dividend reinvestment program

 

 

 

7,042

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

(0.1

)

 

 

 

 

 

 

Share-based compensation expense

 

 

 

353,177

 

 

 

 

 

 

 

 

 

 

 

 

3.4

 

 

 

(0.3

)

 

 

 

 

 

3.1

 

Balance, March 31, 2021

 

 

 

246,811,376

 

 

 

33,335,570

 

 

$

2.1

 

 

$

0.3

 

 

$

3,846.2

 

 

$

(150.3

)

 

$

(20.0

)

 

$

3,678.3

 

 

See accompanying notes to interim consolidated financial statements.

 

4

 


 

 

ATLAS CORP.

Interim Consolidated Statements of Shareholders’ Equity

(Unaudited)

(Expressed in millions of United States dollars, except number of shares and per share amounts)

 

Three months ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Number of

 

 

Number of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

 

 

other

 

 

Total

 

 

 

 

common

 

 

preferred

 

Common

 

 

 

 

Preferred

 

 

 

 

Treasury

 

 

 

 

paid-in

 

 

 

 

 

 

 

 

 

 

comprehensive

 

 

shareholders'

 

 

 

 

shares

 

 

shares

 

shares

 

 

 

 

shares

 

 

 

 

shares

 

 

 

 

capital

 

 

 

 

Deficit

 

 

 

 

loss

 

 

equity

 

Balance, December 31, 2019,

   carried forward

 

 

 

215,675,599

 

 

 

33,335,570

 

$

2.2

 

 

 

 

$

0.3

 

 

 

 

$

(0.4

)

 

 

 

$

3,452.9

 

 

 

 

$

(200.7

)

 

 

 

$

(21.6

)

 

$

3,232.7

 

Impact of accounting policy change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2.3

)

 

 

 

 

 

 

 

(2.3

)

Adjusted balance, December 31, 2019

 

 

 

215,675,599

 

 

 

33,335,570

 

$

2.2

 

 

 

 

$

0.3

 

 

 

 

$

(0.4

)

 

 

 

$

3,452.9

 

 

 

 

$

(203.0

)

 

 

 

$

(21.6

)

 

$

3,230.4

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51.9

 

 

 

 

 

 

 

 

51.9

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.3

 

 

 

0.3

 

Common shares issued on acquisition

 

 

 

29,891,266

 

 

 

 

 

0.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

316.6

 

 

 

 

 

 

 

 

 

 

 

 

 

316.8

 

Common shares issued on loan settlement

 

 

 

775,139

 

 

 

 

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.2

 

 

 

 

 

0.4

 

 

 

 

 

 

 

 

8.7

 

Dividends on common shares ($0.25 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(57.7

)

 

 

 

 

 

 

 

(57.7

)

Dividends on preferred shares

(Series D - $0.99 per share;

Series E -  $1.03 per share;

Series G - $1.03 per share;

Series H - $0.98 per share;

Series I - $1.00 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33.5

)

 

 

 

 

 

 

 

(33.5

)

Shares issued through dividend reinvestment program

 

 

 

7,943

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

 

 

 

 

(0.1

)

 

 

 

 

 

 

 

 

Share-based compensation expense

 

 

 

354,809

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.2

 

 

 

 

 

(0.1

)

 

 

 

 

 

 

 

2.1

 

Treasury shares

 

 

 

37,778

 

 

 

 

 

(0.4

)

 

 

 

 

 

 

 

 

 

0.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unissued acquisition related equity consideration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65.8

 

 

 

 

 

 

 

 

 

 

 

 

 

65.8

 

Balance, March 31, 2020

 

 

 

246,742,534

 

 

 

33,335,570

 

$

2.1

 

 

 

 

$

0.3

 

 

 

 

$

 

 

 

 

$

3,845.8

 

 

 

 

$

(242.1

)

 

 

 

$

(21.3

)

 

$

3,584.8

 

 

 

5

 


 

 

ATLAS CORP.

