Seaspan expands fleet with takeover of GCI in US$450m deal
HONG Kong-based shipowner Seaspan Corporation has boosted its fleet in a US$450 million deal to acquire the remaining 89 per cent share of Greater China Intermodal Investment (GCI) it did not own.
The New York-listed Seaspan Corp announced that it was buying the shares from affiliates of Carlyle Group and the minority owners of GCI for $450 million in cash and stock. It explained that it was financing the deal with $330 million in cash and $50 million in new shares. It sourced the capital for the purchase from its own balance sheet, plus a $100 million credit facility from Citi and a $16 million reinvestment by the Washington family.
A new $250 million investment by Fairfax Financial Holdings will also facilitate the purchase, Seaspan Corp said in a press release announcing the acquisition. The new investment increases Fairfax's total investment in Seaspan to $500 million.
The deal has an implied enterprise value $1.6 billion.
GCI's fleet consists of 18 modern "eco-class" containerships of 10,000 TEU and 14,000 TEU, representing a total of 204,000 TEU. Of the eighteen vessels, sixteen are currently on-the-water while the remaining two are newbuilds vessels scheduled for delivery during the second quarter of 2018.
Seaspan has been involved in the design, construction, delivery and operations of all 18 of GCI's vessels since inception. All of these vessels are sister ships to Seaspan's current fleet. Given Seaspan's operating history of GCI's fleet, there is no operational integration risk, the company said, reports gCaptain of California.
"GCI's current fleet will contribute approximately $1.3 billion towards Seaspan's contracted future revenues, increasing Seaspan's total contracted future revenues to approximately $5.6 billion. In calendar year 2019, with an 18 vessel fleet, GCI is expected to generate $185 million to $200 million in annual EBITDA," the company said in the press release.
Bing Chen, president and Chief Executive Officer of Seaspan, stated: "This significantly accretive acquisition