Uccmal Posted January 6, 2011 Share Posted January 6, 2011 Never mind, I found it: Wells Fargo (WFC) is upgrading Seaspan Corporation (NYSE: SSW) to Outperform. We are upgrading SSW to Outperform as we believe SSW remains best of breed' within the containership sector and we expect fundamentals across the containerized freight complex to remain firm in 2011, Wells Fargo writes. After pulling back 11% since late October (versus the S&P, up 7%), SSW is now yielding 3.8%, which we view as solid compensation for owning through 2011 into 2012, at which point we expect material dividend upside potential. We believe SSW's dividend could more than double in 2012 (from $0.50/share), as it fulfills its orderbook commitments and starts returning value to shareholders. Our valuation range goes to $16-17 from $15-16. Seaspan Corporation closed Tuesday at $13.02. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 6, 2011 Share Posted January 6, 2011 As this post is now in the idea section, and I was the originator - I suppose that the full disclosure be presented. As such, attached is the original white paper. Though a little dated at this juncture, I am of the belief that much of the thesis is still intact even at current prices. Feedback and critic is always welcomed from fellow board members. Cheers JEast I thank you very much for the gift horse, and I hate to look it in the mouth, but I didn't understand the reasoning behind the counter-party risk. Somebody could always tear up the lease after the ship has been unloaded, or can tear up the lease on the new-builds that are not yet delivered. Anyhow, an academic point that isn't terribly important the way things have worked out (so far). Or maybe I didn't understand the maritime laws governing non-payment -- is it on a per-ship basis only (allowing them to break lease after ship is unloaded) or can you seize any cargo from any of the ships (making it difficult to coordinate their ships all being unloaded at the time of lease being broken)? Incidentally, my grandfather's grandfather (my great-great-grandfather I think) had all of his ships (about 13 I believe) sunk in the Crimean War. Family legend has it that he was (in his late 20s or early 30s I think) on his way to being a shipping tycoon. I think I have better luck but we'll see. Link to comment Share on other sites More sharing options...
Uccmal Posted January 6, 2011 Share Posted January 6, 2011 James, I was just going back in my records. I started my position in December 2008. I wish we had the old board. I am pretty sure you posted this on the old board as an idea way ahead of your white paper. I know I had looked at it due to Irwin Michael holding it for a long period of time before then. Anyway, its good to look back at old assumptions. The projected huge share dilution was minimal. The dividend was dramatically reduced but I think we knew that was coming. We didn't know during the credit crisis what would happen but they appear to have weathered it extremely well. I wont be selling this one before 25 US is reached, if ever. The dividend is going to go up as they get the remaining ships on lease. Link to comment Share on other sites More sharing options...
ericd1 Posted January 6, 2011 Share Posted January 6, 2011 James, Great effort on your part...Thanks for sharing your in depth analysis! I hope SSW goes thru the roof... Eric Link to comment Share on other sites More sharing options...
lessthaniv Posted January 7, 2011 Share Posted January 7, 2011 James, I was just going back in my records. I started my position in December 2008. I wish we had the old board. I am pretty sure you posted this on the old board as an idea way ahead of your white paper. I know I had looked at it due to Irwin Michael holding it for a long period of time before then. Anyway, its good to look back at old assumptions. The projected huge share dilution was minimal. The dividend was dramatically reduced but I think we knew that was coming. We didn't know during the credit crisis what would happen but they appear to have weathered it extremely well. I wont be selling this one before 25 US is reached, if ever. The dividend is going to go up as they get the remaining ships on lease. Hey Al, You can go back and have a look. JEast was 653211 back then (Correct?)... Anyway, you can google your boardname as well as the company and get the old posts. Take a look at this link for our discussions around SSW in the "fall" of 2008, for example... http://brk.visualhash.com/search/index.cgi?query_string=SSW&query_type=any Link to comment Share on other sites More sharing options...
gaf63 Posted January 7, 2011 Share Posted January 7, 2011 Uccmal, left the house just after I posted, and you found more info than I had anyway, As you say Who Knows!! what will happen to market and stock , and I dont want to be out of SSW when the 13000 teu ships come in, and they start raising the div to old levels As to dilution, unless they sell more stock to finance additional ships, final share count looks to be in low 90 millions, way below earlier projections Link to comment Share on other sites More sharing options...
