Achieves record annual Revenue, Operating
Earnings and Cash Flow from Operations
Approaches one million TEU with acquisition of
fleet of six high-quality containerships
Announces proposed reorganization to form
Atlas Corp., a global asset management platform
Enters into agreement to acquire APR Energy in
$750 million transaction
HONG KONG, China, Feb. 19, 2020 /PRNewswire/ - Seaspan Corporation
("Seaspan") (NYSE: SSW) announced today its financial results for
the quarter and year ended December 31,
2019.
Financial and Operation Highlights
- Executed agreements to acquire three 10,700 TEU and three 9,200
TEU containerships on long-term charters; increasing, on a fully
delivered fleet basis, Seaspan's contracted revenue to $4.3 billion and average remaining contract term
to 4.2 years
- Achieved Vessel Utilization of 99.1% for the fourth quarter and
98.9% for the full year; highest since the year ended December 31, 2014
- Operating earnings of $116.5
million for the fourth quarter and a record $687.0 million for the full year, which included
$227.0 million of income related
to the modification of time charters
- Cash flow from operations of $137.8
million for the fourth quarter and a record
$783.0 million for the full year
- Earnings per diluted share of $0.24 for the fourth quarter and $1.67 for the full year; changes in fair value of
financial instruments contributed a gain of $0.01 per diluted share for the fourth quarter
and a loss of $0.16 per diluted share
for the full year
Comments from Management
Bing Chen, President and Chief Executive Officer ("CEO") of
Seaspan, commented, "2019 follows 2018 as another year of
achievement and transformation for Seaspan. Our commitment to
providing a best-in-class integrated platform focused on delivering
long-term value for our stakeholders resulted in record performance
across our key financial and operational metrics. Starting in 2018,
we set out with a clear strategy focused on five key priorities,
and as demonstrated by our results, our relentless execution has
benefited all of our stakeholders. We've built a strong team
equipped with core competencies to continue growing the
container-shipping franchise and beyond. The proposed holding
company reorganization to form Atlas Corp. is expected to provide
us, as asset managers, with a solid foundation to expand our core
competencies into power via the acquisition of APR Energy while
augmenting our commitment to the container-shipping industry and
customers. As we enter the second quarter of 2020, we believe that
we are uniquely positioned to build on our strong momentum through
a continued focus on our five key priorities."
Ryan Courson, Chief Financial
Officer ("CFO"), added, "Over the course of the last two years we
have made significant improvements across our capital structure
adding $500.0 million of equity,
restructuring nearly $2 billion of
secured debt into an innovative portfolio financing program,
and increasing our balance sheet flexibility by adding a
total of $450.0 million of liquid
revolving credit capacity - with the long-term goal of achieving an
investment grade credit rating. While focusing on strengthening our
credit profile, we have also invested $2.2
billion of capital into high quality shipping assets, which
has materially improved our long-term cash flow profile. We will
continue to invest capital to create long-term value through the
Atlas platform which we expect to be finalized by March, and we are
very excited about the opportunities in front of Seaspan and
APR."
Significant Developments in the Fourth Quarter and Subsequent
Events
Acquisition of Six High Quality Containerships
In November 2019, Seaspan entered
into an agreement to purchase a fleet of six containerships for
approximately $380 million in
cash. Pro-forma to this acquisition, Seaspan's fully delivered
global fleet of 119 vessels will reach approximately
975,000 TEU, representing a global market share of
7.7%(1), as measured by TEUs. Five of the six vessels
were delivered in the fourth quarter, with the sixth vessel
delivered on January 24, 2020.
Portfolio Financing Program Increased
In December 2019, Seaspan
increased the committed amount under its portfolio financing
program (the "Program") by $155.0
million. In February 2020,
Seaspan expects to further increase the committed amount by
$70.0 million to a total of
$1.725 billion. The Program provides
flexibility to continuously expand up to $2.0 billion. For further information regarding
the Program, please refer to our quarterly reports on Form 6-K for
the quarters ended June 30 and
September 30, 2019 which were
furnished to the U.S. Securities and Exchange Commission on
August 14 and November 18, 2019, respectively
|
(1) Based on data
from Alphaliner Monthly Monitor (October 1, 2019); includes all
vessels Seaspan has agreed to purchase.
|
Repayment of Total Borrowings
During the quarter ended December 31,
2019, Seaspan repaid borrowings in respect of four
vessels, totalling $266.2 million,
using proceeds from the Program.
Formation of New Holding Company, Atlas Corp.
In November 2019, Seaspan
announced a proposed holding company reorganization to form Atlas
Corp., a new global asset management platform. The proposed
reorganization will be implemented through the merger
of Seaspan and an indirect, wholly-owned subsidiary,
with Seaspan continuing as the surviving corporation and
a direct, wholly-owned subsidiary of Atlas Corp. The proposed
reorganization is expected to advance the commitment of the
Board of Directors and management to thoughtful capital allocation
and diversification of cash flows through professional asset
management. Bing Chen will be CEO and Ryan
Courson will be CFO of Atlas Corp., as well as Seaspan.