Interim Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in millions of United States dollars)

 

Three Months Ended March 31,

 

 

2021

 

 

2020

 

Cash from (used in):

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

Net earnings

$

97.6

 

 

$

51.9

 

Items not involving cash:

 

 

 

 

 

 

 

Depreciation and amortization

 

87.3

 

 

 

72.2

 

Change in right-of-use asset

 

30.8

 

 

 

29.3

 

Non-cash interest expense and accretion

 

11.9

 

 

 

8.9

 

Unrealized change in derivative instruments

 

(15.5

)

 

 

20.8

 

Amortization of acquired revenue contracts

 

4.2

 

 

 

3.9

 

Other

 

7.8

 

 

 

(0.3

)

Change in other operating assets and liabilities (note 17)

 

(43.3

)

 

 

(56.0

)

Cash from operating activities

 

180.8

 

 

 

130.7

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

Expenditures for property, plant and equipment

 

(8.0

)

 

 

(248.8

)

Short-term investments

 

 

 

 

(0.8

)

Prepayment on vessel purchase

 

(191.9

)

 

 

 

Payment on settlement of interest swap agreements

 

(5.3

)

 

 

(2.8

)

Cash and restricted cash acquired from APR Energy acquisition

 

 

 

 

50.6

 

Loss on foreign currency repatriation

 

(6.0

)

 

 

 

Receipt from contingent consideration asset

 

6.9

 

 

 

 

Other assets

 

3.0

 

 

 

(37.3

)

Cash used in investing activities

 

(201.3

)

 

 

(239.1

)

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

Repayments of long-term debt and other financing arrangements

 

(430.4

)

 

 

(658.6

)

Issuance of long-term debt and other financing arrangements

 

534.5

 

 

 

798.8

 

Fairfax Notes issued

 

 

 

 

100.0

 

Financing fees

 

(2.5

)

 

 

(12.9

)

Dividends on common shares

 

(31.1

)

 

 

(26.9

)

Dividends on preferred shares

 

(16.8

)

 

 

(16.8

)

Cash from financing activities

 

53.7

 

 

 

183.6

 

Increase in cash and cash equivalents

 

33.2

 

 

 

75.2

 

Cash and cash equivalents and restricted cash, beginning of period

 

342.5

 

 

 

197.3

 

Cash and cash equivalents and restricted cash, end of period

$

375.7

 

 

$

272.5

 

 

Supplemental cash flow information (note 17)

See accompanying notes to interim consolidated financial statements.

 

6

 


ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

 

 

1.

Significant accounting policies:

 

(a)

Basis of presentation:

The accompanying interim financial information of Atlas Corp. (the “Company” or “Atlas”) has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), on a basis consistent with those followed in the December 31, 2020 audited annual consolidated financial statements of Atlas. The accompanying interim financial information is unaudited and reflects all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The unaudited interim consolidated financial statements do not include all the disclosures required under U.S. GAAP for annual financial statements and should be read in conjunction with the December 31, 2020 annual consolidated financial statements of Atlas filed with the U.S. Securities and Exchange Commission in the Company’s 2020 Annual Report on Form 20-F.

The outbreak of COVID-19 has had a negative effect on the global economy and has adversely impacted the industries that Atlas operates in.  During the initial onset of COVID-19 in the first half of 2020, the containership industry experienced decreased container trade and reduced charter rates. Since then, there have been significant improvements in charter rates and decreases in idle capacity as the industry recovers. In the power generation industry, while COVID-19 continues to impact developing countries, which reduces general power demand in some areas, it has not materially impacted the Company's ability to execute contracts in the peaking power and emergency power segments of the market in which it operates. The duration and full effects of this global health emergency and related disruptions are uncertain, although expected to continue for the near future as the success and timing of COVID-19 vaccination programs and containment strategies are also uncertain.  Negative impacts of COVID-19 are expected to reverberate beyond the duration of the pandemic itself.  As a result, this increases the uncertainties and the degree of judgment associated with many of the Company’s estimates and assumptions. As events develop and additional information becomes available, the Company’s estimates may change in future periods.

 

(b)

Recent accounting pronouncements:

Discontinuation of LIBOR

In March 2020, FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”, which provides optional relief for the discontinuation of LIBOR resulting from rate reform. Contract terms that are modified due to the replacement of a reference rate are not required to be remeasured or reassessed under FASB’s relevant U.S. GAAP Topic. The election is available by Topic. This guidance is effective for all entities as of March 12, 2020 through December 31, 2022 and may be applied from the beginning of an interim period that includes the issuance date of the ASU. The Company is currently evaluating the impact of this guidance.

