The Hong Kong-based containership lessor in Q3 2016 took impairment charges of $202.8 million related to ten ships under 5,000 TEUs in capacity and another $18.9 million related to the bankruptcy and subsequent default of Hanjin Shipping.
Seaspan Corp. swung to a $184 million net loss in the third quarter of 2016 due to non-cash vessel impairments and the bankruptcy and subsequent default on charter payments of South Korean ocean carrier Hanjin Shipping, according to the company’s most recent financial statements.
The Honk Kong-based independent containership owner and manager reported a diluted loss per share (EPS) of $1.86 per share for the quarter compared with a $0.07 per share gain the previous year.
The loss came despite a 5.6 percent year-over-year increase in revenues to $224.9 million.
The company noted its normalized net earnings were relatively stable compared with third quarter 2015, ticking up 0.5 percent to $43.6 million for the period. Normalized net earnings, which are a non-GAAP measure, are “adjusted for interest expense, excluding amortization of deferred financing fees, refinancing expenses, foreign exchange gain, write-off of vessel equipment, change in fair value of financial instruments, interest expense at the hedged rate, and certain other items that Seaspan believes are not representative of its operating performance,” Seaspan said.
During the third quarter, Seaspan took delivery of the 10,000-TEU containership Maersk Genoa, which was built at the Jiangsu New Yangzi Shipbuilding Co., Ltd. and Jiangsu Yangzi Xinfu Shipbuilding Co., Ltd. using the company’s “SAVER” design and immediately commenced a five-year, fixed-rate time charter with Maersk Line upon delivery.
In addition, the company in August sold the 4,600-TEU Seaspan Excellence for scrap, netting proceeds of $5.8 million that resulted in a loss on disposal of around $16.5 million.
Seaspan attributed the massive quarterly loss primarily to a non-cash vessel impairment of $202.8 million related to ten ships with under 5,000 TEUs of capacity each, as well as the Hanjin bankruptcy proceedings.
Beleaguered container carrier Hanjin filed for court receivership in Korea on Aug. 31, and as a result, ended up defaulting on payments for four chartered containerships – three 10,000-TEU vessels and the Seaspan Efficiency. Seaspan stopped recognizing revenue on those four ships as of Sept. 1, 2016, and the vessels were returned to Seaspan.
For the first nine months of the year, Seaspan posted a net loss of $140.5 million compared with earnings of $123.2 million in the same 2015 period. Revenues, on the other hand, grew 10.7 percent year-over-year to $664.7 million through the first three quarters of 2016.
The company, which had a total fleet of 89 ships as of Sept. 30, reported vessel utilization of 95.6 percent and 97 percent for the third quarter and first nine months of 2016, respectively.
“We continued to enhance our liquidity position and fund our newbuild program by accessing over $400 million in capital during the third quarter, bringing total capital raised year-to-date to over $1.5 billion,” Seaspan Co-Chairman and CEO Gerry Wang said of the results. “Our continued ability to access diverse sources of capital on attractive terms, from multiple markets and geographies, is one of the key factors that differentiates us from competitors.
“During the third quarter, we continued to modernize our fleet with the delivery of our eleventh 10,000-TEU SAVER containership, which commenced a five-year fixed-rate time charter with Maersk Line,” he added. “This represents the fifth newbuilding vessel that has been delivered to Seaspan this year. We are also very pleased with the success of our cost control measures that resulted in a decline in our ship operating expenses while our fleet ownership days continued to increase.”
Seaspan posts $184m loss amid Hanjin turmoil