Acquisition of APR Energy Limited
In November 2019, Seaspan
announced the proposed acquisition of APR Energy
Limited ("APR"), a global leader in fast-track, mobile power
solutions, in an all-stock transaction valued at $750.0
million, including the assumption of debt, for an expected
equity value at closing of approximately $425.0 million using
shares of Atlas Corp. valued at $11.10. APR is a global leasing business that
owns and operates a fleet of specialty assets (gas turbines
and other power generation equipment) that provide power solutions
to customers including large corporations and/or government backed
utilities. APR focuses on maintaining high asset utilization
through medium-to-long-term contracts to optimize cash flows across
its asset portfolio. APR, like Seaspan, is a global leader in its
asset class and offers a unique integrated platform to both lease
and operate its assets.
Termination of Investment in Swiber Holdings Limited
Effective January 1, 2020,
Seaspan's investment agreement with Swiber Holdings Limited was
terminated due to certain conditions' precedent not being met.
Delisting of Seaspan Securities in Connection with
Reorganization
In announcements made on January
17 and February 14, 2020,
Seaspan announced its intention to delist its outstanding 5.50%
senior notes due 2025 (the "2025 Notes"), 5.50% senior notes due
2026 (the "2026 Notes") and 7.125% senior unsecured notes due 2027
(the "2027 Notes" and together with the 2025 Notes and 2026 Notes,
the "Notes") from the New York Stock Exchange (the
"NYSE") and to deregister the Notes under the Securities Exchange
Act of 1934, as amended. The last day of trading of the Notes
on the NYSE is expected to be Monday, March
9, 2020. Seaspan also announced its intention to
exercise its option to redeem the 2027 Notes on October 10,
2020, the first date for early redemption, at par plus accrued and
unpaid interest to, but not including, such redemption date.
On January 28, 2020, the 2025
Notes and the 2026 Notes were admitted to the official list of
Euronext Dublin and are currently trading on the Global Exchange
Market, the exchange regulated market of Euronext Dublin.
Distribution
The Board of Directors declared a quarterly distribution in the
amount of $0.125 per share for its
Class A Common Shares, paid on January 30,
2020 to shareholders of record as at the close of business
on January 20, 2020. Regular
quarterly dividends on the Preferred Shares Series D, Series E,
Series G, Series H and Series I were also declared.
Recent Additions to Senior Management
In February 2020, Seaspan appointed Karen
Lawrie as General Counsel.
Class A Common Shares Outstanding
As of February 18, 2020, there
were 215.9 million Class A Common Shares outstanding.
Results for the Quarter and Year Ended December 31, 2019
Financial Results
The following table summarizes Seaspan's consolidated financial
results for the quarter and year ended December 31, 2019 and 2018:
|
Financial Summary
(in millions of US dollars, except
|
|
Quarter
Ended
December
31,
|
|
|
Year
Ended
December
31,
|
|
earnings per share
amount)
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
288.0
|
|
|
$
|
294.9
|
|
|
$
|
1,131.5
|
|
|
$
|
1,096.3
|
|
Ship operating
expense
|
|
|
59.4
|
|
|
|
55.6
|
|
|
|
229.8
|
|
|
|
219.3
|
|
Depreciation and
amortization expense
|
|
|
64.4
|
|
|
|
64.7
|
|
|
|
254.3
|
|
|
|
245.8
|
|
General and
administrative expense
|
|
|
9.8
|
|
|
|
7.1
|
|
|
|
33.1
|
|
|
|
31.6
|
|
Operating lease
expense
|
|
|
37.9
|
|
|
|
33.2
|
|
|
|
154.3
|
|
|
|
129.7
|
|
Income related to
modification of time charters
|
|
|
-
|
|
|
|
-
|
|
|
|
227.0
|
|
|
|
-
|
|
Operating
earnings
|
|
|
116.5
|
|
|
|
134.3
|
|
|
|
687.0
|
|
|
|
469.9
|
|
Net earnings to
common shareholders
|
|
|
53.9
|
|
|
|
44.8
|
|
|
|
368.0
|
|
|
|
207.5
|
|
Earnings per share,
diluted
|
|
|
0.24
|
|
|
|
0.25
|
|
|
|
1.67
|
|
|
|
1.31
|
|
Cash from operating
activities
|
|
|
137.8
|
|
|
|
169.2
|
|
|
|
783.0
|
|
|
|
525.1
|
Ownership Days, Ownership Days On-Hire and Vessel
Utilization
Ownership Days are the number of days a vessel is owned and
available for charter. Ownership Days On-Hire are the number
of days a vessel is available to the charterer for use. The primary
driver of Ownership Days is the increase or decrease in the number
of vessels in our fleet.
Total Ownership Days increased by 10 days for the quarter ended
December 31, 2019 compared to the
same period in 2018. Ownership Days increased by 1,804 days for the
full year ended December 31, 2019
compared to the same period in 2018, primarily due to the full
period contribution of the additional 16 vessels acquired through
the acquisition of Greater China Intermodal Investments
LLC ("GCI"), which contributed 1,152 days, with the remainder
due to additional 2018 vessel deliveries.
