HONG KONG, CHINA, Jan 22, 2009 (Marketwire via COMTEX News Network) -- Seaspan Corporation (NYSE:SSW) announced today an agreement to issue and sell Series A Preferred Stock to Dennis R. Washington, Kevin L. Washington, Kyle R. Washington, who is the Company's chairman and Graham Porter, through their respective affiliates, for $200 million. Dennis R. Washington will invest $160 million and the others will invest an aggregate of $40 million.
The preferred shares will automatically convert into Seaspan's common shares at an exercise price of $15.00 at any time on or after January 31, 2014 if the trailing 30 day average trading price of the common shares is equal to or above $15.00. The exercise price represents a premium of approximately 57% to today's closing price of the common shares of $9.54.
If at any time on or after January 31, 2014 the trailing 30 day average price of the common shares is less than $15.00, Seaspan has the option to convert the preferred shares at an exercise price of $15.00 and pay the investor 115% of the difference between the exercise price and the trailing 30 day average price of the common shares, payable in cash or common shares at Seaspan's option.
I've been long for quite a while. Analysts generate volume and when the news is good, it adds to liquidity. They help if I want to hold a core and trade in and out for profits, which I won't if liquidity is marginal.
the rich keep getting rich--pretty good return for the insiders. the rest of us nobody's get to hold these dilutive common shares. Unfortunately, I don't think management is done yet screwing the common shareholder.
I don't hold SSW (I hold GSL b/c they don't have the capital funding issues of SSW, though I think SSW is undervalued here) but I do follow it. This is a decent deal for SSW b/c it keeps the cost of capital at a relatively reasonable rate I say relative due to the cost associated with raising common at these levels. This allows them to issue capital at roughly SSW's return on capital, which is neither value destructive nor value enhancing but does solve a piece of the puzzle regarding funding their future order book. This was a bold move on the part of management, and the right one. Good job SSW.