Boxship owner Seaspan Corp is launching an exchangeable notes deal worth more than $200m to fund potential acquisitions.
The company, owned by New York-listed Atlas Corp, said $175m of securities will be sold.
There will also be an option for buyers to add an additional $26.25m of the notes, which can be converted into Atlas stock.
The coupon has not yet been revealed.
The cash could be used to fund acquisitions or repay debt, as well as financing Seaspan’s recently announced newbuilding vessels, the company said.
Big boxship order
Seaspan returned to the newbuilding market earlier this month with an order for five 12,200-teu containerships.
The owner is ordering the neopanamax vessels on the back of an 18-year time charter to an unnamed liner company. No details of the yard were revealed.
Speculation is likely to fall on Mediterranean Shipping Co (MSC) as the charterer. The Swiss company has done 18-year charter deals with Seaspan in the past.
Atlas' share price dropped 11% in New York after the announcement.
This probably reflected delta hedging from investors in the deal, Fearnley Securities said.
Delta hedging is an options strategy that seeks to be neutral by establishing both long and short positions.
Limited dilution
The investment bank added the transaction represents only 7% of Atlas' market cap, implying limited dilution of the stock.
"Overall, the deal is an effective way to diversify the company’s capital base at an attractive price," analysts Espen Landmark Fjermestad, Peder Nicolai Jarlsby and Ulrik Mannhart said
"Including the 30 unencumbered assets, we now see Atlas having a liquidity base well north of $1bn. Share reaction yesterday thus representing a buying opportunity as freight and charter rates in the container market continue [their] synchronised rise."
Fearnley has a buy rating on the shares.
