Atlas Corp is attempting head off a litigation threat by revealing new details of events leading up to a planned $10.9bn merger deal that will take the company private.
The New York-listed company, an asset manager that owns major container ship tonnage provider Seaspan Corp, added the new information to a proxy statement ahead of a 24 February shareholder vote on the proposed take-private deal.
Atlas said that since December, it has received five demand letters from lawyers purporting to represent minority shareholders who alleged that key information about the merger deal was omitted from the proxy statement.
“The company believes that the allegations in the demand letters are without merit and that supplemental disclosures are not required or necessary under applicable laws,” Atlas said in a filing to the US Securities & Exchange Commission.
“However, to avoid the risk of litigation relating to the allegations in the demand letters and to minimise the costs, risks and uncertainties inherent in defending any such litigation, and without admitting any liability or wrongdoing, the company is voluntarily supplementing the proxy statement as described in this report.”
Under the take-private deal announced in October, Poseidon Acquisition will take over Hong Kong-headquartered Atlas Corp for $15.50 per share.
The buyer’s shareholders include affiliates of Fairfax Financial Holdings, the Washington family and Atlas chairman David Sokol, which together already control 68% of the company.
Ocean Network Express (ONE) — the Singapore-based container ship operation of Japan’s Mitsui OSK Lines, NYK Line and K Line — is also participating in the bid.
The demand letters have not been disclosed, so the significance of the new information is not immediately clear.
Some of the updates in the document signed by Atlas corporate secretary and general counsel Andrew Derksen provided more details on valuation estimates for Atlas and its subsidiaries.
For example, during a strategic review in February 2022, management put a sum-of-the-parts value on the outfit at $14.65 to $22.35 per share. The January proxy statement only revealed a midpoint of $18.50 per share.
In another addition, Atlas revealed that Morgan Stanley, the bank representing the special committee, estimated a range of so-called terminal values for Seaspan that predicted the container ship giant could be worth $3.76bn to $6.28bn under a calculation called a “perpetuity growth rate method”.
A similar estimation method put a terminal value of power solutions subsidiary APR Energy at $483m to $662m.
Atlas also revealed the reason why a special committee rejected an earlier August 2022 take-take private proposal by Poseidon at $14.45 per share, which was later upped to $15.50 per share.
“The special committee’s determination to reject the initial consortium proposal was based in part on its belief that the contracted revenue stream and newbuild orderbook of the company would yield a cash flow profile for Seaspan that would produce value in excess of the initial consortium proposal,” Atlas said in the new language.
Proxy advisors Institutional Shareholder Services and Glass Lewis have recommended that shareholders approve the take-private offer.
