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25 thoughts on “Atlas Corp (formerly Seaspan) Receives Take Private Proposal”

  1. Quite a jump in the ATCO preferred shares today (~6-8%) on fairly heavy volume. I can find no news to account for this.

    Anyone know if this one of those HDO pumps?

  2. AnimeSnoopy – I’ll take the other side of that bet (and I have, in a modest way). Here’s my thought process:

    * Fairfax owns $300,000,000 face value in Series J preferred shares
    * The Series J shares rank pari passu with the public preferreds (ATCO-D, -H, and -I) – see https://www.sec.gov/Archives/edgar/data/0001794846/000119312521190203/d180582dex11.htm
    * Fairfax will obviously want to continue to get paid on its prefs, implying that the other parity securities will be paid, too (I realize this doesn’t mean the public shares won’t get delisted, but it weighs against delisting, and certainly against stopping payment on any of them)
    * Fairfax itself is heavily reliant on issuing preferred shares – see https://www.quantumonline.com/ParentCoSearch.cfm?tickersymbol=FRFHF (I count 8 outstanding Fairfax preferred shares) – how do they benefit by screwing around with preferred shareholders here, especially since they’re the biggest preferred shareholder in Atlas?
    * Fairfax in its own businesses and Atlas / Poseidon may want to issue preferred shares in future; stopping payment on the Atlas preferred shares (or delisting them) would undercut their ability to do so
    * Atlas currently repurposes its SEC financial disclosures to file financials required by its Norwegian notes on the Oslo Bors – they’re effectively getting a “twofer” by continuing to file disclosures with the SEC (see https://newsweb.oslobors.no/search?issuer=12898). This militates in favor of continued listing and financial disclosures.
    * I would estimate the cost of continuing to file financial disclosures with the SEC as several hundred thousand dollars a year – insignificant in the grand scheme of things compared to the reputational risk and ability to go to the financial markets in future
    * Similar companies who have gone private have continued to list their preferred shares and file appropriate financial disclosures (GLOG-A, SEAL-A and SEAL-B to name a couple) – the listing costs can’t be that exorbitant
    * Some of the rhetoric I’ve seen surrounding various take-private efforts is borderline tin-foil hat stuff – calling management “snakes”, alleging that they’re trying to “steal” the company. I don’t buy that talk – rather, I think back to a conversation I had last March with Ryan Hamilton, the IR guy at TK, which used to own TGP (taken private, preferred shares still NYSE-listed). He knew the Stonepeak financial people quite well, and told me “People assume that all private equity guys are nefarious; they’re not all that way.” I don’t think the Atlas / Fairfax people are “snakes”.
    * At the end of the day, I trust the Atlas owners (Fairfax, Sokol) and don’t think they’ll play games with the preferred shares. As someone who once owned a privately held business, I can fully understand their frustration with the languishing share price of ATCO and the never-ending quarter-to-quarter focus brought by being a publicly held company, when they’d rather focus on long term prospects.

    ANYWAY – too long of a note, sorry about that, but that’s how I see it. At the end of the day I think the benefits of continuing to keep the preferred shares listed in the event of a successful take-private effort by the Poseidon Consortium outweigh the minimal cost savings that would be gained by delisting the preferred shares.

    1. Interesting thoughts, thanks for the insight. I forgot about that issue that, as far as I know, only Fairfax owns. Your theory is definitely compelling.

      Maybe my frustrations are better directed at ATCO board. After all they are the ones who have given shareholders a NAV quote quarter after quarter well above the value they are willing to accept now.

      What do you call an individual who tells you these things and then takes your shares for less? I think those terms are all valid.

  3. seems to be somewhat mixed consensus on the future of the preferreds if atco goes private. whats more advantageous to the people taking it private, keep preferreds listed or not?

    1. In my opinion they will delist. Hard to imagine why they should bother to release financials just to keep a preferred on the market. My question is why they should bother to pay any preferreds at all (I am not really sure what they obligation is) — would be interested to hear thoughts on this.

