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Heads Up to Atlas Corp (Seaspan) Preferred Holders

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.

The SEC document is here.

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.

17 thoughts on “Heads Up to Atlas Corp (Seaspan) Preferred Holders”

  1. Atlas Declares Quarterly Dividends on Preferred Shares
    LONDON, UK, Sept. 29, 2023 /CNW/ – Atlas Corp. (“Atlas” or the “Company”) announced today that the Company’s Board of Directors has declared cash dividends on its preferred shares as follows:

    (Table data that does not reproduce well here; record date October 27, payment date October 30 for all series.)


      1. Well, it’s hard to say, but this sentence in ATCO’s 4th Q, 2022 results PR caught my eye:

        • Approximately 73% of Seaspan’s total borrowings including preferred shares are fixed rate, protecting against an unpredictable inflationary and rising interest rate environment


        That sentence made me wonder if it makes the fixed-to-floating ATCO-I preferred shares more likely to be called in late October:

        “At any time on or after October 30, 2023 we may redeem, in whole or in part, the Series I Preferred Shares 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, whether or not declared. Any such redemption would be effected only out of funds legally available for such purpose. We must provide not less than 15 days’ and not more than 60 days’ written notice of any such redemption.”

        https://www.sec.gov/Archives/edgar/data/1332639/000119312518274260/d587215d424b5.htm , page S-9.
        This recent disclosure also caught my eye:
        Changes in Senior Management
        In July 2023, Graham Talbot resigned as Chief Financial Officer of Atlas and Seaspan. Bing Chen was appointed as interim Chief Financial Officer of Atlas and Seaspan, effective July 7, 2023.
        In June 2023, Peter Curtis resigned as Chief Commercial Officer of Seaspan and in June 2023 Kun Li was appointed Chief Commercial Officer of Seaspan.

        And finally, Atlas has been reported to be designing the first big container ships to run on ammonia:

        One of the lead authors of the report, Sebastian Brindley, an independent senior naval architect acting on behalf of Seaspan, said many things still have to be put in place before a ship can be ordered and built.

        He told TradeWinds: “We need to get the design sorted. We need to get the engine specs sorted. We need to also make sure we’ve got the availability of ammonia. Bunkering — we need to make sure the shoreside facilities, the ports are ready for it, the safety side of it is ready.

        “From Seaspan’s side, we are really keen to make sure that we’ve done our bit.

        “I think we’re probably looking at 2030. I mean realistically, looking at engines, that kind of time probably is when ammonia is going to start to pick up. But I do not have a crystal ball, and I would love to have a crystal ball, but that’s my gut feeling.”

        He hopes the project can be a spur to others to make the same journey.


        1. Good stuff ESW… The other baby bonds including the ATCOL the 2027 note doesn’t seem to scream “redeem me!” for the I’s but there is a case to be made. Then again, taking the other side for argument’s sake, the sentence you quote about 73% of their debt being fixed could possibly be an argument as to why they might want to leave a floater outstanding… Granted that’s convoluted in this environment, but maybe they still like to have the mix high but not higher…. Good catch on the 15 day notification too….. Seaspan’s a whole lot better credit than it used to be, isn’t it? Isn’t Fairfax involved nowadays?

        2. Atlas Corp. Announces Full Redemption of Its Series I Preferred Shares

          Full Redemption Of Its Fixed-To-Floating Rate Cumulative Redeemable Perpetual Preferred Shares – Series I

          LONDON, UK, Oct. 12, 2023 — Atlas Corp. (the “Company” or “Atlas”) today announced that it will redeem all outstanding shares of its Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Shares, Series I, par value of $0.01 per share (the “Series I Preferred Shares”).

          All six million outstanding shares of the Series I Preferred Shares (CUSIP: Y0436Q158) will be redeemed at a price of $25.00 per share of Series I Preferred Shares on October 30, 2023 (the “Redemption Date”). The related notice of redemption will be deemed effective as of October 13, 2023.

          Regular dividends on the outstanding shares of the Series I Preferred Shares of $0.50 per share will be paid in cash separately on October 30, 2023, to holders of record as of the close of business on October 27, 2023, in the customary manner. Accordingly, the redemption price for the Series I Preferred Shares will not include any accrued and unpaid dividends. Unless the Company defaults in the payment of the Redemption Price, on and after the Redemption Date, all shares of Series I Preferred Shares will no longer be deemed outstanding, and no further dividends will be declared or payable (and all dividends will cease to accrue) on the Series I Preferred Shares.


          1. The CUSIP mentioned does not match up with the CUSIP of ATCO-I on quantumonline but the issue date and issue size seem to according to Fidelity when entering their CUSIP #

            15 days notice too…. That’s no fun……..but it is the requirement, not 30

            1. Problem solved – putting the QOL Cusip into Fidelity the description includes “exchanged for CUSIP Y0436Q158

  2. Given it’s been eight months since the last comment here, does anyone have updated priors / prognosis as to continued exchange listings and dividend declarations for the outstanding pref series I, D, and H? Thanks.

  3. 2023-01-10 ATCO merger filing – notes on treatment of preferred shares – deal documents require continued NYSE listing, continued SEC reporting post-merger:
    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.
    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.

  4. good catch -That is EXACTLY the language referring to the PSB Pref’s. and shouldn’t make investors that own these issues very comfortable.

    1. 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.

    1. 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.

    2. 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

      1. 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.

    3. 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.”

      • 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.
      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!

      1. Poseidon owns all the common with the exception of that owned by Fairfax, Washington and Mr. Sokol. David Sokol was the heir apparent for Berkshire. He foolishly bought stock in a company and then recommended same to Berkshire. After Berkshire purchased, Warren learned of this. I met him when he was with Berkshire; was shocked at his actions. I own a bit of ATCOL but will not add more. I am old enough to understand, “when a man shows you who he is, believe him.”

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