It is likely that if you hold one of the 3 old Seaspan preferreds (now Atlas Corp) you are up to speed on the acquisition by Poseiden Acquisition Corp.
I had posted a note on this back in August when EWS3 and Dave had highlighted the take private proposal.
I had just looked over the ‘going private’ document filed with the SEC on 12/7/2022 which contains the following–
Each preferred share issued and outstanding immediately prior to the Effective Time will be unaffected by the Merger, will remain outstanding and no consideration will be delivered in respect thereof. The Company’s Series D 7.95% Cumulative Redeemable Perpetual Preferred Shares, par value of $0.01 per share, the Company’s Series H 7.875% Cumulative Redeemable Perpetual Preferred Shares, par value of $0.01 per share, and the Company’s Series I Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Shares, par value of $0.01 per share, are expected to continue to trade on the New York Stock Exchange immediately following the completion of the Merger.
My intention with this note is to simply tee up this subject for any holders or potential holders given the recent PS Business Parks preferred debacle.
I hold none of these issues.
2023-01-10 ATCO merger filing – notes on treatment of preferred shares – deal documents require continued NYSE listing, continued SEC reporting post-merger:
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Page 81:
The Preferred Shares outstanding immediately prior to the Effective Time will remain outstanding and be entitled to the same dividend and other relative rights, preferences, limitations and restrictions as are now provided by the statement of designation of such Preferred Shares, which statement of designation is not changing as part of the Merger. Fairfax is the holder of all of the Series J Preferred Shares. The Series D Preferred Shares, the Series H Preferred Shares and the Series I Preferred Shares are expected to continue to trade on the NYSE immediately following the completion of the Merger, and accordingly, the Company will continue to be a reporting company under the Exchange Act.
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Page A-64:
Section 8.11 Continued Listing of Preferred Stock. From and after the Effective Time, Parent shall cause the Company to continue to cause the Designated Company Preferred Shares (other than the Series J Preferred Shares) to be listed on the NYSE.
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https://www.sec.gov/Archives/edgar/data/1794846/000119312523004976/d313377dex99a1.htm
good catch -That is EXACTLY the language referring to the PSB Pref’s. and shouldn’t make investors that own these issues very comfortable.
Mseni, That has been the playbook for several others too. It seems you let them continue trading then quietly a few months later send out a notice for delistment. Now if it did ever happen and they provide financials for pink sheet status it ultimately would still be fine.
I didnt see any mention in any document about the ATCOL 7.125% Senior Notes due 10/2027.
Will the merger affect it in any way ?
From what i can see in the IPO prospectus :
https://www.sec.gov/Archives/edgar/data/1794846/000119312521108311/d149571d424b3.htm
: it does have a Change of Control redemption clause, Currently trading at 24.45$
I think the writing isn’t worth the paper it’s written on. But the fine point on some of these buyouts the past year is the buyer is already part owner of company. I quit following ATCO after I made my quarters flipping the stock.
The Company doing the buyout owned a large share of the stock but made a point of saying they would not vote their shares and allow only the votes to be counted of the rest of the shareholders. I think they also own some of the preferred and the bond.
They say they will stay listed, but I don’t want to wake up some day and find out the rules changed. Not the risk I want to take.
ATCOL is the reissued replacement for SESCF that was delisted for a while after the Atlas buyout. Also note that all four ATCOL coupons for 2023 were already declared last November – payable 1/30, 4/30, 7/30 and 10/30. I am holding to maturity on 10/30/27
Tom, you never have to worry a note like ATCOL being declared because its a contractual agreement. Note payments arent declared by the Board unlike preferreds, they are just paid.
A few notes I’ve taken to myself on the ATCO preferred shares. TL;DR? I think they’ll stay NYSE-listed (preferred shares) and NASDAQ-listed (ATCOL, the 7.125% senior notes) and continue to file with the SEC.
• Poseidon member Fairfax Financial is by far the biggest preferred shareholder. It owns 12,000,000 of the ATCO-J series, or $300,000,000.00 in face value. The Series J shares rank on parity with the public preferreds. See https://www.sec.gov/Archives/edgar/data/0001794846/000119312521190203/d180582dex11.htm, section 7(b), “Rank” at page 6.
• Fairfax currently gets paid $5,250,000 per quarter – $21 million annually – for its preferred shares. It obviously wants to continue to get paid, implying that the other parity securities will continue to be paid as well.
• Atlas currently repurposes its SEC filings to disclose financial information required by its Norwegian notes on the Oslo Børs. See https://newsweb.oslobors.no/search?issuer=12898 for a list of these filings. As a consequence, the costs of financial disclosures are effectively spread between its US and Norwegian listings. This weighs in favor of continued NYSE listing and SEC financial disclosure filings for the preferred shares.
• The terms of the 7.125% Note Exchange Offer (ATCOL) require the company to pay “additional amounts” to be paid if the notes aren’t paid tax-free. Keeping them listed on the NASDAQ Bond Exchange avoids those additional payments:
“Interest on the ATCO Notes will be payable without withholding or deduction for or on account of U.K. income tax provided that the ATCO Notes are and remain listed on a “recognised stock exchange” within the meaning of section 1005 of the Income Tax Act 2007. Nasdaq is a recognised stock exchange for these purposes. Provided, therefore, that the ATCO Notes are and remain listed on the Nasdaq Global Market, interest on the ATCO Notes will be payable without withholding or deduction on account of U.K. income tax.”
https://www.sec.gov/Archives/edgar/data/1794846/000119312521108311/0001193125-21-108311-index.html
• Fairfax Financial is itself reliant on issuing preferred shares in its own businesses. See https://www.quantumonline.com/ParentCoSearch.cfm?tickersymbol=FRFHF (currently eight different active, listed preferred shares). Fairfax, as the biggest preferred shareholder in Atlas and a substantial preferred share issuer in its own right, has little incentive to delist or stop paying the ATCO preferred shares.
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No guarantees, but it’s my best guess that IF the Poseidon buyout is eventually successful, they’ll keep the preferred shares listed on the NYSE and the senior notes listed on the NASDAQ. The last thing we heard from the company was that the 2026 NOK bondholders want to exercise their “put” option, so the bondholders’ meeting was cancelled. In the presentation to the NOK bondholders, Seaspan said “Seaspan’s reporting obligations and standards remain unchanged (continue to file with SEC)”. https://ir.atlascorporation.com/download/2026+6.5%25+Seaspan+Sustainability-Linked+Senior+Unsecured+Bond+Proposal+%28FINAL%29.pdf
We’ll see, I guess!