Uccmal Posted January 7, 2011 Share Posted January 7, 2011 Well <IV... good to know all our comments, the good, the bad, and the ugly are immortalized..... :-\ Thanks, At least on this one we seem remarkably consistent. My original buy prices were in the range from 5 to 9. Since then I have churned it a little and the ACB is now just below $12.00. The dividend has paid the interest. What more could one ask for? Link to comment Share on other sites More sharing options...
Myth465 Posted January 10, 2011 Share Posted January 10, 2011 Thanks again JEast for the white paper. I really like your call option strategy for minimizing risks. I hope to use it in the future, just have to work to keep the positions properly sized. I tend to go a bit overboard. Link to comment Share on other sites More sharing options...
SmallCap Posted January 10, 2011 Share Posted January 10, 2011 Is any significant portion of Seaspans debts on a variable rate or subject to rate increases? I was wondering if a rising interest rate environment would be a problem because of the long term contracts that they have in place? Link to comment Share on other sites More sharing options...
gaf63 Posted January 10, 2011 Share Posted January 10, 2011 Smallcap, off the top of my head from past reading, they do have variable rate loans tied to Libor, and they have purchased interest rate swaps to maintain their interest rate around 6%. The interest cost does vary with the movement of Libor but is but is held within a range by the swaps. Link to comment Share on other sites More sharing options...
lessthaniv Posted January 10, 2011 Share Posted January 10, 2011 Smallcap, off the top of my head from past reading, they do have variable rate loans tied to Libor, and they have purchased interest rate swaps to maintain their interest rate around 6%. The interest cost does vary with the movement of Libor but is but is held within a range by the swaps. This is correct. SSW is the fixed payer on the SWAP's. That's good news for SSW if variable rates rise as far as the existing debt goes. Link to comment Share on other sites More sharing options...
SmallCap Posted January 11, 2011 Share Posted January 11, 2011 Will any of their debt need to be refinanced (at potentially higher rates) before the matching leases expire? Because they have a fixed income and a lot of debt I am trying to gauge their interest rate risks. Also has anyone looked at how long it would take for them to get out of Debt? This would be on a theoretical basis only because I don't expect it to ever happen but was wondering with their current payment schedule when would they pay off all the debt? This would be kind of like a run off scenario. How much life would there be left in their ships after they had paid off all the debts? SmallCap Link to comment Share on other sites More sharing options...
lessthaniv Posted January 12, 2011 Share Posted January 12, 2011 Will any of their debt need to be refinanced (at potentially higher rates) before the matching leases expire? Because they have a fixed income and a lot of debt I am trying to gauge their interest rate risks. Also has anyone looked at how long it would take for them to get out of Debt? This would be on a theoretical basis only because I don't expect it to ever happen but was wondering with their current payment schedule when would they pay off all the debt? This would be kind of like a run off scenario. How much life would there be left in their ships after they had paid off all the debts? SmallCap Page 75: Time Charters Page 154: Note 7 Discusses Debt Hammer Away! http://files.shareholder.com/downloads/SSW/1125574973x0x360411/0fbc0b8d-2b07-4145-8518-099da4fb6ab0/Seaspan.pdf Link to comment Share on other sites More sharing options...
