Seaspan Stumbles on Secondary Pricing

Seaspan Corp. (NYSE: SSW) watched its shares sink early on Tuesday following the announcement of the pricing for its secondary offering. The company will price its 5 million Class A common shares at $14.70 per share, with an overallotment option for an additional 750,000 shares. At this price, the entire offering is valued up to $84.53 million.

The underwriters for the offering are Wells Fargo, Morgan Stanley, UBS Investment Bank, Credit Suisse, JPMorgan and Stifel. They will act as joint book-running managers for the public offering, while RBC Capital Markets, BB&T, Janney Montgomery Scott, Ladenburg Thalmann, ABN AMRO, BNP Paribus and Santander will act as co-managers.

Apart from this offering, Seaspan’s CEO and affiliates of one of Seaspan’s directors and of Dennis Washington have agreed to purchase directly from Seaspan, at the public offering price, an aggregate of $15 million of Common Shares concurrently with the closing of the public offering.

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The company detailed in its release:

Seaspan intends to use approximately $85 million of the net proceeds from the public offering and the concurrent private sale to redeem a portion of its outstanding 9.50% Series C Cumulative Redeemable Perpetual Preferred Shares (the “Series C Preferred Shares”), and the remainder for general corporate purposes. Any such redemption of Series C Preferred Shares would be in addition to the redemption of 5,600,000 Series C Preferred Shares previously announced by Seaspan.

The company provides many of the world’s major shipping lines with creative outsourcing alternatives to vessel ownership by offering long-term leases on large, modern containerships combined with industry leading ship management services.

Shares of Seaspan were trading down about 10% at $14.59 on Tuesday, with a consensus analyst price target of $17.75 and a 52-week trading range of $13.67 to $20.87.