Vessel Utilization represents the number of Ownership Days
On-Hire as a percentage of total Ownership Days. The
following table summarizes Seaspan's Vessel Utilization by quarter
and for the year ended December 31,
2019 and 2018:
|
|
2018
|
|
|
2019
|
|
|
Year
Ended
|
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
2018
|
|
|
2019
|
|
|
Vessel
Utilization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time Charter
Ownership Days
|
|
|
8,030
|
|
|
|
9,546
|
|
|
|
9,844
|
|
|
|
9,844
|
|
|
|
9,630
|
|
|
|
9,737
|
|
|
|
9,844
|
|
|
|
9,791
|
|
|
|
37,264
|
|
|
|
39,002
|
|
|
Bareboat Ownership
Days(1)
|
|
|
447
|
|
|
|
455
|
|
|
|
460
|
|
|
|
460
|
|
|
|
450
|
|
|
|
455
|
|
|
|
460
|
|
|
|
523
|
|
|
|
1,822
|
|
|
|
1,888
|
|
|
Total Ownership
Days
|
|
|
8,477
|
|
|
|
10,001
|
|
|
|
10,304
|
|
|
|
10,304
|
|
|
|
10,080
|
|
|
|
10,192
|
|
|
|
10,304
|
|
|
|
10,314
|
|
|
|
39,086
|
|
|
|
40,890
|
|
|
Less Off-Hire
Days:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled Dry
Docking
|
|
|
(104)
|
|
|
|
-
|
|
|
|
(8)
|
|
|
|
(22)
|
|
|
|
(13)
|
|
|
|
(54)
|
|
|
|
(36)
|
|
|
|
(59)
|
|
|
|
(134)
|
|
|
|
(162)
|
|
|
Unscheduled
Off-
|
|
|
(149)
|
|
|
|
(137)
|
|
|
|
(146)
|
|
|
|
(240)
|
|
|
|
(166)
|
|
|
|
(71)
|
|
|
|
(3)
|
|
|
|
(36)
|
|
|
|
(672)
|
|
|
|
(276)
|
|
|
Hire(2)
|
|
Ownership Days
On-Hire
|
|
|
8,224
|
|
|
|
9,864
|
|
|
|
10,150
|
|
|
|
10,042
|
|
|
|
9,901
|
|
|
|
10,067
|
|
|
|
10,265
|
|
|
|
10,219
|
|
|
|
38,280
|
|
|
|
40,452
|
|
|
Vessel
Utilization
|
|
|
97.0
|
%
|
|
|
98.6
|
%
|
|
|
98.5
|
%
|
|
|
97.5
|
%
|
|
|
98.2
|
%
|
|
|
98.8
|
%
|
|
|
99.6
|
%
|
|
|
99.1
|
%
|
|
|
97.9
|
%
|
|
|
98.9
|
%
|
|
_______________________________
|
|
(1)
|
Ownership Days for
bareboat charters exclude days prior to the initial charter hire
date
|
|
(2)
|
Unscheduled off-hire
includes days related to vessels being off-charter
|
Vessel Utilization increased for the quarter and year ended
December 31, 2019, compared to the
same periods in 2018. The increases were primarily due to a large
decrease in the number of unscheduled off-hire days including fewer
idle days.
Revenue
Revenue decreased by 2.3% to $288.0
million, and increased by 3.2% to $1,131.5 million for the quarter and year ended
December 31, 2019, respectively,
compared to the same periods in 2018. For the quarter ended
December 31, 2019, the decrease in
revenue was primarily due to the changes in the daily charter hire
rates of seven time charters, which were modified in the first
quarter of 2019; this modification resulted in income of
$227.0 million. For the year ended
December 31, 2019, the increase was
primarily due to the contribution of additional Ownership Days
On-Hire from the acquisition of vessels from the GCI transaction in
March 2018.
Ship Operating Expense
Ship operating expense increased by 6.8% to $59.4 million and by 4.8% to $229.8 million for the quarter and year ended
December 31, 2019, respectively,
compared to the same periods in 2018. For the quarter ended
December 31, 2019, the increase was
primarily due to the maintenance and repair of vessels. The
increase in ship operating expense for the year ended December 31, 2019 was also due to an increase in
Ownership Days from the contribution of the acquisition of vessels
from the GCI transaction and 2018 vessel deliveries.
|
|
2018
|
|
|
2019
|
|
|
Year
Ended
|
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
Q1
|
|
|
Q2
|
|
|
Q3
|
|
|
Q4
|
|
|
2018
|
|
|
2019
|
|
|
Operating
Cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time Charter
Ownership Days(1)
|
|
|
8,030
|
|
|
|
9,546
|
|
|
|
9,844
|
|
|
|
9,844
|
|
|
|
9,630
|
|
|
|
9,737
|
|
|
|
9,844
|
|
|
|
9,791
|
|
|
|
37,264
|
|
|
|
39,002
|
|
|
Vessel Operating
Costs
(in
millions of US dollars)
|
|
$
|
49.5
|
|
|
$
|
58.8
|
|
|
$
|
55.4
|
|
|
$
|
55.6
|
|
|
$
|
57.7
|
|
|
$
|
55.9
|
|
|
$
|
56.8
|
|
|
$
|
59.4
|
|
|
$
|
219.3
|
|
|
$
|
229.8
|
|
|
Operating Cost per
Day(2)
|
|
$
|
6,170
|
|
|
$
|
6,156
|
|
|
$
|
5,624
|
|
|
$
|
5,648
|
|
|
$
|
5,993
|
|
|
$
|
5,743
|
|
|
$
|
5,770
|
|
|
$
|
6,067
|
|
|
$
|
5,884
|
|
|
$
|
5,892
|
|
|
_______________________________
|
|
(1)
|
Time Charter
Ownership Days include leased vessels and exclude vessels under
bareboat charter; bareboat charters are not operated by Seaspan and
thus have no operating expense associated with them
|
|
(2)
|
Operating Cost per
Day relates to vessels on time charter
|
Ship operating cost per day increased by 7.4% to $6,067 for
the quarter ended December 31, 2019
compared to the same period in 2018 due to the maintenance and
repair of vessels. For the year ended December 31, 2019, the
cost increased by 0.1% to $5,892 compared to the same
period in 2018.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased by 0.5% to
$64.4 million and increased by 3.5%
to $254.3 million for the quarter and
year ended December 31, 2019,
respectively, compared to the same periods in 2018. For the year
ended December 31, 2019, the increase
was primarily due to the contribution of the vessels from the GCI
transaction and 2018 deliveries.