      But there still has to be a vote to approve this deal and at least some minority shareholders are likely needed (or that is my understanding at least).

  4. Here’s a little Sunday afternoon woolgathering on the likelihood of ATCO delisting its three series of preferred shares and its baby bond.
    My “gut” tells me that ATCO will keep the NYSE listing for its preferred shares (ATCO-D, -H-, and -I) and the NASDAQ listing for its baby bonds (ATCOL), but that’s really only a hunch. We have seen it go both ways after privatization – when Seapeak took over TK LNG, it maintained the NYSE listings and in fact re-registered the pref shares as SEAL-A and SEAL-B. Likewise when Livanos took Gaslog private, the company maintained the listing of the GLOG-A preferred shares. Even Brookfield maintained the NYSE listing of the Altera preferred shares after it took over Teekay Offshore (though it did of course get into dire financial straits and suspend payment on the preferred shares). The outlier is the GLNG preferred shares, GMLPF – when New Fortress bought Golar LNG Partners, they were delisted (not by NFE, but by the NASDAQ global markets due to lack of sufficient # of shareholders). GMLPF then went to the expert market, despite the fact that NFE has posted audited financials for its GMLP subsidiary – my impression is that GMLPF simply isn’t important enough to NFE to bother paying the OTC markets filing fee and getting the shares back to Pink, Current.

    The fact that Seapeak, Gaslog, and Altera / Brookfield maintained the NYSE listings of their preferred shares suggests to me that the burdens and expenses of listing preferred shares and filing the requisite SEC financial disclosures aren’t as significant as some would claim. (Elsewhere, I see posters making the delisting argument for orphaned preferred shares as nearly Gospel … me, I’m not so sure.)

    ATCO has a couple of 144A bonds listed on the Oslo Stock Exchange. From what I can tell the bond covenants force a higher buyout price if there is a change of control, *or a delisting*. Here’s a filing from May, 2022:

    “Sustainability-Linked NOK Bonds
    As of March 31, 2022, we had an aggregate $500.0 million outstanding under our NOK Bonds. The NOK Bonds were issued in the Nordic bond market in February 2021 ($200.0 million) and April 2021 ($300.0 million), bear interest at 6.5% per annum, and mature in February 2024 and April 2026, respectively. Upon maturity, 100.0% of the principal balance is due, or 100.5% if certain sustainability-linked targets are not achieved, except in the event of certain eligible changes in tax law. As of March 31, 2022, the sustainability-linked targets had been achieved, which targeted capital expenditure for projects which mitigate carbon emissions, including LNG vessel technology. Upon the occurrence of a change of control or a delisting event (each as defined in the NOK Bonds), each holder of NOK Bonds will have the right to require the Company to purchase all or a portion of such holder’s NOK Bonds at a purchase price equal to 101.0% of the principal amount thereof plus accrued and unpaid interest, if any.”

    See https://www.sec.gov/Archives/edgar/data/1794846/000162828022014902/sc-6kx2022x03x31.htm at page 31.
    Will this be sufficient motivation for the Sokol/Fairfax Consortium to keep the preferred shares and baby bond listed? I’d love to hear what others think about this! Thanks for putting up with this idle speculation.

    1. EW, At this point for me, its really just an awareness issue of the possibility of it occurring. Without direct guidance from the company its just being aware that it could occur, and then assess if that concerns you in terms of holding or buying. The markets initial reaction is there is a concern. Whether its a warning to get out or an opportunity to buy and exploit is risk one takes either way. How the private company is capitalized going forward and private could also have an additional benefit or risk too.