Debt with conversion and other options

In August 2020, FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20)”, which simplifies the accounting for convertible debt instruments by reducing the number of accounting models and circumstances when embedded conversion features are separately recognized. This update also revises the method in which diluted earnings per share is calculated related to certain instruments with conversion features, among other clarifications. The guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance.

 

(c)

Comparative information:

 

Certain prior period information has been reclassified to conform with current financial statement presentation.

 

 

 

 

7

 


ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

 

 

2.

Acquisition of Apple Bidco Limited:

On February 28, 2020, the Company acquired 100.0% of the share capital of APR Energy from Fairfax Financial Holdings Ltd. and its affiliates (“Fairfax”) and certain other minority shareholders (collectively, the “Sellers”). Fairfax held 67.8% of APR Energy’s common shares. APR Energy owns and operates a fleet of capital-intensive assets, including aero-derivative gas turbines and other power generation equipment, and provides power solutions to customers through various contracts. The financial results of APR Energy have been included in the Company’s consolidated financial statements from February 29, 2020, after the date of acquisition.

At closing, Atlas issued 29,891,266 common shares and reserved 6,664,270 common shares for future issuance (the “Holdback Shares”). The Holdback Shares are issuable over a period of 90 days to five years after the date of acquisition and are subject to settlement of purchase price adjustments, indemnification arrangements and other future compensable events. These arrangements may be settled, at the Sellers’ option, by either cancellation of Holdback Shares or cash. In the case of purchase price adjustments, and certain inventory mechanisms, if Holdback Shares are insufficient, Sellers may choose to compensate the Company in cash or cancel previously issued common shares. Any Holdback Shares that are not cancelled after the expiry of their respective holdback periods, will be issued to the Sellers, plus any accrued distributions or dividends.  

 

The net purchase price of $287,700,000 was comprised of the following:

 

 

 

 

29,891,266 common shares issued (1)

$

316.8

 

6,664,270 Holdback Shares (1)

 

70.6

 

Less: Contingent consideration asset (2)

 

(95.2

)

Less: Purchase price adjustment (3)

 

(4.5

)

Net purchase price

$

287.7

 

 

 

(1)

The fair value was determined based on the closing market price of common shares on February 28, 2020, the acquisition date.

 

(2)

Pursuant to the acquisition agreement, the Sellers are required to compensate the Company for losses on cash repatriation from a foreign jurisdiction related to specified contracts. Losses on cash repatriation is recognized in other expenses in the period incurred. In February 2021, Fairfax agreed, subject to definitive documentation, to compensate the Company for future losses realized on sale or disposal of certain property, plant and equipment and inventory items (note 9(c)). The definitive documentation was executed on April 30, 2021 (note 20).

 

(3)

In 2020, the Sellers forfeited their rights to receive 577,139 Holdback Shares and returned 1,849,641 previously issued common shares to the Company. Of this number, 1,122,290 shares were permanently forfeited as part of post-closing purchase price adjustments. The remaining 727,351 shares are held in reserve as treasury shares. The shares held in reserve are issuable to the Sellers at a future date, subject to settlement of potential indemnified events. In February 2021, the Company agreed to issue 5-year warrants to purchase 5,000,000 common shares at an exercise price of $13.00 per share to Fairfax, subject to definitive documentation. The definitive documentation was executed on April 30, 2021 (note 20). Accordingly, as of March 31, 2021, the warrants were not yet issued. During the three months ended March 31, 2021, 173,819 (2020 – nil) common shares were released from holdback and issued to the Sellers.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.

 

 

 

 

Cash and cash equivalents

$

36.7

 

Inventory

 

40.9

 

Acquisition related assets (1)

 

96.4

 

Accounts receivable (2)

 

49.1

 

Other current assets

 

9.1

 

Property, plant and equipment

 

447.2

 

Intangible assets

 

27.4

 

Deferred tax assets

 

16.6

 

Other assets

 

13.9

 

Goodwill

 

117.9

 

Total assets acquired

 

855.2

 

Accounts payable and accrued liabilities

 

92.5

 

Income tax payable

 

106.5

 

Other current liabilities

 

17.2

 

Long-term debt (including current and non-current portions) (3)

 

311.6

 

Deferred tax liabilities

 

1.0

 

Other long-term liabilities

 

38.7

 

Net assets acquired

$

287.7

 

 

 

(1)

Consists of indemnification assets recognized on acquisition. The Sellers are required to indemnify the Company for certain legal and tax matters through cancellation of the Holdback Shares or in cash, at the Sellers’ option. For certain of these arrangements, if the Holdback Shares are insufficient, Fairfax may be required to compensate the Company in cash. The amount to be indemnified is subject to the aggregate losses incurred at settlement of these legal and tax matters. The amount recognized is equal to the liabilities accrued for such legal and tax matters, based on the Company’s best estimates. For certain other indemnification arrangements, Fairfax is required to compensate the Company in cash, without minority shareholders.