General and Administrative Expense
General and administrative expense increased by 38% to
$9.8 million and by 4.7% to
$33.1 million for the quarter and
year ended December 31, 2019,
respectively, compared to the same periods in 2018. These increases
were primarily due to legal and professional fees in the amount of
$3.3 million recognized in the fourth
quarter of 2019, associated with the acquisitions.
Operating Lease Expense
Operating lease expense increased by 14.2% to $37.9 million and by 18.9% to $154.3 million for the quarter and year ended
December 31, 2019, respectively,
compared to the same periods in 2018. The increase was primarily
due to the amortization of deferred gains related to Seaspan's
vessel sale-leaseback transactions, which are no longer recognized
through operating leases. Upon adoption of Accounting Standards
Update 2016-02 "Leases" on January 1,
2019, the remaining balance of these deferred gains were
recognized through opening deficit as a cumulative adjustment, as
discussed in previous Earnings Releases.
Interest Expense and Amortization of Deferred Financing
Fees
The following table summarizes Seaspan's borrowings:
|
(in millions
of US dollars)
|
|
As at December
31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
Long-term debt,
excluding deferred financing fees:
|
|
|
|
|
|
|
|
|
|
|
Credit
facilities
|
|
$
|
2,666.4
|
|
|
$
|
2,946.9
|
|
|
|
2027 Notes
|
|
|
80.0
|
|
|
|
400.4
|
|
|
|
2025 Notes and
2026 Notes
|
|
|
500.0
|
|
|
|
250
|
|
|
|
Debt discount and fair
value adjustment
|
|
|
(151.0)
|
|
|
|
(85.7)
|
|
|
|
Long-term obligations
under other financing arrangements, excluding
deferred financing fees
|
|
|
513.8
|
|
|
|
647.7
|
|
|
|
Total
borrowings
|
|
$
|
3,609.2
|
|
|
$
|
4,159.3
|
|
|
|
Decrease in
Borrowings from prior year end
|
|
|
(550.1)
|
|
|
|
|
|
|
Interest expense and amortization of deferred financing fees
decreased by $12.3 million to
$42.8 million and by $10.6 million to $194.2
million for the quarter and year ended December 31, 2019, respectively, compared to the
same periods in 2018. These decreases were primarily due to both
the lower average interest rate and the average principal
balance.
Change in Fair Value of Financial Instruments
The change in fair value of financial instruments resulted in a
gain of $2.5 million, and a loss of
$35.1 million for the quarter and
year ended December 31, 2019,
respectively. The gain for the quarter ended December 31, 2019 is primarily due to an
unrealized gain resulting from the increase in the LIBOR forward
curve during the period. The loss for the year ended December 31, 2019 is primarily due to swap
settlements and an overall decrease in the LIBOR forward curve.
Liquidity and Unencumbered Vessels
As of December 31, 2019, Seaspan
had total liquidity of $470.0
million, consisting of $195.0
million of cash and cash equivalents and $275.0 million of undrawn commitments under the
Program. Additionally, as of December
31, 2019, Seaspan's unencumbered asset pool included 32
vessels.
|
TEU
Class
|
|
Vessel
Count
|
|
|
2500
|
|
4
|
|
|
3500
|
|
2
|
|
|
4250
|
|
15
|
|
|
8500
|
|
2
|
|
|
9200
|
|
2
|
|
|
10000
|
|
2
|
|
|
10700
|
|
3
|
|
|
14000
|
|
2
|
|
|
Total
|
|
32
|
|
About Seaspan
Seaspan is a leading independent charter owner and operator
of containerships with industry leading ship management services.
We charter our vessels primarily pursuant to long-term, fixed-rate,
time charters to the world's largest container shipping
liners. Seaspan's fleet consists of 119 containerships,
including one vessel Seaspan has agreed to purchase,
which has not yet been delivered, representing total capacity of
more than 975,000 TEU. Seaspan's current operating fleet of
118 vessels has an average age of approximately seven years and an
average remaining lease period of approximately four years, on a
TEU-weighted basis.
Conference Call and Webcast
Seaspan will host a conference call and webcast presentation for
investors, analysts, and interested parties to discuss its fourth
quarter and full year results on February
19, 2020 at 8:30 a.m. ET.
Participants should call 1-877-246-9875 (US/Canada) or 1-707-287-9353 (International) and
request the Seaspan call. The live webcast and slide presentation
are available under "Events & Presentations" at
www.seaspancorp.com.
