Issues $140 Million of 6.95% Series F Cumulative Convertible Perpetual Preferred Shares, Renews $150 Million Unsecured Revolving Loan and Enters into $250 Million Lease Financing
Seaspan Corporation (Seaspan) (NYSE:SSW) announced on Wednesday (May 18) that it has entered into over $540 million of debt and equity financings.
Gerry Wang, Chief Executive Officer, Co-Chairman, and Co-Founder of Seaspan, commented, "We are pleased to announce that we have accessed over $540 million in attractively priced capital, which further strengthens our financial position and enhances our financial flexibility. Seaspan's consistent ability to access diverse and innovative sources of capital reflects our leadership position in the market, and the breadth of our relationships with capital providers. Since our initial public offering in 2005 Seaspan has raised over $12 billion in capital."
Container ship Cosco Yingkou - Image: Seaspan
6.95% Series F Convertible Preferred Shares
Seaspan issued $140 million of 6.95% Series F Cumulative Convertible Perpetual Preferred Shares (the "Preferred Shares") to a third party investor based in Asia. The holder of the Preferred Shares has the right to convert these shares into Seaspan common shares at a conversion price of $18 per share. The dividend rate is initially set at 6.95%, but will increase by 1% annually after the fifth anniversary date to a maximum of 10.5% by the ninth anniversary date, or in certain circumstances to 10.5% on January 1, 2018. Seaspan has the right to call the Preferred Shares at par plus any accumulated and unpaid dividends any time after the dividend increases above 6.95%. Further information on the Preferred Shares can be found in a Statement of Designation to be filed with the SEC.
Unsecured Revolver Renewal
Seaspan recently completed the renewal of its 364-day unsecured, revolving loan facility with various banks for a total commitment of $150 million. The facility includes features allowing it to be upsized for additional bank commitments of up to $30 million, enabling a total facility size of up to $180 million. The revolving loan facility bears interest at LIBOR plus a margin, will be used to fund vessels under construction and for general corporate purposes, and will expire on April 30, 2017. Additionally, Seaspan recently received a $54 million repayment on its demand loan to GCI, as part of routine treasury management.
17-Year Lease Financing
Seaspan entered into a 17-year lease financing arrangement with an Asian-based leasing company for gross proceeds of over $250 million, which bears interest at LIBOR plus a margin. Seaspan will use the lease financing proceeds to fund the construction and delivery of three 11,000 TEU newbuild containerships which will commence 17-year charters upon their deliveries, expected during 2017.