  5. Thanks for the clarification, Grid. I did vaguely recall you opined on SJI getting acquired and going private in Sandbox and SiliconInvestors/income. I probably should sell and take profit while it is in the plus column, either stay in cash, waiting for Fed St. Louis Bullards shooting his mouth off with that CNBC Fed watch quasi economist echos to speed up a recession. Or get some RILYO which seems to follow simple arithmetic. I foolishly sold some SWAN believing the rate was too low. I sold half of Tim’s EICA monthly payor. that was dumb. I followed someone at Tim’s on PRE-J when it was trashed. Some bought quickly with trading error. Went to buy more. I have stopped buying these super low coupon super SWAN, knowing that it could get cheaper the next few days. BTW, I managed to sell ALL my LBDRP with loss offset by dividends received. Actually LBDRP behaved well. They just got a decent report. Still, the preferreds follow the headline news and market action of the common. Sold CEPQ right after COVID got controlled. Their balance sheet reminded me of the upstream MLP with all 3 got busted and never recovered from bankruptcy. Wild days at Doug with two high roller gamblers. Safe Bulkers were in that era too along with Navios and Richard Lejeune who does have more knowledge than Rida. Then Wheeler eREIT was his high roller bust. I did pick up a few shares of XOM and Vanguard Energy ETF plus a few shares of MMP. AY seems to be safer than BEP and BEPC (tiny positions). I was piling up AY for many years. Schwab quoted some analysts gave AY an upgrade. Unlike EPD (I have loaded up in my IRA up the limit) and ET (I sold them all because of their mean measures against native Americans and its awful CEO). AY now has proforma yield of 5% not bad. Next div ex date not yet announced but should be end of Aug or Beginning of Sept. Perhaps a small purchase may be a good bet with administrations money on renewables. EVA is my trashy fake renewable (I thanked Rida when I made my comment and asked questions to Preferred Stock Trader). This one is almost like the fake electric reseller. Yet, lower the price and take loss in attempt to expand its market share in Germany and Japan have earned many who keep its price in line with other energy names. LOL.

  6. Been playing a lot of small ball this week.

    I squeezed the INBKZ bonds for 20 cents and started to trade the ATCO issues at the open.

    I already owned the D & H shares, after they dipped under par a couple of weeks back.

    The D & H shares traded in the low 22’s and I picked up a slice. I then dumped them when they ran up above 24 and then bought some back of the weaker trading H share in the low 23’s.

    While I was doing those trades, III’er GRJoel, (thank you) chimed in on the ATCOL. So of course I had to get some of those too under par de har har.

  7. Regarding ATCOL, I am trying to figure out whether this take-private offer (if consummated) would constitute a Change of Control per the prospectus and therefore obligate Atlas to redeem (at 101% + accrued divs) shares put to them by holders.

    The document I’m reading is https://www.sec.gov/Archives/edgar/data/0001794846/000119312521108311/d149571d424b3.htm.

    I *think* what I’m reading implies this would *not* be a CoC, since I *think* that this transaction would be one “in which the survivor or transferee is a Person that is controlled by the Permitted Holders.” (clip from paragraph “Change of Control Permits Holders to Require Us to Purchase Notes”).

    Any opinions?

  8. John – do you agree that the 2027 maturity of ATCOL would not be affected if a change of control happens and the issue goes “dark.”

  9. I don’t quite understand the dump on ATCOL this morning. Regardless of whether its delisted it matures in 2027 and has a nice yield. Added to my small position @ $24.50. Just love Fidelity’s “price improvements” as my $25.16 GTC order filled @ $24.50.

  10. ATCOL still probably a good deal at this discount even if it gets delisted since it is a baby bond.

  11. ESW3 has a valid concern regarding continued listing of ATCO preferred post a take private transaction. The “safety margin” between being a listed preferred and a delisted preferred will decrease if they become orphan preferreds.