A recording will be available at 1-855-859-2056 or
1-404-537-3406 (Conference passcode: 9797805).
|
SEASPAN
CORPORATION
|
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
|
AS OF DECEMBER 31,
2019 AND 2018
|
|
(IN MILLIONS OF US
DOLLARS)
|
|
|
|
|
|
|
|
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
195.0
|
|
|
$
|
357.3
|
|
|
Short-term
investments
|
|
|
-
|
|
|
|
2.5
|
|
|
Accounts
receivable
|
|
|
18.7
|
|
|
|
13.0
|
|
|
Prepaid expenses and
other
|
|
|
31.7
|
|
|
|
36.5
|
|
|
Net investment in
lease
|
|
|
35.2
|
|
|
|
9.8
|
|
|
Fair value of
financial instruments
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
280.7
|
|
|
|
419.2
|
|
|
|
|
|
|
|
|
|
|
|
Vessels
|
|
|
5,707.1
|
|
|
|
5,926.3
|
|
|
Right-of-use
assets
|
|
|
957.2
|
|
|
|
-
|
|
|
Net investment in
lease
|
|
|
723.6
|
|
|
|
441.7
|
|
|
Goodwill
|
|
|
75.3
|
|
|
|
75.3
|
|
|
Other
assets
|
|
|
173.1
|
|
|
|
204.9
|
|
|
|
$
|
7,917.0
|
|
|
$
|
7,067.4
|
|
|
Liabilities, puttable
preferred shares and shareholders' equity
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
|
83.4
|
|
|
|
70.2
|
|
|
Current portion of
deferred revenue
|
|
|
20.3
|
|
|
|
21.3
|
|
|
Current portion of
long-term debt
|
|
|
363.7
|
|
|
|
722.6
|
|
|
Current portion of
operating lease liabilities
|
|
|
159.7
|
|
|
|
-
|
|
|
Current portion of
long-term obligations under other financing
arrangements
|
|
|
134.6
|
|
|
|
48.4
|
|
|
Current portion of
other long-term liabilities
|
|
|
7.8
|
|
|
|
32.2
|
|
|
|
|
769.5
|
|
|
|
894.7
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
2,696.9
|
|
|
|
2,764.9
|
|
|
Operating lease
liabilities
|
|
|
782.6
|
|
|
|
-
|
|
|
Long-term obligations
under other financing arrangements
|
|
|
373.9
|
|
|
|
591.4
|
|
|
Other long-term
liabilities
|
|
|
11.2
|
|
|
|
181.1
|
|
|
Fair value of
financial instruments
|
|
|
50.2
|
|
|
|
127.2
|
|
|
|
|
4,684.3
|
|
|
|
4,559.3
|
|
|
|
|
|
|
|
|
|
|
|
Puttable preferred
shares
|
|
|
-
|
|
|
|
48.1
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
2.5
|
|
|
|
2.1
|
|
|
Treasury
shares
|
|
|
(0.4)
|
|
|
|
(0.4)
|
|
|
Additional paid in
capital
|
|
|
3,452.9
|
|
|
|
3,126.5
|
|
|
Deficit
|
|
|
(200.7)
|
|
|
|
(645.6)
|
|
|
Accumulated other
comprehensive loss
|
|
|
(21.6)
|
|
|
|
(22.6)
|
|
|
|
|
3,232.7
|
|
|
|
2,460.0
|
|
|
|
$
|
7,917.0
|
|
|
$
|
7,067.4
|
|
|
|
|
|
|
|
|
|
|
|
SEASPAN
CORPORATION
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
FOR THE QUARTER AND YEAR ENDED DECEMBER
31, 2019 AND 2018
|
|
(IN MILLIONS OF US
DOLLARS, EXCEPT SHARES IN THOUSANDS AND PER SHARE
AMOUNTS)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
December 31,
|
|
|
|
|
Year
Ended
December 31,
|
|
|
|
2019
|
|
|
|
|
2018
|
|
|
|
|
2019
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
288.0
|
|
|
|
|
$
|
294.9
|
|
|
|
|
$
|
1,131.5
|
|
|
|
|
$
|
1,096.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
(income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ship
operating
|
|
|
59.4
|
|
|
|
|
|
55.6
|
|
|
|
|
|
229.8
|
|
|
|
|
|
219.3
|
|
|
Depreciation and
amortization
|
|
|
64.4
|
|
|
|
|
|
64.7
|
|
|
|
|
|
254.3
|
|
|
|
|
|
245.8
|
|
|
General and
administrative
|
|
|
9.8
|
|
|
|
|
|
7.1
|
|
|
|
|
|
33.1
|
|
|
|
|
|
31.6
|
|
|
Operating
leases
|
|
|
37.9
|
|
|
|
|
|
33.2
|
|
|
|
|
|
154.3
|
|
|
|
|
|
129.7
|
|
|
Income related to
modification of time charters
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(227.0)
|
|
|
|
|
|
-
|
|
|
|
|
171.5
|
|
|
|
|
|
160.6
|
|
|
|
|
|
444.5
|
|
|
|
|
|
626.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
earnings
|
|
|
116.5
|
|
|
|
|
|
134.3
|
|
|
|
|
|
687.0
|
|
|
|
|
|
469.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and
amortization of deferred
financing fees
|
|
|
42.8
|
|
|
|
|
|
55.1
|
|
|
|
|
|
194.2
|
|
|
|
|
|
204.8
|
|
|
Interest expense
related to amortization of debt discount
|
|
|
4.4
|
|
|
|
|
|
2.5
|
|
|
|
