New York-listed Seaspan Corp has wasted no time in using its new financial muscle by acquiring a boxship fleet for $380m.
The company said the deal for six neo-pananamx ships brings its total capacity to near 1m teu.
The transaction will be financed from additional borrowings as well as cash on hand.
It is expected to be "immediately accretive" to the company's earnings, it said.
The ships are three 10,700-teu vessels built in 2012, two 2013-built units of 9,200 teu, and another 9,200-teu vessel built in 2014.
The only two shipowners with vessels in all those categories are China Merchants and CMA CGM.
All six operate under long-term charters with a leading global liner company, which appears to be CMA CGM's APL unit.
Seaspan's capacity will expand to 119 vessels of 975,000 teu after the deal closes in December.
CEO Bing Chen said the transaction "further demonstrates our core competency of allocating capital in a disciplined manner."
He called it a "win-win outcome for one of our key financing partners, a key customer, and for Seaspan."
"As consolidation continues to play out in the containership space, we're well positioned to capture great opportunities in the secondhand market and to pursue attractive newbuild programmes," he added.
Financial firepower
Last week, Seaspan said it was ready for its next phase of growth after completing its $1.5bn portfolio financing programme.
The company added $500m to its funding pot in September, at interest of LIBOR plus 2.25%.
In 2018, it boosted its fleet in a $380m deal to take over Greater China Intermodal Investments (GCI).
It agreed to acquire the remaining 89% it did not own in GCI from The Carlyle Group and minority owners.
The transaction added 18 ships to the Seaspan fleet.
CFO Ryan Courson said: "Over the last two years, we have demonstrated discipline through our capital allocation process.
"By focusing first on improving our balance sheet strength, liquidity and financing flexibility, we have positioned ourselves to execute on large scale, accretive transactions."
Discipline to be maintained
He added: "This fleet acquisition of six high-quality vessels contributes substantial long-term value to our asset portfolio through significant incremental contracted cash flows, increasing Seaspan's minimum future contracted revenue to approximately $4.2bn.
"We will continue to remain disciplined in achieving our return objectives while maintaining the strength and flexibility of our balance sheet."
Seaspan's net earnings in the third quarter were $43m against $80m in 2018.
Revenue was $282.7m, versus $295m the year before.
Accretive move
Stifel analyst Ben Nolan raised full-year earnings-per-share expectations by $0.01 to $0.80 for 2019 and by $0.11 to $1.00.
"Our estimates are moving up in conjunction with the acquisition as the deal is expected to be accretive," he wrote in a client note.
The $380m price tag should result in 10% to 15% in un-levered returns over the life of the six ships since Seaspan is taking residual risk on where they will be fixed in a few years.
"As such, the expected substantial cash flows on the vessels should de-risk the residual risk of the vessels," he said.