    1. Dave: can you explain that last sentence a bit. Are you saying they are more likely to get delisted?

      1. I believe Dave meant to say that a delisted preferred vs a delisted baby bond are both risky when the liquidity is very limited. For example, SLMNP price declined significantly once it was delisted in NYSE, yet it continued to pay. Some SA writer wrote a positive article that the owner was doing recently well. Dishonest eREIT owner, CDR groceries Mom and Pop in many states, decided to be taken private after selling many of its assets to WHEELER eREIT, the notorious eREIT groceries incredibly leveraged. Once upon a time, following Rida Morwa and some of my notorious online friend, bought and suffered severe losses on WHEELER and now CBR preferreds. Like Gridbird said, CBR disaster was unexpected s its financials were chugging on trying to recover from COVID. Best case of delisted: the old Amtrust financial preferreds, non cumulative. Son in law of self made Hungarian multi millionaire Michael Karfunkel (deceased) could not manage his father in law’s old Wall Street hedge fund manager enemies and made a series of bad mistakes (FBI, SEC all the nonsense), still paying dividends presumably to main its decent insurance rating AM Best.
        Maiden Holdings, LTD, Its incompetent British collaborators could not survived and stopped dividend payment for several years.
        Very difficult to forecast. I sold a big chuck of my worst best, Altera Infrasturcture LP, old Brookfield owned (bought from TK offshore LLP) E and look a whopping 85% loss well over $10,000. I still have more of this huge MISTAKE on my own along with busted Maiden non cumulative preferreds.
        I have not made attempts to sell my ATCO-H, bought with money from Partial call of the MOST honest GREEK shipper SB C shares (Safe Bulkers Inc.) About $12,000 cost basis with one payment of dividends. ATCO was bought after I saw someone on this website. Then I bought lots of WBS-G following a post on this website, some merger from the old Sterling bank.
        I apologize to Dave if I have misinterpreted his meaning on his post.
        ATCO, the old Seaspan was always a risk taker (I sold them all) with juicy dividends or interests, once upon a time (probably still do) with container ships which you can see near cruise terminal in LA and Florida.
        I can only hope that the owner of ATCO and the acquirer is like Greek shipper of GLOG (now retired) unlike the CEO founder of Navios Meritime Good luck to all of us.

          1. I tried to sell my remaining shares of DCP-C, taking profit. DCP was and still is I believe a fearless driller if I recall correctly. Then I must ask myself what should I replace with. The good ones all up nicely. For whatever reason which I do not understand, BHFAN is not one of these. I have learned not to go against the market, even if I were not schooled in technical analyses. Ditto for TDS-U and/or V. Gridbird’s SJIJ seems to fit the bill. Disclosure: I do have some SJIJ. SJI seems to act okay. Both of my ATCO-H are in IRA accounts. So, perhaps, I will unload both and replace them with SJIJ. Of course, I could be totally wrong. Not so long ago, I sold my DLNG-B, bought following Ricahrd Lejeune, learned from a daring online friend. Sold them all with no net loss except for opportunity cost. Now DLNG-B and the DLNG-A act like no immediate threat. Company confirmed that one or more of their ships go to Russia with no current threat of prohibited from landing. There were lots of talk that they might have to divert the route to Singapore and then head to Russia from Singapore. Being no friend of Putin or Russia, I did not hesitate too long to sell my sizable position. I noticed that ATCO-H has slid a little more. That is how these things work. I suppose Speaker Pelosi’s trip to Taiwan does not help names like ATCO. Over time, some of the Greek shippers could also suffer from trade wars as opined by CEO or COO of Safe Bulkers. Currently the shippers are generally doing well with goods being transported both ways. I placed sale order on my daughter’s IRA on ATCO-H

            1. John, remember SJIJ is a possible experts market issue if merger goes through. You know what that means. Something to ponder. I doubled down at $17 and sold in mid $18s, so you obviously know what I would do at its present plus $20 price, lol.. Who knows…But there are a lot of funds holding this and they will be forced to sell if it becomes delisted. That scenario if it would happen wouldn’t be very pretty is my broken crystal ball guess.

