Atlas Corp, the parent of container leasing giant Seaspan, looks set to go private after existing shareholders tabled a bid to acquire all outstanding shares in the company.
The acquisition is being carried out by Poseidon Acquisition Corp, an entity formed by certain affiliates of Fairfax Financial Holdings, the Washington Family and Atlas chairman David Sokol.
Ocean Network Express (ONE), the Singapore-based containership operation of Japan’s Mitsui OSK Lines, NYK Lines and K Line, is also participating in the bid.
Poseidon is offering to acquire all the outstanding common shares of Atlas, other than those owned by Fairfax, Washington, Sokol and certain executive officers of the company, for $14.45 per share.
The offer price represents a 32.1% and 28.8% premium over the 30 and 60-day average closing prices of the company’s common shares of $10.94 and $11.22, respectively, Atlas said.
Fairfax, Washington and Sokol, together with certain of their respective affiliates, collectively own around 68% of the outstanding shares.
“The consortium believes the proposed transaction will provide Atlas’s common shareholders with immediate liquidity and certainty of value at a significant premium to the current share price, while allowing Atlas to focus on the long term without the emphasis on short-term results and providing Atlas with an ideal strategic partner to support its future growth,” Sokol said.
The transaction is subject to two non-waivable conditions: approval and recommendation by a special committee of independent directors of the board; and approval by the holders of a majority of the outstanding common shares of Atlas not owned by the consortium.
Atlas only received the proposal letter on Thursday last week and said it had not had an opportunity to “carefully review and evaluate the proposal or make any decision with respect to Atlas response”.
It said the proposal is only an “indication of interest by Poseidon and does not constitute a binding commitment with respect to the proposed transaction or any other transaction”.
Bondholders secure
Fearnley Securities analysts Oystein Vaagen, Erik Gabriel Hovi and Ulrik Mannhart said that should the offer be accepted, it will have a major impact on the Nordic bonds due in 2024 and 2026.
These are trading in the 90% to 99% range in terms of par value, and both have put options at 101% in case of de-listing events.
The transaction could mean a 20% yield for these bonds.
“That said, recent take-private transactions in the shipping space, like GasLog, Hoegh LNG, Teekay LNG Partners and Ocean Yield, have been resolved by waiving de-listing covenants through amendments,” the analysts added.
They argue that Seaspan and Atlas are not directly comparable with those other owners, due to their size and structure.
The analysts see a put option as more likely in this case.
“We do not see bondholders significantly worse off with a private parent considering the majority owners’ financial strength and proven willingness and ability to support the company,” they said.
Fairfax alone has invested $1.1bn in Seaspan since 2018, including $200m in April this year.
Seaspan describes itself as the world’s largest containership lessor, primarily focused on long-term, fixed-rate leases with the world’s largest container shipping liners.
Its operating fleet consists of 132 vessels with a total capacity of 1.15m teu and an additional 71 vessels under construction.
ONE charters 22 containerships from Seaspan ranging from 4,500 teu to 12,000 teu.
In addition to Seaspan, Atlas owns a company called APR Energy, which provides mobile power to underserved markets through gas-powered turbines.
Shares in Atlas Corp, which is listed on the New York Stock Exchange, closed at $11.57 on Thursday but were up more than 23% in after-market trading to $14.26 per share following the announcement.