 

(2)

The gross contractual accounts receivables acquired is $57.0 million. The amount not expected to be collected is $7.9 million.

 

(3)

Concurrent with the acquisition, the Company refinanced the debt facilities acquired.

 

8

 


ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

 

 

2.

Acquisition of Apple Bidco Limited (continued):

 

The carrying amounts of cash and cash equivalents, accounts receivable and other current assets (consisting of prepaid expenses), accounts payable and accrued liabilities, income taxes payable and other current liabilities approximate their fair values due to the short-term maturity of the instruments. The fair value of long-term debt and other assets are categorized within Level 2 of the fair value hierarchy and determined based on expected payments. The fair values of contingent consideration assets, inventory, property, plant and equipment, intangible assets and asset retirement obligation included in other long-term liabilities were categorized within Level 3 of the fair value hierarchy and were determined using relevant market assumptions, including comparable sales and cost data, discount rates and future cash flows.

As part of the acquisition, the Company recorded $117,900,000 of goodwill resulting from expected synergies in congruence with APR’s unique position in the power generation market, which is not deductible for tax purposes and has been assigned to the power generation segment. Subsequent to the acquisition, as a result of potential strategic repositioning contemplated by the Company, it was determined that the carrying value of the mobile power generation reporting unit exceeded its fair value. As a result, the balance of the goodwill of $117,900,000 was written-off.

The Company recognized $977,000 and $2,294,000 of acquisition related costs that were included in general and administrative expense in the first quarter of 2020 and fourth quarter of 2019, respectively.

Pro forma financial information

The following table presents unaudited pro forma results for the three months ended March 31, 2020. The unaudited pro forma financial information combines the results of operations of the Company and APR Energy as though the acquisition had occurred as of January 1, 2019. The pro forma results contain adjustments that are directly attributable to the transaction, including depreciation of the fair value of property, plant and equipment, amortization of acquired intangible assets, and refinancing of debt. Additionally, pro forma net earnings were adjusted to exclude acquisition-related costs incurred.

 

 

 

Pro forma information

 

 

 

Revenue

 

$

351.0

 

Net earnings

 

 

50.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

9

 


ATLAS CORP.

Notes to Interim Consolidated Financial Statements

(Unaudited)

(Tabular amounts in millions of United States dollars, except per share amount and number of shares)

 

 

3.

Segment reporting

 

For management purposes, the Company is organized based on its two leasing businesses and has two reportable segments, containership leasing and mobile power generation. The Company’s containership leasing segment owns and operates a fleet of containerships which are chartered primarily pursuant to long-term, fixed-rate time charters.  The Company’s mobile power generation segment owns and operates a fleet of power generation assets, including aero-derivative gas turbines and other equipment, and provides power solutions to customers.

 

The Company’s chief operating decision makers monitor the operating results of the leasing businesses separately for the purpose of making decisions about resource allocation and performance assessment.  In the second quarter of 2020, in an effort to align the performance metrics of the Company's segments, the performance measure evaluated by the Company's chief operating decision makers for internal resource allocation and performance assessment was revised to be Adjusted EBITDA, which is computed as earnings before interest, taxes, depreciation and amortization, loss on derivative instruments, gain/loss on contingent consideration asset, gain/loss on sale, loss on foreign currency repatriation, impairment and other expenses.

 

The following tables include the Company’s selected financial information by segment:

 

Three months ended March 31, 2021

 

Containership Leasing

 

 

Mobile Power Generation

 

 

Elimination and Other

 

 

Total

 

Revenue

 

$

331.6

 

 

$

41.0

 

 

$

 

 

$

372.6

 

Operating expense

 

 

68.2

 

 

 

8.0

 

 

 

 

 

 

76.2

 

Depreciation and amortization expense

 

 

75.2

 

 

 

12.1

 

 

 

 

 

 

87.3