              1. Thanks Grid. I probably should just keep DCP-C. Energy sector probably “safe”. It has staying power. That Preferred Stock Trader, you had respect, working for Rida Morwa, suggested a few months back on RILYO. I bought a small position. He was correct on this term limited fake SWAN, knowing that the issuer is unlikely to file for bankruptcy. Recently he wrote another article for Rida, suggesting that ATH-D was a better stock than AAM-A, which when climbed could have call risks. This was true when he wrote the article when 10 Yr US Treasury was negative. For the last two days, market seems to follow CNBC pundits. The 10 Yr T climbed back up. While he is a very smart trader. Compared to Tim, he shows his weakness. He is no doubt a risk taker in general, hence working part time for Rida. I have cancelled my SELL order on DCP-C and bumped up just a little on ATCO-H for tomorrow. If it continues to slide, take a chance. ALIN-E plus a little ALIN-A is at the similar situation as CBL or WGP busted open market eREIT in the manner that ALIN has suspended payments on its senior unsecured bond interest payments. Apparently these busted ones are difficult to predict. CBL gave me a few dollars here and there. Some probably from its bond plus some from preferreds. WPG Washington eREITS preferreds all gone, its bond going down too. I sold the bond.

                1. John, FWIW, I guess Im in a bit of alignment with you on my high risk bucket, my 2 biggest ones are in energy. Im not a big preferred insurer guy for no particular reason other than a decent amount of the AON trust preferred…..I did buy resettable nasties of ARGO and SPNT at around $23 a couple weeks ago. Thats all I got there….. Would have sold ARGO yesterday for a quick $2 buck gain, but wasnt paying attention and now its under par again, so I will hold. Not sticking my neck out on those either way though.
                  I had my eye on the ATCOL but got a bit greedier than I should and didnt get any. Others were smarter than me here and got in before it went back up. Wasn’t going to pay par there. Just a personal emotional preference.
                  You like nasties, one can dream of a scenario where Ba3 weakling SLMBP goes 10% QDI if Bullards’s dream of 4% Fed Funds bears fruit. I bought about 150 shares around $57. Dont like this company at all, but I will play and amuse myself a bit here.

                  1. Grid,
                    You are correct that I have some of the same positions. Legacy ARGO. SPINT-B had just a few shares, after seeing it on Tim’s website. Then bought some when it gapped up, still under par. Now some small unrealized loss. Greed kills and patience is gold. Since I was never a fisherman, I tend to execute order without seeking the best price. This works IF the bet is correct. Loss when I am wrong. My best recent bets was on SHO-H following one SA article suggesting that SHO found some new money and ready for more action. My online Dallas friend who loves the fake electric reseller, now called VIA and VIASP, with VIASP reset for LBOR plus still gun ho on this. I exited my position with small loss. He was also gun ho on GRBK-A highly rated by momentum rater Egon Jones. I was stupid to add a little more for this 5.75% only to see more unrealized loss. My own EFSCP, Knoll rated BBB did not work. It is the CY, which clearly needs to be close to 6%. The Dallas guy was correct, ideally around 6.2%, which is not obtainable at least for now for IG. Doug Le Du was correct that regardless of valuation, the dividends/interest for the likes of EFSCP should be very safe. If there is recession, these IG in that range should recover. Like Tim would say, we now know Egon-Jones was and never has been credit rater, just momentum. BTW, among the shippers, CMRE preferreds and DSX-B are probably the safer ones, as I asked the Preferred stock trader. DSX-B has theoretical call risks. Tsarko TNP Antonio the Founder COO seems to have learned his lesson, deleveraged some. FIDO would not let anyone to buy more. I sold all my NS-B, the worst of its preferreds took the pain and replaced with your NSS. That was a great move. Thanks for your NSS. I interpret SIJI could have the risk of going private or being acquired or merged.

                    1. John, SJI is getting acquired and going private. They stated in public filings they would delist it, if merger went through. So it will head to experts market if merger is approved. That is the only “if” part to it.
                      NSS is my personal “home base”. I did switch most over to NS-B at $20, but when it ran over $22, I sold it and bought back the full compliment of NSS shares. NSS and CEQP- are my home base energy preferreds. I trade around them but always hold a base position.

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