|
|
17.3
|
|
|
|
|
|
7.3
|
|
|
Interest
income
|
|
|
(1.1)
|
|
|
|
|
|
(1.3)
|
|
|
|
|
|
(9.3)
|
|
|
|
|
|
(4.2)
|
|
|
Refinancing
expenses
|
|
|
1.3
|
|
|
|
|
|
-
|
|
|
|
|
|
7.4
|
|
|
|
|
|
-
|
|
|
Acquisition related
gain on contract settlement
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(2.4)
|
|
|
Change in fair value
of financial instruments
|
|
|
(2.5)
|
|
|
|
|
|
14.3
|
|
|
|
|
|
35.1
|
|
|
|
|
|
(15.5)
|
|
|
Equity income on
investment
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(1.2)
|
|
|
Other
expenses
|
|
|
0.9
|
|
|
|
|
|
0.7
|
|
|
|
|
|
3.2
|
|
|
|
|
|
2.3
|
|
|
|
|
45.8
|
|
|
|
|
|
71.3
|
|
|
|
|
|
247.9
|
|
|
|
|
|
191.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
70.7
|
|
|
|
|
$
|
63.0
|
|
|
|
|
$
|
439.1
|
|
|
|
|
$
|
278.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends - preferred
shares
|
|
|
(16.8)
|
|
|
|
|
|
(18.2)
|
|
|
|
|
|
(71.1)
|
|
|
|
|
|
(71.3)
|
|
|
Net earnings
attributable to common shares
|
|
$
|
53.9
|
|
|
|
|
$
|
44.8
|
|
|
|
|
$
|
368.0
|
|
|
|
|
$
|
207.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares, basic
|
|
|
216,162
|
|
|
|
|
|
177,269
|
|
|
|
|
|
214,499
|
|
|
|
|
|
154,848
|
|
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
|
505
|
|
|
|
|
|
132
|
|
|
|
|
|
471
|
|
|
|
|
|
91
|
|
|
Fairfax
warrants
|
|
|
8,085
|
|
|
|
|
|
937
|
|
|
|
|
|
4,902
|
|
|
|
|
|
3,129
|
|
|
Weighted average
number of shares, diluted
|
|
|
224,752
|
|
|
|
|
|
178,338
|
|
|
|
|
|
219,872
|
|
|
|
|
|
158,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share,
basic
|
|
$
|
0.25
|
|
|
|
|
$
|
0.25
|
|
|
|
|
$
|
1.72
|
|
|
|
|
$
|
1.34
|
|
|
Earnings per share,
diluted
|
|
$
|
0.24
|
|
|
|
|
$
|
0.25
|
|
|
|
|
$
|
1.67
|
|
|
|
|
$
|
1.31
|
|
|
SEASPAN
CORPORATION
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF
|
|
COMPREHENSIVE
INCOME
|
|
FOR THE QUARTER AND YEAR ENDED DECEMBER
31, 2019 AND 2018
|
|
(IN MILLIONS
OF US DOLLARS)
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
December
31,
|
|
|
Year
Ended
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
70.7
|
|
|
$
|
63.0
|
|
|
$
|
439.1
|
|
|
$
|
278.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified
to net earnings during the period
|
|
|
0.3
|
|
|
|
0.3
|
|
|
|
1.0
|
|
|
|
1.1
|
|
|
relating to cash flow
hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
71.0
|
|
|
$
|
63.3
|
|
|
$
|
440.1
|
|
|
$
|
279.9
|
|
|
SEASPAN
CORPORATION
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
FOR THE QUARTER AND YEAR ENDED DECEMBER
31, 2019 AND 2018
|
|
(IN MILLIONS
OF US DOLLARS)
|
|
|
|
|
|
|
|
|
Quarter
Ended
December 31,
|
|
Year
Ended
December 31,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Cash from (used
in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
70.8
|
|
$
|
63.1
|
|
$
|
439.1
|
|
$
|
278.8
|
|
|
Items not involving
cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
64.4
|
|
|
64.7
|
|
|
254.3
|
|
|
245.8
|
|
|
Amortization of
right-of-use assets
|
|
|
28.4
|
|
|
-
|
|
|
111.8
|
|
|
-
|
|
|
Share-based
compensation
|
|
|
0.7
|
|
|
1.2
|
|
|
3.3
|
|
|
3.1
|
|
|
Amortization of
deferred financing fees, debt discount and
fair value of long-term debt
|
|
|
8.1
|
|
|
5.7
|
|
|
30.7
|
|
|
19.9
|
|
|
Amounts reclassified
from other comprehensive income to
interest expense
|
|
|
0.1
|
|
|
0.1
|
|
|
0.3
|
|
|
0.3
|
|
|
Unrealized change in
fair value of financial instruments
|
|
|
(6.3)
|
|
|
5.4
|
|
|
(20.0)
|
|
|
(57.4)
|
|
|
Acquisition related
gain on contract settlement
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2.4)
|
|
|
Equity income on
investment
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1.2)
|
|
|
Deferred gain on
sale-leasebacks
|
|
|
-
|
|
|
(7.0)
|
|
|
-
|
|
|
(23.6)
|
|
|
Amortization of
acquired revenue contracts
|
|
|
4.0
|
|
|
2.7
|
|
|
13.8
|
|
|
8.1
|
|
|
Refinancing
expenses
|
|
|
1.3
|
|
|
-
|
|
|
7.4
|
|
|
-
|
