Seaspan is increasing the size of its fleet by 29 percent through the acquisition of the remaining 89 percent of Greater China Intermodal Investments it did not already own.
Hong Kong-based containership lessor Seaspan had acquired the 89 percent of Greater China Intermodal Investments (GCI) it did not already own from affiliates of The Carlyle Group and several minority owners of GCI.
Seaspan has managed GCI’s fleet since GCI was founded in 2011.
The deal is increasing the size of Seaspan’s fleet by 29 percent, in addition to increasing its average vessel size and lowering the average age of ships in its fleet.
With the addition of GCI’s fleet of 16 operating containerships and two ships to be delivered this year, Seaspan will now have 112 ships, including four under construction. GCI’s fleet (including the newbuilds) had a capacity of 204,000 TEUs, while Seaspan had a capacity of 701,900 TEUs prior to the acquisition.
The average size of the 18 ships in GCI’s fleet is 11,333 TEUs, and they have an average age of 2.6 years. Prior to the acquisition, Seaspan’s fleet of 94 ships averaged 7,500 TEUs with an average age of 6.1 years.
The deal was valued at $1.6 billion, including assumed third-party net debt of approximately $1 billion and $140 million of future vessel payments, Seapsan said.
It added how the deal “solidifies Seaspan’s industry-leading position as the world’s largest independent containership owner operator, and highlights Seaspan’s strength and ability to achieve sustained growth and drive consolidation in the fragmented containership sector.”
Seaspan will pay the owners of GCI $330 million in cash and $50 million issuance of Seaspan Series D preferred shares.
It financed the cash consideration with cash from its balance sheet and a $16 million reinvestment by the founding Washington family in Seaspan common equity. Seaspan has also closed on a $100 million secured credit facility from Citi.
Seaspan also said the Canadian investment company, Fairfax Financial, would invest an additional $250 million in 5.5 percent debentures and warrants, doubling Fairfax’s total investment in Seaspan to $500 Million. Fairfax Financial is led by Prem Watsa.
GCI was formed by Carlyle in partnership with Seaspan, the family of Dennis and Kyle Washington, Graham Porter and former Seaspan chief executive officer Gerry Wang.
According to the company’s proxy statement, which was issued earlier this month before yesterday’s deal was announced, various members of the Washington family or their trusts own over 43 percent of the company’s voting shares, while Fairfax owns over 21 percent.
Seaspan’s fleet size soars nearly 30% from GCI acquisition