gaf63 Posted January 20, 2011 Share Posted January 20, 2011 HONG KONG, CHINA--(Marketwire - 01/19/11) - Seaspan Corporation (NYSE:SSW - News) ("Seaspan") today announced that it plans to offer shares of its Series C Cumulative Redeemable Perpetual Preferred Stock (the "Series C Preferred Shares") in a public offering. Seaspan intends to use the net proceeds from the offering for general corporate purposes, which may include making vessel acquisitions or investments. Following the offering, Seaspan intends to file an application to list the Series C Preferred Shares on the New York Stock Exchange. No info as to amount , interest, or for what reason, hopefully they have found some deals out there Link to comment Share on other sites More sharing options...
gaf63 Posted January 21, 2011 Share Posted January 21, 2011 SEC filing info on the new C series pfd. Exp. money, 23.5 mil/yr. in addtional interest expense Seaspan Corporation 9.50% Series C Cumulative Redeemable Perpetual Preferred Shares (Total Issue Size: 10,000,000 Shares) FINAL TERM SHEET Dated January 21, 2011 Issuer: Seaspan Corporation Title of Securities: 9.50% Series C Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share (the “Series C Preferred Shares”) Trade Date: January 21, 2011 Settlement Date: January 28, 2011 (DTC) Offering Size: 10,000,000 Series C Preferred Shares ($250,000,000 aggregate liquidation preference) Maturity: Perpetual Conversion; Exchange and Preemptive Rights: Will not have any conversion or exchange rights or be subject or entitled to preemptive rights. Dividend Payment Dates: Quarterly on January 30, April 30, July 30 and October 30, commencing April 30, 2011 (each, a “Dividend Payment Date”) Dividends: Shall accrue and be cumulative from the date the Series C Preferred Shares are originally issued and shall be payable on each Dividend Payment Date, when, as and if declared by the Issuer’s board of directors. Dividend Rate: 9.50% per annum per $25.00 of liquidation preference per share (equal to $2.375 per share per annum), subject to increase upon (i) a Covenant Default, (ii) a Cross Default, (iii) a Dividend Payment Default or (iv) a Failure to Redeem (each as defined in the preliminary prospectus), in which case the dividend rate payable on the Series C Preferred Shares shall increase (subject to an aggregate maximum rate per annum of 25% prior to January 30, 2016 and 30% thereafter), to a rate that is 1.25 times the dividend rate payable on the Series C Preferred Shares as of the close of business on the day immediately preceding the Covenant Default, Cross Default, Divided Payment Default or Failure to Redeem, as applicable, and on each subsequent Dividend Payment Date, the dividend rate payable shall increase to a rate that is 1.25 times the dividend rate payable on the Series C Preferred Shares as in effect as of the close of business on the day immediately preceding such Dividend Payment Date, until the Covenant Default, Cross Default or Dividend Payment Default is cured or the Series C Preferred Shares are no longer outstanding. Optional Redemption: At the option of the Issuer anytime on or after January 30, 2016, in whole or in part, at a redemption price of $25.00 per share plus an amount equal to all accumulated and unpaid dividends thereon to the date of redemption. A failure to redeem all the Series C Preferred Shares on or prior to January 30, 2017 shall constitute a Failure to Redeem. Issue Price: $25.00 per share Day Count: 30/360 Net Proceeds to the Issuer (before expenses): $241,250,000 Sole Book-Running Manager and Structuring Agent Merrill Lynch, Pierce, Fenner & Smith Incorporated Co-Managers Citigroup Global Markets Inc. Link to comment Share on other sites More sharing options...
gaf63 Posted January 21, 2011 Share Posted January 21, 2011 That's 23.75 mil/yr. Link to comment Share on other sites More sharing options...
ericd1 Posted January 21, 2011 Share Posted January 21, 2011 Depending on where they settle, 9.5% interest would work well in my pfd basket.. :) Link to comment Share on other sites More sharing options...