|
|
Other
|
|
|
(0.5)
|
|
|
1.0
|
|
|
(1.8)
|
|
|
-
|
|
|
Changes in assets and
liabilities
|
|
|
(33.2)
|
|
|
32.3
|
|
|
(55.9)
|
|
|
53.7
|
|
|
Cash from operating
activities
|
|
|
137.8
|
|
|
169.2
|
|
|
783.0
|
|
|
525.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares
issued, net of issuance costs
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
144.4
|
|
|
Repayment of credit
facilities
|
|
|
(230.8)
|
|
|
(109.0)
|
|
|
(1,507.6)
|
|
|
(469.7)
|
|
|
Draws on credit
facilities
|
|
|
492.4
|
|
|
-
|
|
|
1,227.3
|
|
|
325.6
|
|
|
2026 Notes and 2018
warrants issued
|
|
|
-
|
|
|
-
|
|
|
250.0
|
|
|
250.0
|
|
|
Draws on long-term
obligations under other financing
arrangements
|
|
|
-
|
|
|
82.6
|
|
|
-
|
|
|
47.0
|
|
|
Repayments on
long-term obligations under other
financing arrangements
|
|
|
(95.9)
|
|
|
(48.1)
|
|
|
(133.9)
|
|
|
(48.1)
|
|
|
Senior unsecured notes
repurchased, including related
expenses
|
|
|
-
|
|
|
(64.5)
|
|
|
(9.0)
|
|
|
(17.5)
|
|
|
Redemption of
preferred shares
|
|
|
-
|
|
|
-
|
|
|
(47.7)
|
|
|
(143.4)
|
|
|
Repayments on senior
unsecured notes
|
|
|
-
|
|
|
-
|
|
|
(311.4)
|
|
|
-
|
|
|
Proceeds from exercise
of warrants
|
|
|
-
|
|
|
-
|
|
|
250.0
|
|
|
250.0
|
|
|
Financing
fees
|
|
|
(3.3)
|
|
|
(0.3)
|
|
|
(27.0)
|
|
|
(16.1)
|
|
|
Dividends on common
shares
|
|
|
(26.7)
|
|
|
(21.6)
|
|
|
(101.8)
|
|
|
(49.9)
|
|
|
Dividends on preferred
shares
|
|
|
(16.8)
|
|
|
(16.1)
|
|
|
(70.4)
|
|
|
(65.8)
|
|
|
Cash from (used in)
financing activities
|
|
|
118.9
|
|
|
(177.0)
|
|
|
(481.5)
|
|
|
206.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenditures for
vessels
|
|
|
(321.7)
|
|
|
(12.1)
|
|
|
(331.6)
|
|
|
(318.7)
|
|
|
Short-term
investments
|
|
|
-
|
|
|
-
|
|
|
2.5
|
|
|
(2.4)
|
|
|
Prepayment on vessel
purchase
|
|
|
(6.3)
|
|
|
-
|
|
|
(13.0)
|
|
|
-
|
|
|
Other
assets
|
|
|
-
|
|
|
(3.9)
|
|
|
(6.7)
|
|
|
(1.5)
|
|
|
Loans to
affiliate
|
|
|
-
|
|
|
0.4
|
|
|
-
|
|
|
-
|
|
|
Payments on settlement
of interest swap agreements
|
|
|
(4.7)
|
|
|
(10.3)
|
|
|
(126.8)
|
|
|
(41.3)
|
|
|
Acquisition of
GCI
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(333.6)
|
|
|
Cash acquired from GCI
acquisition
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
70.1
|
|
|
Cash used in
investing activities
|
|
|
(332.7)
|
|
|
(25.9)
|
|
|
(475.6)
|
|
|
(627.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in cash, cash equivalents and restricted cash
|
|
|
(76.0)
|
|
|
(33.7)
|
|
|
(174.1)
|
|
|
104.2
|
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
|
273.3
|
|
|
405.1
|
|
|
371.4
|
|
|
267.2
|
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
$
|
197.3
|
|
$
|
371.4
|
|
$
|
197.3
|
|
$
|
371.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table
provides a reconciliation of cash, cash equivalents and restricted
cash reported within the consolidated balance sheets that sum to
the amounts shown in the consolidated statements of cash
flows:
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
195.0
|
|
$
|
357.3
|
|
|
|
|
|
|
|
|
Restricted
cash
|
|
|
2.3
|
|
|
14.1
|
|
|
|
|
|
|
|
|
Total cash, cash
equivalents and restricted cash shown in the
consolidated statements of cash flows
|
|
$
|
197.3
|
|
$
|
371.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements (as such term
is defined in Section 21E of the Securities Exchange Act of 1934,
as amended, or the Exchange Act) concerning Seaspan's operations,
cash flows, and financial position, including, in particular, the
proposed holding company reorganization and the benefits arising
therefrom in terms of creating a global asset management platform,
the proposed acquisition of APR and the benefits arising therefrom,
the likelihood of its success in developing and expanding its
business generally, the proposed delisting and deregistration of
Seaspan's debt securities and redemption of its 2027 Notes.