gaf63 Posted February 17, 2011 Share Posted February 17, 2011 SSW is in discussion to buy up to 10 more ships in the 10,000 range, nothing committed yet. A possible use for the recent pfd. shares offering, been waiting for some info on their plans Cost of these ships could be 1.25 to 1.5 billion( 13000 teu's were 165 mil) Financing should be interesting, hopefully the dividend raises wont be postponed Item 1 – Information Contained in this Form 6-K Report Seaspan Corporation (“Seaspan”) is in discussions with several selected Chinese and Korean shipyards regarding the potential acquisition of up to ten new ships of about 10,000 TEU capacity each, for delivery in 2013 and 2014, subject to agreement on a purchase price and other terms acceptable to Seaspan. These ships would have an innovative design that focuses on improving loadability and fuel efficiency. A letter of intent has not been signed between the parties and there is no assurance that Seaspan will enter into a letter of intent or complete the transaction. Forward-Looking Statements The statements in this release that are not historical facts may be forward-looking statements, including statements regarding the possible acquisition by Seaspan of additional vessels. These forward-looking statements involve risks and uncertainties that could cause the outcome to be materially different. These risks and uncertainties include, among others: an inability to agree to terms with the shipbuilder and to enter into definitive documents; financing of the transaction; and those risks discussed in Seaspan’s public filings with the SEC. Seaspan undertakes no obligation to revise or update any forward-looking statements unless required to do so under the securities laws. Link to comment Share on other sites More sharing options...
Uccmal Posted March 8, 2011 Share Posted March 8, 2011 uhuru, btw - Uccmal, do you really think SSW will increase the dividend when they still appear hell bent on acquiring yet more ships? I'm curious, the thought hadn't crossed my mind These guys are pretty cautious around financing and I am thinking they will use cash flow. I cant imagine the Washington Family is that keen on investing another 200 M at this point - they probably borrowed the money against other assets. With each ship on long term lease the cash flow/new capex ratio increases. I wish they wouldn't buy the new ships and concentrate on raising cash and the dividend but am thinking they will do both. The managers seem very astute after watching them for 2 1/2 years. As we know the managers are highly motivated to get the dividend above the magic number - I think it was 1.76 - Link to comment Share on other sites More sharing options...
finetrader Posted March 8, 2011 Share Posted March 8, 2011 Would they acquire 10 new 10000 TEU ships, I think it just fit into the capital structure of the company. check this article: http://www.eshiptrading.com/InfoContent-41574-4.html The busines model is to finance ships with 34% equity,66% debt These 10 new ships would cost around 1B$, so you need 334M$ cash from operation to finance it. Starting 2012, they should generate 300M$ cash flow. Would they increase the dividend to 2$/share (which is more than expected), it represents about 140M$ annually. So 160M$ per year is free to reinvest in the business. Let say it takes two years to build those 10 new ships(2012 and 2013)... you have 320M$ available for it. Play with the numbers as you want, but what I see is that 334M$ can be found while increasing the dividend significantly. Link to comment Share on other sites More sharing options...
finetrader Posted March 8, 2011 Share Posted March 8, 2011 Concerning scrap value, here an article: http://www.eshiptrading.com/InfoContent-41793-4.html Link to comment Share on other sites More sharing options...
Ross812 Posted March 11, 2011 Share Posted March 11, 2011 Is this getting hit by the Tsunami today? Link to comment Share on other sites More sharing options...
zippy1 Posted March 11, 2011 Share Posted March 11, 2011 Is this getting hit by the Tsunami today? earning announcement on Monday. Someone knows something that we don't? Link to comment Share on other sites More sharing options...
Uccmal Posted March 14, 2011 Share Posted March 14, 2011 Seaspan delivering Q after Q. Raising dividend to 0.75 per year. 55 ships in operation and contracted now. Deal with Carlyle, Washingtons, Wang, and SSW to finance 1 B of ships. http://ir.seaspancorp.com/releasedetail.cfm?ReleaseID=556457 Link to comment Share on other sites More sharing options...
Myth465 Posted March 14, 2011 Share Posted March 14, 2011 I guess you cant win em all. I almost bought back in when it was down a point. Kinda kicking myself for going to lunch without putting in a bid. Congrats guys. Link to comment Share on other sites More sharing options...
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