Statements that are predictive in nature, that depend upon or refer
to future events or conditions, or that include words such as
"continue," "expects," "anticipates," "intends," "plans,"
"believes," "estimates," "projects," "forecasts," "will," "may,"
"potential," "should" and similar expressions are forward looking
statements. These forward-looking statements represent Seaspan's
estimates and assumptions 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 Seaspan believes to be reasonable based upon available
information, they are subject to risks and uncertainties. These
risks and uncertainties include, but are not limited to:
- delays in the consummation of, or the failure to consummate,
the proposed holding company reorganization and the proposed
acquisition of APR;
- challenges in integrating the operations of APR and the
possibility that Seaspan may not recognize the benefits of the
acquisition in terms of growth potential and high returns on
invested capital;
- future growth prospects and ability to expand Seaspan's
business;
- Seaspan's expectations as to impairments of its vessels,
including the timing and amount of currently anticipated
impairments;
- the future valuation of Seaspan's vessels and goodwill;
- potential acquisitions, vessel financing arrangements and other
investments, and Seaspan's expected risks and benefits from such
transactions;
- future time charters and vessel deliveries, including future
long-term charters for certain existing vessels;
- estimated future capital expenditures needed to preserve the
operating capacity of Seaspan's fleet including, its capital base,
and comply with regulatory standards, its expectations regarding
future dry-docking and operating expenses, including ship operating
expense and general and administrative expenses;
- Seaspan's expectations about the availability of vessels to
purchase, the time it may take to construct new vessels, the
delivery dates of new vessels, the commencement of service of new
vessels under long-term time charter contracts and the useful lives
of its vessels;
- availability of crew, number of off-hire days and dry-docking
requirements;
- general market conditions and shipping market trends, including
charter rates, increased technological innovation in competing
vessels and other factors affecting supply and demand;
- Seaspan's financial condition and liquidity, including its
ability to borrow and repay funds under its credit facilities, to
refinance its existing facilities and to obtain additional
financing in the future to fund capital expenditures, acquisitions
and other general corporate activities;
- Seaspan's continued ability to meet its current liabilities as
they become due;
- Seaspan's continued ability to maintain, enter into or renew
primarily long-term, fixed-rate time charters with its existing
customers or new customers;
- the potential for early termination of long-term contracts and
Seaspan's potential inability to enter into, renew or replace
long-term contracts;
- the introduction of new accounting rules for leasing and
exposure to currency exchange rates and interest rate
fluctuations;
- conditions inherent in the operation of ocean-going vessels,
including acts of piracy;
- acts of terrorism or government requisition of Seaspan's
containerships during periods of war or emergency;
- adequacy of Seaspan's insurance to cover losses that result
from the inherent operational risks of the shipping industry;
- lack of diversity in Seaspan's operations and in the type of
vessels in its fleet;
- conditions in the public equity market and the price of
Seaspan's shares;
- Seaspan's ability to leverage to its advantage its
relationships and reputation in the containership industry;
- changes in governmental rules and regulations or actions taken
by regulatory authorities, and the effect of governmental
regulations on Seaspan's business;
- the financial condition of Seaspan's customers, lenders, and
other counterparties and their ability to perform their obligations
under their agreements with us;
- Seaspan's continued ability to meet specified restrictive
covenants and other conditions in its financing and lease
arrangements, its notes and its preferred shares;
- any economic downturn in the global financial markets and
export trade and increase in trade protectionism and potential
negative effects of any recurrence of such disruptions on Seaspan's
customers' ability to charter Seaspan's vessels and pay for
Seaspan's services;
- the value of Seaspan's vessels and other factors or events that
trigger impairment assessments or results;
- taxation of Seaspan's earnings and of distributions to its
shareholders;
- Seaspan's exemption from tax on U.S. source international
transportation income;
- the ability to bring claims in China and Marshall
Island, where the legal systems are not well-developed;
- potential liability from future litigation; and
- other factors detailed from time to time in Seaspan's periodic
reports.
Forward-looking statements in this release are estimates and
assumptions reflecting the judgment of senior management and
involve known and unknown risks and uncertainties. These
forward-looking statements are based upon a number of assumptions
and estimates that are inherently subject to significant
uncertainties and contingencies, many of which are beyond Seaspan's
control. Actual results may differ materially from those expressed
or implied by such forward-looking statements. Accordingly, these
forward-looking statements should be considered in light of various
important factors listed above and including, but not limited to,
those set forth in "Item 3. Key Information—D. Risk Factors"
in Seaspan's Annual Report for the year ended December
31, 2018 on Form 20-F filed on March 26, 2019 and in
the "Risk Factors" in Reports on Form 6-K that are filed with
the Securities and Exchange Commission from time to time
relating to its quarterly financial results.
Seaspan does not intend to revise any forward-looking statements
in order to reflect any change in Seaspan's expectations or events
or circumstances that may subsequently arise. Seaspan expressly
disclaims any obligation to update or revise any of these
forward-looking statements, whether because of future events, new
information, a change in Seaspan's views or expectations, or
otherwise. You should carefully review and consider the various
disclosures included in Seaspan's Annual Report and in Seaspan's
other filings made with the Securities and Exchange Commission that
attempt to advise interested parties of the risks and factors that
may affect Seaspan's business, prospects and results of
operations.
Investor Inquiries:
Bill Stormont
Seaspan Corporation
Tel. +1-604 638 7240
Email: bstormont@seaspanltd.ca
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SOURCE Seaspan Corporation